Sterling Earns Big Profit From Clippers Despite On-Court Woes
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Sterling's Mentality With Clippers
Similar To Real Estate Strategy |
The Clippers are worth an estimated $297M, more than 23 times the $12.7M Owner Donald Sterling paid for the franchise in '81, and Sterling's "huge gain is the direct result of the buy-and-hold strategy that made him rich in real estate," according to Peter Keating of ESPN THE MAGAZINE. Despite their "continually woeful performance" on the court, the Clippers have "turned big profits for Sterling each year" since moving to Staples Center in '99. While the team generates "relatively little money from ticket sales, premium seats and signage, and their overall revenue" of $99M for the '07-08 season was 25th among NBA teams, it is "still far more than they ever made" at L.A. Memorial Sports Arena, their previous home. In addition to "no debt and a fairly low payroll," the Clippers have "low rent, too." AEG President & CEO Tim Leiweke, whose company owns Staples Center, has said that the arena "would make more money from five concerts than from a whole slate of Clippers games." However, in order to "guarantee the certainty of the team's revenue stream," AEG allowed Sterling to renew the lease in '04 for only $1.5M annually. Since moving to Staples, the Clippers have made $140M in profits. In comparison, fellow Staples Center tenant the Lakers have made $322M during the same time period, while the Mavericks lost $137M. Keating writes Sterling runs a "low-risk, sure-reward game," and "who's going to tell him he's wrong?" Meanwhile, NBA VP/Basketball Communications Tim Frank said it would be "premature to have any real take" on former Clippers GM Elgin Baylor's racial discrimination suit against Sterling. When asked to compare the league's "hands-off treatment of Sterling" with heavy fines for Mavericks Owner Mark Cuban, Frank said, "There's a big difference between business decisions and personal attacks." Cuban said, "I like Donald. He plays by his own rules" (ESPN THE MAGAZINE, 6/1 issue).
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