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Donald Sterling Saga

By now you have most likely heard about the racist remarks made by Los Angeles Clippers owner and CEO Donald Sterling. As a result he was given a lifelong ban from the NBA and fined $2.5 million, the largest that league bylaws would allow. He has also been removed as CEO of the team.

Sterling has a history of accusations of discrimination. In 2009, he agreed to pay $2.73 million to settle allegations that he refused to rent apartments to Hispanics and African Americans. In 2011, Sterling won a lawsuit against former general manager Elgin Baylor. Baylor sought roughly $2 million claiming he was forced out of his job with the Clippers due to age discrimination and harassment.

Commissioner Adam Silver intends to force Sterling to sell the Clippers, which would require a three-quarters approval from other teams. “The views expressed by Mr. Sterling are deeply offensive and harmful,” Silver said. “We stand together in condemning Mr. Sterling’s views. They simply have no place in the N.B.A.” Silver’s intention to force the sale is being supported by many of the players and other owners.

The forced sale of the team has brought up several issues of discussion, including free speech and property ownership. According to Forbes, the Clippers are currently worth $575 million. Can Silver force Sterling to sell?

The NBA’s strategy is to use moral and ethical contracts Sterling signed with the NBA in conjunction with the league’s constitution and by-laws to force the sale. The league’s constitution provides that the league may remove an owner if the owner does not fulfill contractual obligations to the Association. If this occurs, the other owners in the league can vote to force a sale by a three-quarters majority.

If this occurs, it is likely that Sterling will bring a lawsuit to attempt to prevent the sale. The lawsuit could take years to settle.

Sterling would likely argue that he did not willfully violate any of the provisions in the league’s Constitution since the recording was obtained illegally and leaked without his consent.

The league could counter this a couple of ways. First, it could use a provision in the Constitution which prevents the owners from bringing a lawsuit to review any decision made by the NBA in accordance with the removal procedure. If that does not work, the league could then use the moral and ethical contracts. These contracts, signed by Sterling, state that an owner will not take any action that materially and adversely affect a team or the league and that the owners will be upheld to the highest standard of moral and ethical behavior.

Another aspect of this scandal to consider is how it is affecting the Clippers financially. Several sponsors have pulled out from supporting the team when Sterling’s comments were made public, including CarMax, Sprint, and State Farm. Even though Sterling has been removed the sponsors have been slow to return. This will be a concern to shareholders of the team as well as prospective buyers.

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About the Author

Chuck Sharkey, Sharkey Law
PO Box 1281
Forest, VA 24551

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