The sale of the Los Angeles Clippers has moved at a rapid pace. Shelly Sterling, Clippers’ owner Donald Sterling’s wife, announced on Thursday May 29, 2014 that she signed a binding contract for the sale of the team by the Sterling Family Trust to Steve Ballmer, former CEO of Microsoft. This is a done deal according to the Los Angeles Times. And the sale blows the “athletes are overpaid” argument out of the water.
It took Donald Sterling four days to get banned from the NBA and it took his wife about four days to sell the team.
Speaking of things happening fast, it is worth noting that the Clippers were up 101-88 with four minutes to go and 104-97 with 49 seconds on the clock versus the Oklahoma City Thunder before finally bowing out. Ballmer submitted the winning bid for a ridiculous $2 billion.
Buying the Clippers will place Ballmer in position to influence other NBA owners about expansion. There are several mixed signals here of course; Shelly Sterling was authorized by Donald Sterling to sale the team and apparently has done so.
Some might think: how is a franchise that has never advanced to the Western Conference Finals and never sold out games before 2011 be worth $2 billion? Remember: value for something is not what someone thinks it is worth… it is what someone will pay.
Donald Sterling purchased the Clippers for $12.5 million in 1981 and is known for never selling anything. The idea of him selling the team seemed odd or like another stall tactic to prolong the inevitable. He has always wanted to put up a fight and take every matter to court. This matter is no different, despite polls out there that list him as one of the most hated men in the country. There are those that will argue that, regardless of how despicable Donald Sterling’s acts were, he did not break any laws. What he did do was violate the NBA constitution and the agreement he signed stating that he would not do anything to sully the NBA brand. Sterling’s’ acts have obviously affected the NBA’s bottom line.
There are several legal ramifications in play in the situation. For instance: there is the “California’s Wiretapping Law” (see Flanagan v. Flanagan) which is a two-party consent law. However, the NBA headquarters are in midtown Manhattan in New York. It appears that New York law applies to the NBA constitution… therefore Donald Sterling has contractually waived his right to pursue this matter in court.
He is bound by what is essentially a private arbitration procedure. Unless a court finds that the NBA’s contract with Donald Sterling is wholly or partially invalid — and his waiver therefore also invalid (which his lawyers will strenuously argue) — the NBA’s decision will be almost impossible to get overturned in court without a showing of clear corruption or fraud. The NBA, any fraternity or any private group has the right to say “we no longer want to associate with you” and they can cancel your membership.
The individual being banished has to accept being banished, take their marbles and go home. It appears that Donald Sterling has a better case against V. Stiviano than the NBA. There are those that will see the NBA punishing him by doubling his net worth. Then there are the realist that will state the obvious: $2 billion on a $12.5 million investment.
What took so long?
The NBA Board of Governors’ meeting to remove Donald Sterling from the league is still scheduled for Tuesday June 3, 2014. The NBA would love to have two big-money teams in Los Angeles. So what does a billion dollars buy? A Maybach Landaulet cost $1 million. $1 billion will buy 1,000 suites at luxury hotels such as the Mardan Palace Hotel in Turkey (they can cost as much as $20,000 – $30,000 per night). A billion dollars will buy you a $20,000 room every night for 137 years.
The Le Grand Bleu, one of the largest private yachts in the world, costs $90 million. Some yachts cost as much as $200 million or more. You can buy ten $100 million yachts with a billion dollars. The Gulfstream G550, a business jet, cost $40 million for the base model. $60 million will buy you the top-of-the-line model with every amenity. A billion dollars will buy you 25 of these.
A private island costs $24.5 million. Your investment can multiple several times by developing said island into a tourist location. You can buy 40 of these with a billion dollars. Closer to home, you may desire a $8 million property in one of Los Angeles’ affluent locations such as Beverly Hills Post Office, Malibu, Pacific Palisades, Bel-Air, Hollywood Hills, Holmby Hills, Hancock Park, Sunset Strip, Studio City, Manhattan Beach or Palos Verdes. You can buy 125 houses in any of these areas for $1 billion.