Celtics business model 'all about winning championships'

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April 16, 2010, 11:26 am
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(NECN) - The Boston Celtics open their first-round playoff series with the Miami Heat at the TD Garden on Saturday night a 8 p.m.  The entire series will be broadcast on NECN's sister station, Comcast SportsNet New England.

This is the third straight season in which the Celtics have made the NBA Playoffs, a trend that is good for business, the team and fans.

Ticket prices generally go up in cost for playoff games, but fifty-percent of the revenue generated by a playoff team like the Celtics is shared across the entire league.  So ticket sale profits are not exactly a windfall for the organization -- think bigger picture.

"The real benefit for being in the playoffs is the increased demand for all things Celtics," Gotham said on NECN's This Week In Business, which airs on Sunday at 12:30 p.m.  "Our business operation is all about winning championships, and of course you can't win a championship if you're not in the playoffs."

While winning is great on the surface for fans, players, coaches, etc., it also benefits the organization by providing funds that can be pumped directly into salaries for on-court talent.  It was the willingness of the ownership group led by CEO Wyc Grousbeck to spend money on high-priced acquisitions like Ray Allen and Kevin Garnett that led Boston to its 17th NBA Title, earned at the end of the 2007-2008 season.

"To win an NBA Championship, it's pretty clear you need to spend a lot of money on players.  In order to spend a lot of money on players, you need to generate a strong top-line revenue," Gotham said, noting that playoff success rejuvenates the economic atmosphere that attracts quality players.  "It fuels it even more -- it's not a windfall by any means -- but certainly it adds on top of what is hopefully a successful regular season.  It's what allows us to continue to spend on players, reinvest that profit back into players."

Big Three, big decisions

At the end of this season, which may or may not culminate in another NBA Title, there is the chance that the Big Three may be broken up.  Allen is a free agent at season's end, and Boston may not be willing to meet the salary demands of an aging shooting guard whose point-per-game average was the lowest in his three-year Celtics tenure.

After the 2010-2011 season, Celtics captain Paul Pierce will be a free agent, followed by Garnett after the '11-'12 season.

Gotham said that he wishes he had a sense of whether the Big Three will remain intact next season and beyond, but that team management will "reassess" the organization's future after this current playoff run.  Weighed in the decision making process will be the short and long term needs of the Celtics, balancing the two in order to remain competitive next season and for years down the road.

"We'd all love to keep our great players around for as long as possible; sometimes that's viable, sometimes it's not viable," Gotham said.  "We owe it to our fans to always put the best team on the floor.  That's always what's going to drive our decision making, whether it's to keep players or to let players leave."

This ownership group is no stranger to difficult personnel moves.  Gotham cited the team's decision to re-sign Paul Pierce ahead of Banner 17 -- it came with other decisions, too, like acquiring Kevin Garnett and Ray Allen in off-season trades.  At the time, the Celtics were coming off a 24-58 season.  But ownership recognized the opportunity to raised Banner 17 and jumped at it.

Whether management decides it can win again with Pierce, Garnett and Allen as its centerpiece will, as Gotham said, come into focus following the playoffs.

Facebook, @celtics

The TD Garden holds 18,600 fans for Celtics games, which leaves a large number of fans watching from home.  With the advent of new social media forums, the Celtics have jumped right in to the trends.

On Twitter -- @celtics -- the team is followed by 32,883 handles as of the publication of this article.  The reach extends much further on Facebook, where the Celtics fan page boasts 577,963 fans at the time of this article's publication.

Both Twitter and Facebook allow the organization to connect directly with its fan base, cutting out the middle man in team-related interaction.

"We can do a ticket promotion, for instance, on Facebook ... and it's amazing how quickly we get a response back," Gotham said.  "It's really been amazing.  We'll post video and we'll see how many people download the video and build it into blogs."

But more than providing another outlet for ticket or video promotion, it puts the Celtics brand in an easily accessible place at any time of the day, all year long -- even when some fans have put basketball on the backburner in favor of baseball season.

"We look at it really as our database of the future," Gotham said of digital media.  "Getting to know these people, bringing them into the Celtics family so to speak and having a lifetime relationship with them."

This interview is part of NECN's This Week In Business program, which will air on Sunday at 12:30 p.m.

Tags: Kevin Garnett, Paul Pierce, NBA Playoffs, Ray Allen, Boston Celtics, Big Three, Rich Gotham
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