Sterling can be forced to sell the Clippers if 3/4 of the other owners decide he must. Do they have any control over the terms of the sale? Do they have no authority to prevent him from making possibly a 1/2 to 1 billion dollar profit, or can they make him sell the Clippers to Magic Johnson for $1?
I’m just looking for the factual answer. What the owners should do, or whether what they can do is proper, is GD territory.
Since they must approve any new owner, they could, in principle, dictate the exact terms by not approving anyone but a shill. However, I would expect anything too egregious (and very possibly anything at all) finally being settled in court.
Article and copy of NBA “Constitution” here.
The relevant passage:
I’m not entirely sure what all that means, but it seems to be saying that the Commissioner becomes Owner of the franchise and it’s essentially his to sell on whatever terms he chooses. The proceeds of the sale will pay off any NBA-related debts Sterling may have held, then he’ll (Sterling) get any remaining profits from the sale.
Someone please make any necessary corrections to my interpretation.
Just a guess, but I think there might be assumed fidcuiary duty. The contract, by common law, would have an implicit good faith requirement and if the rules for sale were read to require that good faith, I believe it would extend to a requirement that any such sale be executed in such a way as to not deny any party the benefit of the bargain. So I think I court would read into the agreement a requirement for the equivalent of a fiduciary duty when the other parties to the contract act to dispose of the assets of another party to the contract. All of that, however, is just my musings based on some research I did as summer law associate working on a good faith in contracting project about 10 years ago. Not legal advice for you or anyone else, obviously.
Odds are that there will be a bidding war so Sterling won’t be financially screwed at all.
That provision of the NBA constitution refers to the owner’s interest in the NBA itself, not his ownership interest of the team. Things like lease rights are the sole province of the team. Other things like player rights are not severable from the league itself (for several reasons.)
Every contract includes an implied covenant of good faith and fair dealing. Silver might be able to sell the NBA’s interest at less than its market value, but he certainly can’t sell it for a dollar. He can’t sell LA Clippers, Inc., or whatever it’s called at all - that remains with Sterling to sell at whatever price he chooses.
Personally, I’m just looking forward to the inevitable lawsuit because it will be called Sterling v. Silver.
How could he not get fair market value? I don’t think the league (the other 29 owners, and someday, potential sellers) would want to set a precedent of forcing him to take less. Could be wrong.
Certainly, the collective team owners (who will have the final say) won’t want to set up a precedent that they could get screwed over. You don’t get rich enough to own a sports team by being short-sighted.
I suspect that Sterling will probably make a ton of money from the sale, and the NBA will make sure the sale amount is not publically disclosed in an attempt to avoid stirring up any further outrage.