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Wednesday, April 30, 2014

Donald Sterling Controversy: Proving Once Again Life is Stranger than Fiction, but are the NBA's actions legal?

Here's an interesting article on the Donald Sterling controversy from the General Counsel magazine.

An intriguing sub plot is the theory that Magic Johnson engineered the controversy to force Sterling (a well known racist and idiot) to sell the Clippers to Magic's same billionaire group that owns the Dodgers.

Rob Maitland 

Are Actions Against Clippers Owner Legal?

April 30, 2014
Responding to the public release of a recording of Los Angeles Clippers owner Donald Sterling making racist comments, NBA Commissioner Adam Silver yesterday announced a number of actions the league will take against Sterling, including a lifetime ban. Now experts are examining the legality of the full spectrum of sanctions: A lifetime ban, both from the Clippers and the NBA generally, and a $2.5 million fine. Silver is also urging the owners vote to force Sterling to sell  the team.
The NBA’s constitution appears to make the ban, and the fine, legal, as Silver’s decision in the matter has the effect of a binding arbitration decision. But voting to force Sterling to sell the Clippers – which would require a vote of three-fourths of the league’s owners – is murkier legal territory. The league constitution opens the door for owners who “willfully” violate its provisions to have their interest in a franchise terminated, though it’s most often understood within the context of financial breaches, like failing to pay bills or gambling on NBA games. However, a general requirement of ethical conduct in business dealings and contracts may be cited as legal grounds for the move. And with many sponsors ending their deals with the Clippers, and players threatening to strike, an argument could be made Sterling’s continued association with the team would be damaging financially and to labor relations.
While Silver said April 29 that he is confident enough owners will vote to oust Sterling, sports attorney Michael McCann writes for Sports Illustrated that there is likely to be discussion among those voting, based on four major concerns: The Clippers are financially viable; though Sterling has been outed as a bigot, the organization does not have a history of discrimination; the lack of a “morals” clause in the NBA constitution; and the fear of setting a worrisome precedent. There is no timeline to take a vote.
Many expect a legal battle that raises breach of contract and antitrust claims, as Sterling, an attorney, has proven to be one of the most litigious major sports teams owners. But it’s not clear that would make business sense. If Sterling maintained ownership, it might tank under the weight of his own bad PR. Gary R. Roberts, professor of sports law at Indiana University, told theWashington Post, “I don’t think that the other league owners are going to be able legally to kick him out. But they’re not going to have to. This guy doesn’t want to own a business that will be bankrupt in short order.”

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