The Big Three

PROLOGUE

That day’s business meeting in Phoenix was supposed to be a simple one. The plan in the spring of 2003 was for Danny Ainge to go to Sky Harbor International Airport in the morning, personally pick up a friend arriving from Boston at eleven o’clock, and eventually recommend some candidates for an executive position.

They’d get in a round of golf, with tee time scheduled for one thirty. Go over some dynamic names. Have dinner. Easy.

Ainge was perfect for assignments like these. Not only did he have an abundance of contacts and opinions, but he was also an expert on the topic: pro basketball—specifically, the Boston Celtics.

His friend was Steve Pagliuca, one of the Celtics’ new co- owners. Months earlier, Pagliuca, Wyc Grousbeck, Bob Epstein, and several partners had paid more for the Celtics, $360 million, than anyone had paid for a team in NBA history. That was 2002. Pagliuca and Grousbeck, longtime and excitable Boston fans, spoke publicly of bringing championship basketball to the city; in private, to confidants like Ainge, they confessed that they wanted to hire a championship team-builder, too.

Pagliuca respected Ainge and liked the way he thought. The two of them attended the 2000 U.S. Open at Pebble Beach, which Tiger Woods dominated with a 15-stroke victory. When they weren’t talking about golf as they walked the famed course, they discussed pro basketball. Pagliuca remembered those conversations when his group bought the Celtics, and he asked Ainge then to take the job. But Ainge was enjoying his life as a TV analyst. He turned Pagliuca down, but that didn’t stop them from joyfully debating basketball in the lounge of Boston’s Four Seasons Hotel, sometimes until one a.m., whenever Ainge was in New England.

The last great Celtics team, from 1986, included four Hall of Famers in the starting five: Larry Bird, Kevin McHale, Robert Parish, Dennis Johnson. The fifth starter was a six-foot-four guard named Ainge, born to be a gamesman. He could backflip off a diving board before he was five. Growing up in Oregon, he was the teenager who was All-State in three sports. He was twenty when he got three hits in his Major League Baseball debut, weeks after completing his sophomore year of college. When he returned to Brigham Young University as a junior, he earned all-conference and All-American. In basketball. He became a Celtic at twenty-two. He won his first Boston title at twenty-five.

It was hard to pin down Ainge precisely as just one thing all the time. He’d touched all sides of the basketball business. By the time he retired in 1995, he’d played in six NBA Finals. Been an All-Star. Been traded. Traveled with and teased by Bird. Tangled with and taunted by Michael Jordan. He was the prankster who became a coach, briefly, and won 70 percent of his games in his first full season. He’d done national TV, too: an analyst who wasn’t partial to his era of ball. He was no in my day type. He often praised modern players and took mythology away from ones he’d traded elbows with. In fact, he once scolded his boss, basketball deity Red Auerbach, at a Christmas party in 1988. He looked around the room and saw his best friend, McHale, limping. He pointed to Bird’s surgically repaired feet. He shook his head and told Auerbach, the sport’s original front-office genius, “I’d trade these guys.”

Pagliuca knew Ainge wouldn’t give him convenient clichés. The ownership group wanted names of elite team-builders. What’s the point of spending all that money if you don’t have a creative visionary making basketball decisions? Ainge promised to help.

When Pagliuca arrived in Phoenix, he saw Ainge waiting for him outside. The owner got into Ainge’s gray Ford Taurus, and as they began to drive, it was clear that their original plan was being tweaked. Pagliuca and Ainge were supposed to meet with a candidate, and the three of them would play golf and talk about the Celtics job. But Ainge wasn’t hurried.

“Let’s drive for a while,” he told Pagliuca. “We’ve got some time. You know, I’ve given a lot of thought to this…”

Ainge was trying to get to a point, and it was that he knew the perfect man for the job that Pagliuca had flown hours to discuss.

Him.

That was his recommendation. He could be the one to go back to Boston, twenty-two years after he first stepped on the court there, to make a series of bold basketball decisions. When he stopped coaching, he and his wife, Michelle, had six kids at home, and he needed to spend more time there. But now three of the six were out of the house, and Michelle was open to the idea of a Boston return.

As for Ainge’s decisions, frankly, many of them might confuse people, in and out of the office. Some people would be confused due to their own assumptions. For example, in Boston, the story naturally could be positioned as a sentimental homecoming. But that wasn’t quite it. He wasn’t invested in the 1980s or in the way the Celtics typically did business, and not even in what Auerbach imagined as the best way to win again. If anything, he was attached to social experiments. He’d do it to his friends all the time with the intention of getting to some pure, objective truth.

