SBD/July 23, 2014/Franchises

Sterling Files Another Suit To Block Clippers Sale As Parsons Warns Of "Death Spiral"

Sterling accused his wife, the NBA and Commissioner Adam Silver of fraud
Donald Sterling "opened a third legal front Tuesday in his fight to maintain control of the Clippers, alleging in another lawsuit that he remained the team's rightful owner and demanding" that Shelly Sterling's $2B sale of the team to Steve Ballmer "be blocked," according to Rainey & Fenno of the L.A. TIMES. Also during yesterday's testimony, interim Clippers CEO Dick Parsons said that he feared the team "could fall into a 'death spiral' if fans, sponsors, players and coaches flee should Sterling remain with the team." Parsons said that Clippers coach and Senior VP/Basketball Operations Doc Rivers told him "in at least three conversations that he would probably leave if the team wasn't sold." Parsons: "If Mr. Sterling continues to own the team, he doesn't think he wants to continue as coach." Attorneys for Shelly Sterling "called Parsons to bolster their request that Superior Court Judge Michael Levanas not only validate her takeover of the trust that owns the Clippers but also order that her actions remain in force, regardless of appeals." Donald Sterling's filing yesterday stated that the ongoing probate trial "would resolve only issues about the family trust, and that he still had claims based on his ongoing control of LAC Basketball Club Inc., the corporation that owns the team." Sterling accused his wife, the NBA and Commissioner Adam Silver of "fraud, breach of contract, breach of fiduciary duty and other violations for pushing a sale of the team despite his continuing ownership." The suit "asked for an injunction to block the sale to Ballmer." The NBA declined to comment. The testimony from Parsons "drew the most attention" because he has "kept a low profile." The trial is set to continue today, and Donald Sterling's lawyers "plan to call a psychiatrist who evaluated Sterling." They also may "question Shelly Sterling again" (L.A. TIMES, 7/23).

LANGUAGE OF THE LAWSUIT: Shelly Sterling's attorney Pierce O'Donnell called Donald Sterling's latest lawsuit a "frivolous, last-ditch act of desperation by a delusional, bitter man" who is "obsessed with ruining" the sale of the team. In L.A., Shelburne & Markazi note it "is not known whether the probate-court judge will seek to consolidate Tuesday's lawsuit with the current trial" (ESPNLA.com, 7/23). Donald Sterling's new complaint reads in part, "(Shelly) is attempting to usurp (Donald's) interest in LAC by unilaterally selling LAC's shares to Ballmer. (Shelly's) unilateral attempt at the sale of LAC shares to Ballmer is without the consent of the sole shareholder of record (Donald) or the board of directors of LAC. The sole shareholder of record was denied the right to sell his shares. As the sole shareholder, (Donald) retained the right to withhold his shares and refused to sell the team to Ballmer" (USA TODAY, 7/23). In California, Kelly Puente notes closing arguments "are set for Monday" (ORANGE COUNTY REGISTER, 7/23).

THE "DEATH SPIRAL" DETAILED: Parsons said that while the Clippers' ticket revenue was "essentially the same as the past season's, many of the team's 20 or so sponsors have made it clear they want to continue a relationship with the team only if Sterling is replaced as owner." Parsons said sponsors such as Mandalay Bay and Kia Motors are "sitting at the edge of the pool and don't want to go in the water unless there is resolution" on the ownership situation. But he added that only six or seven sponsors "had explicitly asked to be disassociated" from the team following Donald Sterling's controversial comments. ESPN L.A.'s Shelburne reported the Clippers "gave the remaining two-thirds 'a holiday' before they felt compelled to disassociate from the franchise." Parsons: "If none of your sponsors want to sponsor you, your coach doesn't want to coach you and players don't want to play for you, what do you have?" Parsons and Bank of America's Anwar Zakkour testified that the $2B price Ballmer agreed to pay for the franchise "was much higher than the team's revenues justified under the most aggressive and optimistic predictions." Zakkour, who helped conduct the sale, added, "Whether you want to call it a slam dunk or a home run, none of us believed we would get to the $2 billion." Zakkour warned that if the sale "fell through and the NBA restarted termination proceedings, there was significant risk the franchise would sell for far less" (ESPNLA.com, 7/22). Parsons testified that ticket sales are "holding steady thanks to excitement over last season, but that fans could still revolt." He added that he has "seen emails from fans saying they don’t want any of their money going to the Sterling family" (N.Y. DAILY NEWS, 7/23).

WHAT'S UP, DOC?
ESPN L.A.' s Markazi wrote Rivers "isn’t just the team’s coach and president; he’s its heart and soul." Rivers is the "calming presence that kept the team afloat when it was rocked by the tsunami that was the Sterling controversy during the playoffs." He "not only did his best to shield his players from outside distractions, but he also put his arms around tearful employees and told everyone in the organization -- players to receptionists -- to call him with any problems." Rivers "didn’t come to Los Angeles to be the team’s leader, but when it needed one, he stepped up to the challenge" (ESPNLA.com, 7/22).
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