What is next for the Boston Celtics if the NBA Board of Governors approve the team’s sale to a group lead by William Chisholm? Below is an excerpt of Article 5 from the National Basketball Association’s Constitution and By-Laws dated June 2024 that outlines the exact process for transferring ownership of an NBA team: TRANSFER OF MEMBERSHIPNo Membership, nor any direct, indirect, contingent, orconvertible interest therein (regardless of the size of the interest), may besold, pledged, hypothecated, assigned, or otherwise transferred orencumbered (each a “transfer”) in whole or in part, directly or indirectly,except in accordance with and subject to the following provisions of thisArticle 5:(a) An application requesting approval of a transfer mustbe made in writing to the Commissioner by the applicable Member (onbehalf of the transferring Owner) promptly after an agreement withrespect to such transfer has been reached. The Commissioner may waivethis requirement and accept an application directly from a ProspectiveOwner that has a security interest previously approved by theAssociation in the interest proposed to be transferred or when, in theCommissioner’s sole judgment, the best interests of the Associationwould be served.(b) Upon receipt of such application, the Commissionershall have the right to require from the transferring Owner, and thetransferring Owner shall furnish or cause the proposed transferee tofurnish to the Commissioner, such information as the Commissionershall request about the transfer, the proposed transferee and eachProspective Owner, any persons or Entities with which the transferee orany Prospective Owner is associated or affiliated, and such other matters,whether or not confidential, as the Commissioner shall deem relevant inhis sole discretion. The transferring Owner and its proposed transfereeand each of its Prospective Owners shall also execute, deliver, andperform, and shall cause such other parties (including their respectivecontrolled subsidiaries and affiliates) as the Commissioner shall direct toexecute, deliver, and perform, such documents in such forms as theCommissioner shall prescribe. It shall be the obligation of thetransferring Owner to ensure that the Commissioner timely receives allinformation that the Commissioner may request under this Article 5.(c) Any agreement to transfer an interest in a Member orMembership, and any application requesting approval of such transfer,shall include a binding agreement of the proposed transferee and each ofits Prospective Owners stating that if the transfer is approved by theAssociation, the proposed transferee and each of its Prospective Owners(and each of their respective controlled subsidiaries and affiliates) shallbe bound by the Constitution and By-Laws, rules, regulations,resolutions, and agreements of the Association, and any modifications oramendments thereof.(d) An application requesting approval of a transfer of aninterest in a Member or Membership equal to or larger than ten percent(10%), or such smaller interest as may result in a change of control oversuch Member or Membership, shall be accompanied by a certified checkfrom the transferring Owner to the order of the Association in the sumof $50,000 to defray all expenses (including, but not limited to,attorneys’ fees) incurred by the Association in investigating, reviewing,and processing the application. Following the disposition of anyapplication, the Association shall repay to the applicant the sum of$50,000, less all expenses incurred in connection with the application. Ifthese expenses exceed $50,000, the additional expenses shall be assessedagainst the Member and promptly paid to the Association.(e) With respect to an application requesting approval ofa transfer of an interest in a Member or Membership of less than tenpercent (10%) (other than a transfer that would result in a change ofcontrol over such Member or Membership), all expenses incurred by theAssociation in investigating, reviewing, and processing the application(including, but not limited to, attorneys’ fees) shall be assessed againstthe Member and promptly paid to the Association.(f) Upon receipt of an application requesting approval ofa transfer, the Commissioner shall conduct such investigation as theCommissioner deems appropriate. Upon the completion of theinvestigation, the Commissioner shall submit the proposed transfer to theMembers for approval, together with all information in respect theretothat the Commissioner deems pertinent. A transfer shall only becomeeffective if approved by the affirmative vote of not less than three-fourths(3/4) of all Governors at a meeting duly called for such purpose.(g) The Commissioner shall appoint a committee to assisthim in matters relating to proposed transfers of Membership interests(for purposes of this Article 5, the “Committee”).