He’d take an indefensible position on something he didn’t believe just to see if you’d buy the indefensibility. Because if you did, well, maybe it meant that you could be swayed too easily. Or that you don’t want to argue with him just because he played in the NBA and you didn’t. He certainly wasn’t that guy. Either way, he was always trying to sniff out that personality type because that in itself was an obstacle to improvement.

If he took that job in Boston, there’d have to be some firm principles.

There could be no player or topic protected from analytical scrutiny.

There could be no quick acceptance of so-called basketball truisms without a challenge.

There could be no exasperation or hopelessness about how hard it is to scout unrealized talent, recruit and coach known talent, manage the salary cap, and ultimately win in pro basketball.

That last one is where many NBA executives lose their spirit.

The contemporary player has been scouted since he was a high school freshman, and a general manager must have some sense of who that player projects to be by the time he’s nineteen or twenty. Even so, that player’s motivations might change when given guaranteed millions and international attention. For those who find talent, develop and expertly coach it, the heartbreak is sometimes crass and sudden: The talent might want to play elsewhere, in a better city, for a better team, or leave simply in the name of change. It wasn’t that way in the 1980s for several reasons, and intelligent team-builders understand that they don’t have time to rant about it. Too much looking back will get you fired.

From the outside looking in, Boston was just fine. The Celtics won forty-nine games in the 2001–2002 season and advanced to the Eastern Conference Finals. When Pagliuca made his trip to Phoenix to visit with Ainge, the 2002–2003 Celtics were back in the playoffs again, headed toward the Eastern Conference Semifinals. The fans weren’t asking for a change. The players were content. Things were comfortable.

But Ainge, then forty-four years old, had matured from gamesman to strategist. His TV listeners could hear his discomfort when he analyzed Celtics games. You could see it on screen, underneath the half smile for the benefit of the cameras. Real basketball observers were not fooled; he wasn’t impressed with the Celtics. He didn’t believe that they were anywhere close to winning a championship.

They were stuck: too good to be bad and not good enough to be great. There was only so far they could go as they were, so the trick for Ainge was to do what had never been done in his life. He was to inherit a situation, temporarily make it worse, and then rise from that subterranean point to the top of the industry.

This would be tougher than that magic he pulled in the spring of 1981. Then, he and two future NBA players from BYU were up against six future NBA players from Notre Dame. They trailed by 1 point with eight seconds to play. Ainge got the ball and was on the move fast. He dribbled with his right hand past John Paxson, then went behind his back to elude Kelly Tripucka and another defender. He’d blown up a triple-team in four seconds. He was college basketball’s player of the year and an academic All-American. It was obvious. He was fast but not frantic, smarts blurring perfectly with style and cool urgency. He was in the lane now, with a slow-footed center named Tim Andree in front of him and an athletic six-foot-nine forward, Orlando Woolridge, close by. It took him a second and a half to get there. He had time for one more left-to-right switch, and the right was a beauty: a soft finger roll over Woolridge. Ainge hadn’t been great that game, but it didn’t matter. He dribbled BYU to a win.

Ainge was outnumbered, and Ainge prevailed.

This would be tougher than the fall of 1981. He’d picked the wrong pro sport, baseball, and he knew it. He wasn’t even hitting .200. The best thing he could say about the year was that as a third baseman, he got to stand next to shortstop Alfredo Griffin, who was on his way to being the American League’s Rookie of the Year. At the end of May and the first week and a half of June, his Toronto Blue Jays lost eleven games in a row. Then baseball went on strike. The basketball team that drafted him, the Celtics, had lost ten games combined in all of March, April, and May. Then it won the NBA title. This wasn’t working. He told the Jays that he didn’t want to play baseball anymore and that he’d return their signing bonus money. He thought their soothing words equaled a verbal release from the contract; the Jays disagreed. They took him to court, and the court agreed with them. But he still got out of the contract and joined the Celtics.

Ainge took on an entire baseball franchise, and Ainge somehow prevailed.

This would be tougher, more humbling, than the winter of 1997. He was back in Boston as head coach of the Phoenix Suns. He had a frustrated player, Robert Horry, who wasn’t playing well, and the player took out his frustration on him. Horry threw a towel in the coach’s face as he walked back to the bench. Why do that to him in Boston, of all places? In front of his people? Embarrassing. But less than a week later, Horry was traded, and Ainge remained on the bench.

Ainge didn’t agree with a player, and the player had to leave. How many times does that happen in the NBA?

This task was going to take something new. In the previous ones, he was left with things in his hands, literally and figuratively, and he had to make a good choice. With the basketball. With baseball. With, remarkably, the towel. In Boston, he had to create a winning plan and then sell it to groups with competing agendas: players, coaches, fans, media, ownership. Some of the people he’d sell it to knew that, long term, they wouldn’t be around if a championship parade ever were to happen.

