SBD/April 30, 2014/Franchises

Sterling Could Pursue As Much As $1B For Clippers, Or Time-Consuming Litigation Instead

Sterling may choose to litigate in order to keep his claim on the Clippers
NBA Commissioner Adam Silver yesterday indicated he would push for a sale of the Clippers from Donald Sterling as part of Sterling's lifetime ban from the league, and Sterling could sell the franchise for up to $1B, especially if an "auction creates a bidding war," according to analysts cited by Hsu & Pfeifer of the L.A. TIMES. A transaction could "wrap up within a year, if not before the next NBA season starts in November." But Sterling "may choose expensive and time-consuming litigation to keep his claim on the Clippers" (L.A. TIMES, 4/30). In DC, Fahrenthold & Zapotosky cite legal experts as saying that Sterling's best option to keep the team would be "trying to stop a forced sale." Sterling could stop a vote on his ownership status by the NBA's BOG by "persuading enough owners to reject the motion, or -- if that doesn’t work -- by persuading a judge to throw out the owners’ vote." However, a victory by Sterling would only allow him to "keep ownership of a team he couldn't run" (WASHINGTON POST, 4/30). John Marshall Law School sports law professor Cari Grieb said that she expects that Sterling will fight any forced sale because the NBA constitution "allows expulsion of an owner only under circumstances such as gambling, fraud or an inability to fulfill a contractual obligation to the league." She added that Sterling "could file an antitrust lawsuit against the NBA if he was forced to sell the team for what he believed was less than market value" (L.A. TIMES, 4/30). Winston & Strawn attorney Jeffrey Kessler said that Silver's decision to ban Sterling for life "has the effect of a binding-arbitration decision and is enforceable in court." He added that overturning it "could be difficult ... as arbitrations are often only reversed when a losing party can point to fraud or a serious conflict of interest on the part of an arbitrator" (WALL STREET JOURNAL, 4/30).

PROTRACTED BATTLE POSSIBLE: SI.com's Michael McCann wrote under the header, "Sterling, NBA Set For Epic Legal Fight Over Clippers." Some current NBA team owners could have concerns about the fact that neither the team nor Sterling "is in financial trouble." Other concerns could include the notion that the Clippers "are not run in a racist way," a lack of a morals clause and the precedence the move would set (SI.com, 4/29). CBSSPORTS.com's Ken Berger wrote the "months and potentially years ahead could be fraught with injunctions, federal lawsuits and an ugly legal mess that could threaten the healing process the NBA so desperately needs" (CBSSPORTS.com, 4/29). In Sacramento, Ailene Voisin writes stripping an owner of a franchise "is a hefty undertaking" and Sterling "will not go quietly" (SACRAMENTO BEE, 4/30). ESPN's Tony Kornheiser said, "I don't think there's any reason (Sterling) is going to go quietly. He's sued a lot of people before. ... If you're taking away the thing he loves most, the sort of life of being an owner, I think he's going to fight it" ("PTI," ESPN, 4/29). Fox Sports' Bill Reiter said, "This is going to be a long, ugly process." Silver won yesterday "in the court of public opinion, but beating Sterling in an actual court of law, that’s a different question” ("Fox Sports Live," FS1, 4/29). SI.com's Michael Rosenberg wrote Silver "knew Sterling would fight back, and his lawyers and the other owners surely know Sterling has a fighting chance." However, owners "will take their chances, because Sterling is 80 or 81 years old, depending on what source you trust, and they are willing to fight him in the courts until he gives up or dies" (SI.com, 4/29). In Philadelphia, Bob Ford wonders if NBA owners will "really stay in line and strip Sterling of a holding worth $700 million if they think he might prevail and then sting them for monstrous damages" (PHILADELPHIA INQUIRER, 4/30).

THINGS GET MURKY WITH FORCING A SALE: Tulane Sports Law Program Dir Gabe Feldman said a forced sale "is a little bit murkier" from a legal standpoint than the lifetime ban. Feldman: "The question will be whether highly offensive comments made in a private call is reason enough." If at least 23 of the 30 owners vote Sterling out, legal experts said that he "could sue the league, arguing that the other owners conspired in violation of antitrust law to harm his business or overstepped their constitutional authority by kicking him out." But any such lawsuit "would be a gamble for Sterling" as the NBA constitution states that a decision to terminate the ownership of a team "is final and binding and the ousted owner waives any court fight" (N.Y. TIMES, 4/30). TNT's Steve Kerr noted Silver was "adamant" about the other owners supported his efforts to force a sale of the Clippers and said, "The issue will be, legally, can the league force Sterling to sell?" TNT's Marv Albert: “The question could come down to would Sterling sell, and he’s been involved in a lot of litigation. ... You wonder if he’s going to look at that as a challenge or bow out" ("Wizards-Bulls," TNT, 4/29). In DC, Marissa Payne wrote under the header, "How The NBA Can Force Donald Sterling To Sell The Clippers" (WASHINGTONPOST.com, 4/29).

THE PRECEDENT PART: In N.Y., Harvey Araton writes a "risk here is the establishment of precedent." Sterling is not the "only member of this billionaire boys club who has engaged in business practices or personal agendas that could, under certain conditions, ignite widespread scorn and contention" (N.Y. TIMES, 4/30). Also in N.Y., Mike Vaccaro writes Sterling "isn’t the only NBA owner whose private opinions and behaviors made public would cause discomfort at best and outrage at worst." The other 29 "know that," and Sterling "certainly knows that" (N.Y. POST, 4/30). In Boston, Ron Borges asks do you "really believe" Sterling is the "only NBA billionaire with a chute full of dirty laundry hidden somewhere?" And do you "think for a minute" someone like Sterling "wouldn’t use it in a lawsuit to cover his bigoted butt?" Forcing Sterling to sell the team "may not be as easy as it seems today" (BOSTON HERALD, 4/30). YAHOO SPORTS' Dan Wetzel wrote any backlash from owners "concerned that private views could be used to force them to sell valuable assets could cost Silver his job." Still, he "didn't seem to care" yesterday (SPORTS.YAHOO.com, 4/29). ESPN.com's J.A. Adande wrote Silver "put every other owner on notice" with his actions yesterday. Not only is it "up to them to vote Sterling out, but they're also now aware that anything they say, even in private, can and will be held against them" (ESPN.com, 4/29).

DIVERSITY DRIVE: In Detroit, Drew Sharp writes dropping the harsh penalties on Sterling "only becomes a real victory if this results in a concerted effort to racially diversify the ownership ranks" (DETROIT FREE PRESS, 4/30). In Portland, John Canzano writes maybe this "embarrassing and shameful development will cause the commissioner and the league's other owners ... to take a deeper dive when they approve new league ownership" (Portland OREGONIAN, 4/30).
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