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CELTICS' STOCKHOLDERS NOT GETTING RICH OFF THE GREEN?
Published April 28, 1995
Partners Don Gaston, Alan Cohen and Paul Dupee together have made $1.8M a year in management fees from the Boston Celtics Limited Partnership, but for other investors the team has been "far less rewarding," according to the current issue of FINANCIAL WORLD. FW's Ronald Fink reviews the stock, "the purest play on professional sports in the U.S.," and finds that price appreciation since the IPO has been roughly 2% a year. With dividend reinvestment, annual returns improve to 12-13% a year -- "but the dividends are likely to be slashed." The reasons for the disappointing track record: The IPO price of $17.50 was too high; the Celtics' deal for a local TV station was a good one for partners, but bad for investors; and, the fact that master limited partnerships (MLPs) are off-limits to pension fund investors. Fink notes that the team has about $170M in cash after the sale of the TV station, with one possible use being a purchase of the Red Sox. But with the Celtics set to lose their MLP tax break on earnings in '97, the general partners may look to buy up investors' shares "at a discount." That could change if a bill backed by Sen. Finance Committee Chairman Bob Packwood extending the MLPs' current tax status is passed (FINANCIAL WORLD, 5/9 issue).