Ainge said he was intrigued by the job, and Pagliuca, a man who had presided over multiple billion-dollar deals at his private investment firm, thought he knew what that meant: Ainge really wanted the job. Pags, as everyone called him, started thinking about how excited his ownership group would be with this development. Pags, Ainge, and the would-be candidate played golf for five hours that day, and then it was time for two of them to think about reshaping the Celtics.

When he was a gamesman in his twenties, Ainge played with teammates who were known as the Big Three. As a strategist in his forties, his mission was to find the updated version of it. Pags and the owners liked Ainge’s chances because of the way he blended the old and new eras of basketball. They soon found out, as they negotiated a contract with him, that he had a lot more than basketball instincts. They were composed dealmakers, and so was he. And he was using his skills on them.

The owners wanted his first-year salary to be $2 million. Ainge said it should be $3 million. The owners kept talking with him over the next two weeks and going up incrementally—$2.1 million, $2.3 million, $2.5 million. Ainge had something else in mind, and he was determined to get it. He wasn’t trying to be the highest-paid team-builder in the NBA or get to a number that someone could proudly leak to the media. He didn’t care about any of that. This really was about him as an evaluator and negotiator. This was their first opportunity to see him work up close, to see how he placed a value on something—in this case, himself—and how he got the result he wanted.

As they negotiated with him over two weeks, they noticed what was happening. Pags and Grousbeck were venture capitalists, a position that Grousbeck summed up as “finding people to believe in and bet on.” They’d found one, and he was already at work. Ainge remained firm and patient with them, yet the numbers from their side continued to rise: $2.6 million, $2.7 million, $2.8 million…

Auerbach, then eighty-five years old, had already told the new owners that Ainge was lucky, and the wise man winked when he said it. He knew that you could create a mess for Ainge, and somehow he’d find a way to sort it out and make it better.

That was his task in Boston. Pags and Grousbeck had negotiated with him, and he’d finally accepted their final offer to take the job. His first-year salary was $3 million.

CHAPTER ONE

IT’S A NEW GAME

Wyc Grousbeck stood outside the gorgeous townhouse on the Upper East Side of Manhattan and took a breath. He’d been in and closed dozens of million-dollar meetings before, but none like this one in the summer of 2002.

In a few seconds, he planned to enter the building, go to the second floor, shake hands with a man he’d never met, and ask him to sell the Boston Celtics. And the Celtics weren’t for sale.

None of that made him nervous.

He was thinking more about his life. He had degrees from Princeton, Michigan, and Stanford. He’d graduated from law and business school. As a venture capitalist, he’d invested in software and biotech in Silicon Valley and made a lot of money, enough of it to be taken seriously in this meeting. All those things were a part of him, but they weren’t what made him feel most alive.

He was at his authentic peak when connected to team sports, just like he’d been as a college rower with his championship crew. He’d searched nearly twenty years for an echo of that, and now at forty-one years old, he was convinced that this would be the last of Boston’s professional teams to sell in his lifetime.

He was a Celtics fan from Worcester, Massachusetts, so he knew about the team’s legends and history. He didn’t know much about the owner, Paul Gaston. He had two dealmakers from Boston set up a meeting at Gaston’s office in New York. Before that introduction, Grousbeck looked up the publicly traded franchise’s income statement and got an idea. The Celtics hadn’t been to the NBA Finals in fifteen years, and they’d ended the 1990s with seven consecutive losing seasons, but they still made money. He’d factor that into the big offer he planned to make for the team.

Things moved faster than he expected when he met Gaston. He’d gone over numbers in his head, with a ceiling of what he couldn’t exceed. He’d rehearsed how it would go, and in his vision, things were more formal. In reality, he was barely in the office, just after the pleasantries, when Gaston got right to the point.

“Why are we here?” he asked.

“I’d like to buy the Celtics,” Grousbeck replied.

“But they’re not for sale.”

“Well, there must be a number, a crazy number, that you’d sell them for.”

Gaston’s family had owned the team since 1983. It was theirs for the franchise’s fifteenth and sixteenth championship seasons, in 1984 and 1986. It was theirs for the lean years, too. Gaston didn’t live in Boston, and he’d been to only a handful of his own team’s games in the previous three years. This just might be his time to cash out.

“There is a crazy number,” he said. “It’s $360 million.”

Grousbeck couldn’t believe it. It was as if Gaston was in his head. That was exactly his maximum figure.