(h) Notwithstanding the provisions of Article 5(f):(i) If a proposed transfer involves (x) a larger thanfive percent (5%) but smaller than ten percent (10%) interestin a Member or Membership (including an interest subject toArticle 5(h)(iii)), or (y) the transfer of a Membership or aninterest in a Member or Membership to a different Entityowned by substantially the same Owners in substantially thesame proportions (provided that the aggregate direct andindirect changes in ownership, if any, do not equal or exceedten percent (10%)), the Committee shall have the power, inits sole discretion, to approve such proposed transfer withoutsubmitting it to the Members for approval under Article 5(f)above, unless (A) the transfer would result in any person orEntity (or group of persons or Entities acting in concert) thathas not been approved by the Members directly or indirectlyowning an interest of ten percent (10%) or larger in aMember or Membership, or (B) the effect of such proposedtransfer is or may be to change the ownership of effectivecontrol of such Member or Membership.(ii) If a proposed transfer involves (x) a five percent(5%) or smaller interest in a Member or Membership, or(y) the transfer of a Membership or an interest in a Memberor Membership to a different Entity owned by substantiallythe same Owners in substantially the same proportions(provided that the aggregate direct and indirect changes inownership, if any, do not exceed five percent (5%)), theCommissioner shall have the power, in his sole discretion, toapprove such proposed transfer without submitting it to theMembers for approval under Article 5(f) above, unless(A) the transfer would result in any person or Entity (orgroup of persons or Entities acting in concert) that has notbeen approved by the Committee or the Members directly orindirectly owning an interest of larger than five percent (5%)but smaller than ten percent (10%) in a Member orMembership, (B) the transfer would result in any person orEntity (or group of persons or Entities acting in concert) thathas not been approved by the Members directly or indirectlyowning an interest of ten percent (10%) or larger in aMember or Membership, or (C) the effect of such proposedtransfer is or may be to change the ownership of effectivecontrol of such Member or Membership.(iii) This Article 5 shall not be applicable to aproposed transfer of any interest in a Member or otherOwner in which the number of individuals and Entitiesdirectly or indirectly owning interests prior to such proposedtransaction exceeds five hundred (500), unless (w) theinterest proposed to be transferred represents a direct orindirect interest of five percent (5%) or larger in a Memberor Membership, (x) the transfer would result in any personor Entity (or group of persons or Entities acting in concert)that has not been approved by the Committee or theMembers directly or indirectly owning an interest of at leastfive percent (5%) but less than ten percent (10%) in aMember or Membership, (y) the transfer would result in anyperson or Entity (or group of persons or Entities acting inconcert) that has not been approved by the Members directlyor indirectly owning an interest of ten percent (10%) orlarger in a Member or Membership, or (z) the effect of suchproposed transaction is or may be to change the ownershipof effective control of such Member or Membership.(iv) If a proposed transfer is in the form of a pledge,lien or hypothecation of a Membership or an interest in aMember or Membership in connection with the incurrenceof indebtedness that does not exceed the then-currentAssociation limits on secured indebtedness of a Member, theCommissioner shall have the power, in his sole discretion, toapprove such proposed transfer without submitting it to theMembers for approval under Article 5(f) above, upon andsubject to such conditions as the Commissioner shalldetermine.(i) Any addition, replacement, or substitution of a trusteeor a beneficiary of a trust that is an Owner shall be deemed a transfer ofthe entire interest owned by that trust, unless the Commissioner shalldetermine that the interest to be transferred is only a portion of theinterest owned by the trust (in which case the interest deemed to betransferred for purposes of this Article 5 shall be such portion).(j) Absent a compelling reason to the contrary asdetermined by the Board of Governors, it shall be the policy of theAssociation not to approve a proposed transfer of an interest in a Memberor Membership to (i) any governmental or quasi-governmental authority,agency, or instrumentality, or (ii) any person or Entity not satisfying anyminimum ownership criteria that may be established from time to timeby the Commissioner, the Committee, or the Board of Governors.(k) Any violation of the provisions of this Article 5 shallconstitute a violation of Article 13(b) (Article 13: Termination of Ownership or Membership: (b) Transfer or attempt to transfer a Membership or an interest in a Member without complying with the provisions of Article 5.)
