SILVER’S STERLING PROBLEM

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Donald Sterling bought the San Diego Clippers in 1981. By 1982, the NBA knew it had a serious problem, after Sterling fell behind on paychecks and violated the collective bargaining agreement by forcing players to fly coach. He was also caught on tape saying that his team needed to finish last so that they could draft Ralph Sampson. In 2009, Sterling agreed to pay $2.725 million to settle a suit, filed by the Justice Department, alleging that he refused to rent to minority families and drove them out of his apartment buildings. He reportedly claimed that African-Americans smelled and that Latinos drank took much.

Why, it seems fair to ask, did the NBA take so long to fine or suspend Mr. Sterling? Why didn’t they take every step to compel him to sell the Clippers, long before now. Why did they back off from forcing him to sell in 1982, when they first seriously considered taking exactly that action? Major League Baseball compelled Marge Schott to sell her majority interest in the Cincinnati in the late 90s, after she made anti-semitic and racist remarks. The NBA already had a relevant precedent: former Cleveland Cavalier’s owner Ted Stepien. Like Starling, Stepien was a disaster on the court and in the front office (there is actually a rule named after him that limits a franchise’s latitude to make trades). And he publicly stated that the NBA should try to make sure that more than 50% of the players were white in order to appeal to white fans.

David Stern helped usher Stepien out of the league, but he proved endlessly accommodating to Sterling–for reasons that remain largely unexplained.

Whatever the reason, Stern’s successor as commissioner, Adam Silver, now has to clean up a toxic mess that could have easily been avoided. So far he has done a masterful job. His decision to suspend Sterling sine die has placated the players, who were threatening to boycott playoff games, and most of the owners seem to accept the idea that there is no pace for Sterling in the NBA. Mark Cuban was worried that stripping Sterling of ownership on the basis of a private conversation could lead to a slippery slope, but he later expressed unreserved support for Silver’s actions.

Convincing Sterling that he should sell his franchise, quickly and contritely, is going to be Silver’s big challenge.

Selling immediately would make financial sense. The Clippers will lose lots of money, fast, if Sterling refuses. Coach Doc Rivers will leave. Any players out of contract will leave. The ones under contract will do little more than show up and do their job, and probably continue publicly condemning Sterling. The local cable network and sponsors will pull out or demand contract renegotiations.  And the fans will stop attending, or even watching, once the Clips start to lose regularly.

Selling makes financial sense, but there are lots of reasons to think Sterling will not cooperate. He rarely sells his assets, which probably helps explain why he, of all people, has the longest tenure of any NBA owner. He loves litigation. He was a very successful attorney and he has already shown that he is willing to stare down the NBA. The NBA assessed a $25m fine when he moved his franchises from San Diego to LA, but reduced that number to $6m after the threatened an anti-trust suit. And it is not at all clear that his primary motive for owning the Clips is profit.

Mind you, he is very shrewd businessman, who balanced the books all those hapless years, and he hates to part with even a thousand dollars. At the same time, he turned down a $90m offer to relocate his franchise to Anaheim because he didn’t want to endure the additional drive-time from west LA and a $200m offer from Nashville because he likes having HIS team in LA. He also likes the prestige that comes with owning a major sports franchise, even if it has been the most futile franchise of them all.

The above leads me to conclude that he is going to try to save face, as he defines it, by taking a very hard business line. He is not going to sell the franchise below what he perceives to be full market value and he will actually use his sullied reputation as a bargaining chip. “Refuse my terms and I will drag this out in court and you, the NBA, can deal with all the negative publicity that comes with the Clips being the most dysfunctional franchise in league history. Ya, I would lose a lot of money, too, but I am willing to gamble that you cannot stomach the negative impact that my continued ownership will have on the league as a whole.”

His gripe with V. Stiviano was that her public association with African-Americans undermined his credibility with the company he keeps. His goal in this negotiation, in my view, will be to salvage what he sees as his reputation in their eyes by cutting a great business deal–a deal that allows him to claim that ended up calling the shots.

–Ken Pendleton