When he saw that income statement with its numbers, slim but still positive, he’d put together his strategy then. He thought he could offer $360 million if necessary, borrow half of it, and pay it off with the team’s profits. It would support some debt, and it would be similar to paying a mortgage.

Yes, that was one half of the plan.

The other?

He’d have to raise it with investors in Boston, and he’d have to do it quickly. He’d also have to ask those investors, who were trained not to make emotional financial decisions, to do just that. Not to mention the crazy number—it really was insane. It was $75 million more than the Dallas Mavericks had sold for two years earlier, and they had their own arena. The Celtics were arena tenants.

There was no credible comp for what Grousbeck was about to say and do.

“If I pay you $360 million, you’ll give me the Celtics?”

Gaston hesitated briefly. Then he nodded. Grousbeck had already decided that he wouldn’t negotiate for a better deal. He wouldn’t suggest a knockdown by $10 or $15 million. The Celtics were right here in his grasp, in New York City. If he screwed this up, if Gaston changed his mind and auctioned off the Celtics, he’d be out of his element. He’d never win an investment-bank auction. He had to do this now. He had a joke in his head: If I’d gone to Harvard Business School, I’d still be doing the math on this. But I went to Stanford, so I’m just going to fucking do it.

He smiled and extended his hand.

“You’ve got a deal.”

The meeting had been intense, if short—no more than twenty minutes. After the rush of it was over, and after Grousbeck laughed at himself for violating every principle taught in business school, it started to sink in. He’d agreed to purchase the Celtics for a record price, and he needed a monied team of investors to help him make it official. He had a commitment from his father, Irving, cofounder of Continental Cablevision and also a business professor. He needed his father’s contribution and the contributions of, roughly, ten to twenty others. If he asked everyone to contribute $20 million, it would be ten. If the ask was $10 million per, he needed twenty. His first surprise on the fundraising trail: His projection of needing to raise $180 million was off; the actual number was closer to $200 million.

As he searched for people who would, as he put it, “be in because it’s about Banner 17 and not a 17 percent return on your money,” his wife thought of someone who could partner with him. His name was Steve Pagliuca, also known as Pags.

“He must be some basketball freak,” Corrine Grousbeck reasoned. “He’s got a basketball court in his house.”

She was right. Pags was the father of four, and he’d installed the home gym for his basketball-playing kids and himself. Pags knew Grousbeck, but not well. They lived in the same Boston suburb, Weston, and their daughters, Stephanie Pagliuca and Kelsey Grousbeck, were seventh-grade classmates.

Pags played in college, on the freshman team at Duke. He’d never gotten over ball, even after going through Harvard Business School and working at Bain Capital, a global investment firm. When Grousbeck initially called with a request to invest, Pags was in his office and smiled at his desk. When another call came a week later, with an offer for Pags to be a co-owner, he showed up at Grousbeck’s house, beaming and wearing Celtics gear.

Then he looked at those income statements and had a thought that he tried to quiet: How can somebody pay $360 million for something that has declining attendance and hardly makes any money? It doesn’t make any sense to me.

He was in anyway.

Soon after agreeing to partner with Grousbeck, the scrutiny of NBA life became real to him. In late September, he and Grousbeck walked into a packed press conference at the Celtics’ practice facility for the sale announcement. Pags had negotiated bigger deals than this one. At Bain, they’d bought Domino’s as a private company, taken it public, and watched it become a giant. They’d founded Staples as a venture capitalist company, and it became huge, too. Yet those deals didn’t draw a crowd like this.

Everyone was paying attention to what they did and said, including a man in the balcony who was staring at them intently. He was Jim O’Brien, set to enter his second full season as the Celtics’ head coach. Grousbeck and Pags made eye contact with him and gave him a wave, and the stare became a glare.

They had a problem. No one had told O’Brien about this. And since they had just been introduced as the owners—even though they were far from the money target—they’d eventually be the ones to explain to O’Brien what this meant for him and everyone else on the basketball side of the business.

In a lot of ways, O’Brien had saved Paul Gaston’s Celtics. He’d taken over as head coach after Rick Pitino, who had been installed as a franchise savior in 1997, walked away from the job in January 2001. Pitino was a complicated mix of brilliance, generosity, intensity, and, most notoriously, impatience.

Everywhere he went in his coaching career, his teams delivered more than anyone expected. He led a Providence College team with no first-round NBA prospects to the 1987 Final Four. His 1996 University of Kentucky team, stacked with six first-rounders, won the national title. But even that came with something extra: a twenty-seven-game winning streak. One of those high draft picks from Kentucky, Antoine Walker, was selected by the Celtics one year ahead of Pitino’s arrival.