What is next for the Boston Celtics if the NBA Board of Governors approve the team’s sale to a group lead by William Chisholm?
Below is an excerpt of Article 5 from the National Basketball Association’s Constitution and By-Laws dated June 2024 that outlines the exact process for transferring ownership of an NBA team:
TRANSFER OF MEMBERSHIP
No Membership, nor any direct, indirect, contingent, or
convertible interest therein (regardless of the size of the interest), may be
sold, pledged, hypothecated, assigned, or otherwise transferred or
encumbered (each a “transfer”) in whole or in part, directly or indirectly,
except in accordance with and subject to the following provisions of this
Article 5:
(a) An application requesting approval of a transfer must
be made in writing to the Commissioner by the applicable Member (on
behalf of the transferring Owner) promptly after an agreement with
respect to such transfer has been reached. The Commissioner may waive
this requirement and accept an application directly from a Prospective
Owner that has a security interest previously approved by the
Association in the interest proposed to be transferred or when, in the
Commissioner’s sole judgment, the best interests of the Association
would be served.
(b) Upon receipt of such application, the Commissioner
shall have the right to require from the transferring Owner, and the
transferring Owner shall furnish or cause the proposed transferee to
furnish to the Commissioner, such information as the Commissioner
shall request about the transfer, the proposed transferee and each
Prospective Owner, any persons or Entities with which the transferee or
any Prospective Owner is associated or affiliated, and such other matters,
whether or not confidential, as the Commissioner shall deem relevant in
his sole discretion. The transferring Owner and its proposed transferee
and each of its Prospective Owners shall also execute, deliver, and
perform, and shall cause such other parties (including their respective
controlled subsidiaries and affiliates) as the Commissioner shall direct to
execute, deliver, and perform, such documents in such forms as the
Commissioner shall prescribe. It shall be the obligation of the
transferring Owner to ensure that the Commissioner timely receives all
information that the Commissioner may request under this Article 5.
(c) Any agreement to transfer an interest in a Member or
Membership, and any application requesting approval of such transfer,
shall include a binding agreement of the proposed transferee and each of
its Prospective Owners stating that if the transfer is approved by the
Association, the proposed transferee and each of its Prospective Owners
(and each of their respective controlled subsidiaries and affiliates) shall
be bound by the Constitution and By-Laws, rules, regulations,
resolutions, and agreements of the Association, and any modifications or
amendments thereof.
(d) An application requesting approval of a transfer of an
interest in a Member or Membership equal to or larger than ten percent
(10%), or such smaller interest as may result in a change of control over
such Member or Membership, shall be accompanied by a certified check
from the transferring Owner to the order of the Association in the sum
of $50,000 to defray all expenses (including, but not limited to,
attorneys’ fees) incurred by the Association in investigating, reviewing,
and processing the application. Following the disposition of any
application, the Association shall repay to the applicant the sum of
$50,000, less all expenses incurred in connection with the application. If
these expenses exceed $50,000, the additional expenses shall be assessed
against the Member and promptly paid to the Association.
(e) With respect to an application requesting approval of
a transfer of an interest in a Member or Membership of less than ten
percent (10%) (other than a transfer that would result in a change of
control over such Member or Membership), all expenses incurred by the
Association in investigating, reviewing, and processing the application
(including, but not limited to, attorneys’ fees) shall be assessed against
the Member and promptly paid to the Association.
(f) Upon receipt of an application requesting approval of
a transfer, the Commissioner shall conduct such investigation as the
Commissioner deems appropriate. Upon the completion of the
investigation, the Commissioner shall submit the proposed transfer to the
Members for approval, together with all information in respect thereto
that the Commissioner deems pertinent. A transfer shall only become
effective if approved by the affirmative vote of not less than three-fourths
(3/4) of all Governors at a meeting duly called for such purpose.
(g) The Commissioner shall appoint a committee to assist
him in matters relating to proposed transfers of Membership interests
(for purposes of this Article 5, the “Committee”).
