With billions of dollars in capital that were not spent on Chelsea sitting on the sidelines, the soft-spoken Pagliuca exudes “when, not if” energy about building a network of European teams.
“There’s opportunities out there, because COVID kind of devastated a lot of these leagues and a lot of teams need capital, and they like capital with experience,” said Pagliuca. “So I think we’re even stronger now having had Atalanta, because we have direct soccer experience. Before, we just had the Celtic experience.”
The 67-year-old Pagliuca spoke from his Bain Capital corner office in the upper reaches of the John Hancock tower. Celtics memorabilia covers most of the interior walls and surfaces, though an enlarged black-and-white photo of his grandfather working in a New York City shoe factory in the 1930s takes up prime real estate above a couch.
The outer two walls of floor-to-ceiling windows offer a breathtaking 270-degree view, with sweeping vistas to the left and right that appear to show the entire eastern third of Massachusetts. Look straight ahead from Pagliuca’s desk and you see downtown Boston, with Logan Airport’s west-east runway leading the eye straight to the Atlantic Ocean on the horizon.
Europe is where Pagliuca’s vision is trained now, a shift from his prior focus on North America.
Basketball is his first love
During the NHL lockout in 2005, two years after he joined forces with Wyc Grousbeck to buy the Celtics and became their managing general partner and alternate governor, Pagliuca led a partnership that made a pitch to NHL owners to buy the entire league for more than $3 billion.
A majority of the owners, including the Bruins’ Jeremy Jacobs, said no thanks.
Four years later, a deal to purchase the NFL’s Jacksonville Jaguars fell apart when the league cited a rule that would have required Pagliuca to divest from the Celtics. Pagliuca said no thanks.
Basketball is Pagliuca’s first love. He played freshman basketball at Duke (two of his sons played varsity there, the other at Amherst), and he parlayed his success in the private equity world into the wildly successful Celtics investment.
The $360 million paid by Grousbeck, Pagliuca, and their partners in 2003 has ballooned into a franchise value of $3.55 billion, according to Forbes, a calculation made prior to the Celtics’ appearance in the NBA Finals this year.
As a Duke student, Pagliuca didn’t get to pick his major. His father and grandfather believed that the next Great Depression was lurking around the corner, and they told him, ”You must major in either how to become a lawyer or an accountant, because those were the only people employed in the Depression,” according to Pagliuca. “So they made me get an accounting degree at Duke. I didn’t really want to get an accounting degree.”
The accounting concentration Pagliuca earned within his management science major worked out fine. He became a CPA and joined an accounting firm that promised to send him abroad, and Pagliuca landed in the Netherlands in 1977. The Dutch national soccer team was a powerhouse, one year from losing its second straight World Cup final.
“I became a soccer fan because the country was soccer crazy,” said Pagliuca, his eyes lighting up at the memory. “They had great teams back then, just iconic teams, and so we were at the edge of our seats. I really, really like soccer.
“But the fact I had no money — I was from a very lower middle-class family and had lots of debt coming out of college — I never dreamed I could buy either a basketball team or a soccer team at the time.”
After graduation, it took Pagliuca 26 years to pull off the basketball team purchase.
The soccer team took 45 years.
The deal in Italy kicks in
Pagliuca’s pursuit of Atalanta began last fall, when the Celtics were still finding their feet under new coach Ime Udoka. The deal wrapped up while they were in the midst of a second-half run that ended with a Game 6 loss to the Warriors in the championship round.
While en route to Italy to attend Atalanta’s second game of the season last weekend, Pagliuca reflected via email his belief that last season will serve as a steppingstone for a better Celtics team.
“Working with Wyc, Rich [Gotham, president], Brad [Stevens, president of basketball operations], and Ime in the bad times in the first half was a wonderful experience and strengthened our partnership even more,” Pagliuca wrote. “It was all positive and brainstorming how we could get better, no finger pointing or blaming. I am very proud to be part of this partnership.
“The players also banded together and had the best second-half performance of an under .500 team in NBA history. We came up two games short of a championship, but the team came together and now wants to win it more than ever. We can’t wait for this season to start!”
During trips to Europe last year, Pagliuca, the co-chairman of Bain Capital, which manages approximately $160 billion in assets, recognized Bain was in competition with another private equity company, CVC, over financing opportunities in soccer, including Italy’s Serie A.
As he explored investments, Pagliuca and his Bain partner Luca Bassi got to know Antonio and Luca Percassi, the father and son who owned and ran Atalanta. The Percassis at first wanted to sell a minority stake in the team but that changed after further conversations with Pagliuca’s group.