When Pitino got to Boston, he planned to surround second-year star Walker with talent and then win games fast. He got the city’s attention in his first game, a win over Michael Jordan’s Bulls, and then toasted with the city afterward. He went to a sports bar, the Fours, across the street from the arena and savored every sip of victory. He coached the Celtics to a twenty-one-win improvement in his first year, but they still had more losses than wins, and the slow build toward contention made him miserable.

He wanted quick turnarounds with everything, including physical appearances. He was so obsessed with having well-conditioned players that he raised the stakes off the court. In Boston, he was the weight watcher who required members of his staff to reduce their size. The first general manager he hired, Chris Wallace, got a letter from Pitino, and the message was simple: drop weight. Wallace lost fifty-three pounds. Pitino rode him relentlessly but then bought him a $3,000 suit from a high-end boutique, Louis Boston, at the end of the journey.

Pitino was generous: He once endorsed a $25,000 check he’d received from a speaking engagement and dropped it into an offering basket. Saint Patrick’s Church in Natick needed funds to help retired nuns and priests. The request happened to be made on a morning when Pitino had slipped into Mass there, not far from his house, before going to work.

Pitino was insecure and offbeat: When he took the job in Boston, one of his conditions was being named team president, a title that Red Auerbach always had. While Pitino had an eye for talented coaching and support staff, with his hiring of O’Brien, Wallace, and Frank Vogel, he also relied on the other Red. He was a high school home ec teacher known as Jersey Red, who cooked for Pitino when he was a college student. Jersey Red, a Pitino sycophant, was more privy to basketball decisions than Auerbach. He was so much a part of Pitino’s inner circle that he traveled on the team plane, shared staff members’ hotel rooms, and occupied a seat in the draft room.

The Celtics’ atmosphere was wild and unpredictable. It could have derailed if the steady O’Brien hadn’t stabilized things in 2001. He earned the trust of the team’s two best players, Walker and Paul Pierce, and they immediately responded to his hands-off approach. In fact, “hands off” had become the organizational mantra, with everyone taking ownership of their own plots. Wallace and Leo Papile handled basketball operations, O’Brien coached, and Walker and Pierce called the shots—lots of them—on the court.

That’s why Grousbeck and Pags got that glare. No one just dropped in like this. Who in the hell were these guys? There was already an undercurrent of resistance, and they hadn’t done anything yet.

Gaston wasn’t an owner who hovered, so the franchise often ran itself. When Wallace made a controversial trade two months earlier for former All-Star Vin Baker, Gaston didn’t stop by the office or call for an exhaustive review. As it was, Baker had four years and $50 million remaining on his contract, and his game was in decline. It was an open secret around the league that Baker had a drinking problem, although not many knew the extent of it. The trade was a mistake, on multiple levels, and it wouldn’t be long before the new Celtics owners would ask questions about why it was made.

In their day jobs, Grousbeck and Pags craved precise information and details. The Celtics’ way of doing business in every corner of the organization was about to change.

As November approached, Grousbeck and Pags still didn’t have the money they needed to satisfy Gaston’s terms. He’d given them until the end of December, so they needed to continue meeting with investors. It was what they spent most of their time doing. There was the pressure of the deadline and the pressure of getting into a business that they didn’t know well enough.

Fortunately for them, New England was populated with wealthy businesspeople whose love for the Celtics rivaled their love of business. Bob Epstein, cofounder of the Abbey Group, a high-end real estate company, was one of those people. He grew up in Newton, a quick Green Line trip away from Boston Garden. As a kid, he’d played basketball constantly and once had a brief conversation with Bob Cousy; he considered that chat a highlight of his childhood. But that was years ago. In 2002, he knew better than to put a lot of financial faith in a pro sports team. One of his friends warned him, “Forget everything you know about business when you get involved in pro sports.”

It didn’t matter. It was the Celtics, and he’d dreamed of owning them for years. Once, in his thirties, he thought of making an offer for them and soon realized he and his group were in over their heads. He comforted himself after that with his own mission statement: I buy real estate; I don’t buy companies. And then Grousbeck called, looking for a second co-owner. He’d never said no to the Celtics in his life, and he wasn’t going to do it now. He was in.

One Friday afternoon, it became obvious that Grousbeck felt the enormity of what was at stake. He was agitated. He had a Monday-morning meeting with even more investors, and he wanted to be sure he could answer any questions they had. But he knew he was deficient in a key area. Surrounded by members of the consulting group the Celtics hired, he said aloud, “You know, I don’t understand the salary cap well enough yet. I just need to know. What can we spend, and what can’t we spend? What kind of players can we get? I just need to know more.”