(h) Notwithstanding the provisions of Article 5(f):
(i) If a proposed transfer involves (x) a larger than
five percent (5%) but smaller than ten percent (10%) interest
in a Member or Membership (including an interest subject to
Article 5(h)(iii)), or (y) the transfer of a Membership or an
interest in a Member or Membership to a different Entity
owned by substantially the same Owners in substantially the
same proportions (provided that the aggregate direct and
indirect changes in ownership, if any, do not equal or exceed
ten percent (10%)), the Committee shall have the power, in
its sole discretion, to approve such proposed transfer without
submitting it to the Members for approval under Article 5(f)
above, unless (A) the transfer would result in any person or
Entity (or group of persons or Entities acting in concert) that
has not been approved by the Members directly or indirectly
owning an interest of ten percent (10%) or larger in a
Member or Membership, or (B) the effect of such proposed
transfer is or may be to change the ownership of effective
control of such Member or Membership.
(ii) If a proposed transfer involves (x) a five percent
(5%) or smaller interest in a Member or Membership, or
(y) the transfer of a Membership or an interest in a Member
or Membership to a different Entity owned by substantially
the same Owners in substantially the same proportions
(provided that the aggregate direct and indirect changes in
ownership, if any, do not exceed five percent (5%)), the
Commissioner shall have the power, in his sole discretion, to
approve such proposed transfer without submitting it to the
Members for approval under Article 5(f) above, unless
(A) the transfer would result in any person or Entity (or
group of persons or Entities acting in concert) that has not
been approved by the Committee or the Members directly or
indirectly owning an interest of larger than five percent (5%)
but smaller than ten percent (10%) in a Member or
Membership, (B) the transfer would result in any person or
Entity (or group of persons or Entities acting in concert) that
has not been approved by the Members directly or indirectly
owning an interest of ten percent (10%) or larger in a
Member or Membership, or (C) the effect of such proposed
transfer is or may be to change the ownership of effective
control of such Member or Membership.
(iii) This Article 5 shall not be applicable to a
proposed transfer of any interest in a Member or other
Owner in which the number of individuals and Entities
directly or indirectly owning interests prior to such proposed
transaction exceeds five hundred (500), unless (w) the
interest proposed to be transferred represents a direct or
indirect interest of five percent (5%) or larger in a Member
or Membership, (x) the transfer would result in any person
or Entity (or group of persons or Entities acting in concert)
that has not been approved by the Committee or the
Members directly or indirectly owning an interest of at least
five percent (5%) but less than ten percent (10%) in a
Member or Membership, (y) the transfer would result in any
person or Entity (or group of persons or Entities acting in
concert) that has not been approved by the Members directly
or indirectly owning an interest of ten percent (10%) or
larger in a Member or Membership, or (z) the effect of such
proposed transaction is or may be to change the ownership
of effective control of such Member or Membership.
(iv) If a proposed transfer is in the form of a pledge,
lien or hypothecation of a Membership or an interest in a
Member or Membership in connection with the incurrence
of indebtedness that does not exceed the then-current
Association limits on secured indebtedness of a Member, the
Commissioner shall have the power, in his sole discretion, to
approve such proposed transfer without submitting it to the
Members for approval under Article 5(f) above, upon and
subject to such conditions as the Commissioner shall
determine.
(i) Any addition, replacement, or substitution of a trustee
or a beneficiary of a trust that is an Owner shall be deemed a transfer of
the entire interest owned by that trust, unless the Commissioner shall
determine that the interest to be transferred is only a portion of the
interest owned by the trust (in which case the interest deemed to be
transferred for purposes of this Article 5 shall be such portion).
(j) Absent a compelling reason to the contrary as
determined by the Board of Governors, it shall be the policy of the
Association not to approve a proposed transfer of an interest in a Member
or Membership to (i) any governmental or quasi-governmental authority,
agency, or instrumentality, or (ii) any person or Entity not satisfying any
minimum ownership criteria that may be established from time to time
by the Commissioner, the Committee, or the Board of Governors.
(k) Any violation of the provisions of this Article 5 shall
constitute a violation of Article 13(b)
(Article 13: Termination of Ownership or Membership: (b) Transfer or attempt to transfer a Membership or an interest in a Member without complying with the provisions of Article 5.)