“I think it’s really hard to run an Italian team unless you have strong management in Italy,” said Pagliuca. “So it’s kind of a match made in heaven. For me, it’s an iconic franchise and [the Percassis] stay and run the team. They keep 45 percent of it and our group, we have 55 percent. It’s been wonderful so far.”
Atalanta, which finished in eighth place last year, has an up-and-down history, getting relegated to Serie B three times this century. The team has been in Serie A since 2011, and while it has never won the league, three consecutive third-place finishes from 2019-21 earned its first three Champions League appearances.
Luca Percassi, who visited Boston during the Celtics playoff run, appreciated that Pagliuca wanted to keep the same management team. But the club expects Pagliuca to wield his influence to help it improve.
“Steve is an incredibly dynamic and successful businessman with a wealth of knowledge and experience for the sports world and beyond,” Percassi wrote in an email. “With a very accomplished business background and passion for the game, he brings opportunity to that table that otherwise we may not have had access to. He has opened the door to global opportunities to make us a better club. His leadership has elevated our ability to compete on another level.”
In late July, Pagliuca sent Mike Zarren, the Celtics vice president of basketball operations and team counsel, to Bergamo, the northern Italian city just outside of Milan that has been home to Atalanta for 114 years.
The idea was for Zarren to take a peek at the Atalanta operations and start to figure out what, if anything, an American NBA team has to teach an Italian soccer team in any area: training, nutrition, advanced analytics, player development, player acquisition, coaching, and so forth.
“Steve didn’t say, ‘Well, go over there and tell them how to find the next player at Position X’ — that would be crazy, right?” said Zarren. “I don’t want to be purporting to speak for Steve, but he knows that we have, to some extent, developed some expertise in the sports world, and what he’s observed in interacting with Atalanta is that there are a lot of things that are the same across teams.
“We just know stuff at the Celtics. Maybe they know a lot of the same things. But maybe they don’t. So there’s no reason not to share those ideas. We’re not in competition with them.”
A price he wouldn’t meet
The price tag for Atalanta was an estimated $450 million, significantly less than the $5.4 billion it took a group led by Clearlake Capital and Dodgers part-owner Todd Boehly to buy Chelsea.
Five days after the Atalanta sale was announced, Russia invaded Ukraine. That set in motion the Chelsea transaction, with the team’s big-spending Russian oligarch owner Roman Abramovich pressured into a shotgun sale.
Over the course of two months, Pagliuca and a group of partners — including Toronto sports magnate Larry Tanenbaum, ex-Disney head Robert Iger, and Facebook co-founder Eduardo Saverin — survived a winnowing process that reduced a list of dozens of serious suitors to three.
As the competition tightened, the process took on a different tenor.
“When they began this auction, the mantra was, they wanted a great steward, someone who would be involved with the team — that was the No. 1 thing; it wasn’t the price,” said Pagliuca, who made three cross-Atlantic trips trying to seal the deal. “It was when it started. Didn’t end that way.”
With Pagliuca’s group getting the endorsement of a well-known supporters group, John Terry’s True Blues, and the other bidders making their own moves publicized, the auction became “almost like a political campaign,” said Pagliuca, who lost his 2009 Massachusetts Democratic primary bid for Ted Kennedy’s open US Senate seat. “It was intense. It was a political process, and it was kind of like politics at its worst, because they were leaking things out.”
When Pagliuca read negative pieces in the British tabloids about himself, “I assumed it was coming from Boehly, but then he got some bad stuff, too … There was misinformation coming out every day about the different bids.”
In the end, however, there were published reports that the Boehly bid was the only one of the three to meet a late ask from Abramovich for an estimated $500 million more on top of what were roughly equal bids.
“I thought we had the strongest group — that was the impression I had and I thought we were going to win it,” said Pagliuca, adding that he took the loss hard at first.
“Look, I’m in the deal business, so there are plenty of companies I’ve worked on for two years and I’ve lost them — you felt like you were part of the company, but then it’s gone.”
Pagliuca served as chairman of Boston’s ultimately futile bid to host the 2024 Summer Olympics, a cause he still believes was a missed opportunity for the city.
“What you learn in this business is worry or remorse doesn’t do anything,” he said. “You’ve just got to wake up the next day and, you know, refocus. I told my partners and investors we would pay a premium but it would be a fiscally responsible premium. And this was a very large premium.”
One Pagliuca & Co. would not pay.
Not this time.