It appears Donald Sterling and his estranged wife, Shelly Sterling, are going to sell the L.A. Clippers to former Microsoft CEO, Steve Ballmer, for $2 billion.  Amazing.  Didn’t the Milwaukee Bucks just sell for $550 million?  What makes the Clippers such a sought after franchise?  Good question.

Consider, since Donald Sterling bought the Clippers 33 years ago for $12.5 million they have….

had 8 seasons where they won less than 20 games…

won only 3 playoff series…

only made the playoffs 7 times, and three of those were in the past three seasons…

had a losing record each of the first 10 years Sterling owned the team.

In addition, the Clippers current TV deal is worth $20 million a year and they rent space in the Staples Center.  When the L.A. Dodgers sold for $2.15 billion a few years ago the deal included Dodger Stadium.

While I don’t believe we have a true free market economy, we do have some free market principles still in play.  One of those is  business owners are free to fail.  For years Sterling’s Clippers failed.  Now, it seems Sterling has hit the jackpot.  Will Ballmer’s $2 billion decision turn out to be a business failure?  Only time will tell.  It is his money and his decision.

Ballmer photo

It will be interesting to see if professional sports franchises continue to sell at such high numbers.  Sports teams are in limited supply while the supply of billionaires is increasing.  Forbes says there is now a record 1,645 billionaires on the planet.

What I find amazing is that the NBA made the push to get rid of Donald Sterling because his recent comments damaged the league.  After 27 losing seasons, being called the worst owner in sports, his team being referred to as the worst in professional sports, the NBA thinks Sterling’s comments damaged the league?

But owning a team in the NBA is sort of like owning a home in a subdivision.  We are a country of homeowners associations, covenants, conditions and restrictions.  If you fail to pay your yearly homeowner dues, paint your mailbox the wrong color or fail to get prior approval for that garage addition, you could find yourself surrounded by neighbors who will put a lien on your home.  Fail to pay the lien and they may try and sell your home for you.  Just like Sterling agreed to the NBA’s constitution, we all agree to the association rules when we buy into a subdivision.

The NBA front office slapped a $2.5 million fine on Sterling and banned him for life.  We don’t want you in this subdivision any more!  Now that the sale of the team to Ballmer has been announced I wonder if the vote to kick Sterling out will proceed.

And I wonder if Sterling will still try and fight this in court.  He is an attorney by trade and over the years he’s gone to court with his former general manager (Elgin Baylor), three former coaches (Bill Fitch, Bob Weiss, Mike Dunleavy) and the feds over housing discrimination charges.

 

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