From the legal commentary I’ve seen, it appears that while the NBA is on pretty solid grounds in banning Sterling from the league, the issue of forcing him to sell the team is a lot murkier, and at a minimum it’s thought that Sterling could tie it up in the courts for years. And it’s thought to be likely that he will do this, both because of his personality and because he stands to pay hundreds of millions in capital gains taxes if he sells (versus leaving it for his family a few years down the line).
Question I have is in this situation (whether temporary or permanent) when Sterling can have no involvement in the management of the team, but it’s his money on the line: what is to ensure that whoever is running it keeps Sterling’s interests in mind?
My understanding is that the NBA would run the team (or appoint someone to do this). Does that person care in the slightest if Donald Sterling makes or loses money? What’s to stop them from doubling everyone’s salaries, cutting ticket prices, offering freebies to one and all, sponsoring numerous charitable events, and so on?
It seems like a pretty weird situation, to have one person completely in control of someone else’s money, with the owner having zero recourse or control. But perhaps there is some recourse, and I’m wondering what that might be, if there is.
But in general, it’s not at all unusual to have one person in control of another’s money. An elderly parent may become incompetent to handle his or her finances, and one of his children might be appointed as conservator. A child star may make millions on television, but his parents remain in control of his money. A wealthy politician or judge may place his assets into a blind trust to avoid a conflict of interest when creating law or deciding legal issues that would affect the value of those assets.
In all such cases, the person acting in control of another’s money is said to have a fiduciary duty towards the actual owner. This means he is legally obligated to act in the actual owner’s financial interest.
I think it might be worse in this case, in that in those cases, the person put in charge of the money is ostensibly someone who has the best interests of the owner at heart and is expectd to act in their best interests. But the NBA is obviously very hostile to Silver, and you wouldn’t expect to have a lot of confidence that they’ll act with his interests at heart. (Especially in that they have their own - possibly conflicting - interests, in repairing the damage to the league.)
That raises the possibility that Silver can continue to exert influence and control over the team, by suing (or threatening to sue) over decisions he doesn’t like as not being in his financial interest. And he would seemingly have to be kept informed of goings on, so as to ensure that he can protect his interest.
In the other cases you list, the parent is incompetant, and the judge voluntarily set up the trust and deliberately wants to keep uninvolved. In this case, Silver would want as much involvement and control as he can get.
I’m guessing there hasn’t a lot of litigation on NBA ownership agreements/contracts.
In another thread somebody suggested it could be viewed similar to a Home Owners Association: the individual voluntarily agreed to the rules and regulations when they joined. But when tested in court, some of the terms the in HOA agreement/contract have been ruled unenforceable - I’m thinking of cable satellite dishes and flagpole cases.
So I hope Sterling fights the NBA tooth & nail in the court because, hey, someday I might own an NBA team
In this case the NBA will run the Clippers, and commissioner Silver will be the owner for functional purposes. He is employed by the NBA’s team owners, and I doubt they would want Silver to do anything that would devalue their own teams or the Clippers as an asset they control.
If you want an NBA team, you should hope they force him to sell because this is your best chance to own one. Prices are going up and up, so count your billions and make an offer.
That’s a good point. Even if you did sign a contract, at the end of the day there are limits as to what other people can make you do to your own property. Contract provisions get ruled unenforceable all the time.
Actual legal experts seem to agree that the NBA is on shakey ground trying to force Sterling to sell his team. Even the rules in the NBA bylaws are intended to deal with teams that are broke, not to oust owners because they’re jerks.
Also, said jerk is a billionaire lawyer, while the NBA’s lawyers probably spend 99% of their time explaining contract minutae to players, not dealing with anything major like this. Frankly, I’m thinking maybe I should be betting on Sterling in this fight.
I just keep thinking, though… what happens if he wins? With time and distance, would players forget about this and play for the Clippers? Or would Chris Paul and Blake Griffin and Deandre Jordan all leave? Would meaningful players refuse to sign? Would all Players Association members refuse to sign? Would fans boycott in meaningful numbers? How does that play out?
If the team did end up going down the tubes, that would put the NBA on much firmer legal grounds to force a sale, since the procedures are designed for a team that’s broke, and needs new owners to keep operating. It would be like forcing the sale of a bankrupt company.
As things stand now, the NBA has no financial grounds to force a sale – quite the opposite, in fact, since the Clippers are finally a semi-decent team for the first time in God-knows-how-many years.
Maybe the NBA should let the team crash & burn, while lining up potential buyers in the background. If they encouraged a boycott, however, that would almost certainly violate federal labor laws.
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Frank opens PM from dba Fred: “It’s not the Boston Celtics but it’s a start.” looks out front door
Frank: “Aw, the Los Angeles Clippers!”
Marge: “I think owning the Los Angeles Clippers is pretty good.”
[a player tries to catch the ball, but falls]
Frank: “Yeah, yeah.”
Marge: “Well, explain to me why it isn’t.”
[another player tries to catch, but hits the ball with his head]
Frank: [sighs] “You just don’t understand basketball, Marge.”
It’s beginning to come together (coagulate?): Kenm can handle the finances, Frank can be a talent scout, will Marge want to be a cheerleader? Cecil will, of course, be the team’s publicist since he is so good at answering questions. There’s some good lawyers on the Board, we need one to negotiate with Disney so we can use Dopey as our mascot and at the risk of offending the LGBT community, we’ll have to insist he’s heterosexual - you know, “Straight Dopey.” The team motto will be “It’s Taking Longer Than We Thought.”
I’ll start practicing putting my feet up on the desk and lighting cigars with $100 bills while I call escort agencies for arm candy young enough to be my granddaughter.
No doubt. But the question at this point is: in making the decision to go ahead now, are they relying on “experienced litigators from one or more “Big Law” firms” who are advising them they can get away with it, or are they relying on their in-house people who may be less familiar with these issues?
Sometimes it can be better to get good legal advice upfront and keep your actions defendable rather than relying on good outside counsel to bail you out later. But the NBA doesn’t really have much choice in it - they are being driven by public outrage and need to move hard and fast.
Truth is the NBA is better off voting to remove Sterling and losing in court later than voting to keep him now. This way they can tell the players and the world “we did whatever we could, and we can’t control the courts”.
I heard a sports talk show guy speculating yesterday that if any other owners voted against forcing Sterling to sell, that that owner’s players would possibly boycott the team’s games, that’s how worked up they are about it. The only thing the NBA can do in this circumstance is to get out in front of it.
