May 27, 2014, 9:05 PM EDT
If you read from his comments over the past couple weeks that Donald Sterling was willing to let his Los Angeles Clippers go, that he didn’t really want to fight the league, then you haven’t followed Donald Sterling’s career.
Sterling’s attorney filed a lengthy, defiant response to the NBA’s charges — those charges are part of an effort by the league to use its constitution to force a sale of the team following outcry after prejudiced remarks by Sterling first heard on a private recording obtained by TMZ and then additional remarks on CNN.
Sterling’s response talks of large offers for the team — in excess of $2.5 billion, although his attorney later denied that was the number — and promising to fight the league’s efforts to force a sale of the team, reports Brent Schrotenboer of the USA Today.
Los Angeles Clippers owner Donald Sterling said the NBA’s efforts to terminate his ownership of the Los Angeles Clippers are “illegal” and that it would force his family to pay an enormous capital gains tax that would be “egregious,” according to his response to NBA charges filed Tuesday.
In a 32-page response to the league, he said he will fight the charges and noted that he has received offers of more than $2.5 billion for the team.
Donald’s wife of 58 years, Shelly Sterling, filed a separate response with the league asserting her rights as half owner of the team under community property laws and saying she was just an innocent bystander in this. Her attorney Pierce O’Donnell reached out to NBC News with this statement:
“Donald Sterling has authorized Shelly Sterling in writing to negotiate the sale of the Los Angeles Clippers, including his 50 percent ownership of the team. Shelly is managing the sale of the Clippers. While no formal offers have yet been received, Shelly and the NBA are working cooperatively on the transaction.”
Donald Sterling’s lawyer refutes that.
The NBA is not slowing down its process, NBA spokesman Mike Bass said in a statement in response to the Sterling’s filings.
“This evening, the NBA received responses from Donald and Shelly Sterling to the charge to terminate the current ownership interests in the Los Angeles Clippers. The NBA Board of Governors will meet on June 3 at 1 p.m. in New York City to hear and vote upon this matter. Should the Board vote to sustain the charge, the Sterlings’ interests in the Clippers will be terminated and the team will be sold.”
The owners need a three-quarters vote (23 of the 29 owners) to strip Sterling of his franchise.
This all stems from recorded comments by Donald Sterling that were prejudiced (both in the interview with his former mistress and on CNN), combined with a racist history, which resulted in a wave of anger from fans and sponsors withdrawing their support from the Clippers. This is what the NBA had said previously about the charges.
The charge asserts that Mr. Sterling engaged in conduct that has damaged and continues to damage the NBA and its teams. Among other things, Mr. Sterling disparaged African-Americans and “minorities”; directed a female acquaintance not to associate publicly with African-Americans or to bring African-Americans to Clippers games; and criticized African-Americans for not supporting their communities.
Mr. Sterling’s actions and positions significantly undermine the NBA’s efforts to promote diversity and inclusion; damage the NBA’s relationship with its fans; harm NBA owners, players and Clippers team personnel; and impair the NBA’s relationship with marketing and merchandising partners, as well as with government and community leaders. Mr. Sterling engaged in other misconduct as well, including issuing a false and misleading press statement about this matter.
The mention of capital gains tax by Donald Sterling’s lawyer gets to the heart of the matter — in California the combination of state and federal taxes would force him to pay 33 percent of his profit on the sale in tax. He bought the team for $12.5 million more than 30 years ago, even if the team sold for $1 billion (and it’s expected to be higher, maybe much higher) that would be $333 million in taxes.
However, if Sterling holds on to the team until he passes (he is reportedly battling cancer) and the team goes to his relatives who sell it, they only pay capital gains on the difference between the estimated value at the time of his passing and the sale. That would be considerably less.
The league does not care.
They are moving ahead with their drive to force a sale. If the 29 other owners vote to terminate Sterling’s ownership, the league then takes over and sells the team (Sterling would get the profits from that sale). The league believes it has the right to do this because the Clippers are a a franchise and Sterling signed documents multiple times over the years agreeing to the league’s rules and bylaws. Most legal experts side with the league’s position.
Shelly Sterling is trying to say she will help sell the team, however as part of that she wants to keep a piece of the franchise as a minority owner — her identity is clearly largely tied to being the owner of the Clippers.
The league and its players will not tolerate that.
Expect the league’s owners to vote to terminate Sterling’s ownership of the team on June 3.
Expect the Sterlings to take this to court after that vote.
Expect this to continue to drag out. Because this is who the Sterlings are, this is what they do.
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