Donald Sterling Appears To Be Giving Up Rather Than Fighting The NBA
Reports this afternoon indicate that Donald Sterling has made a move that seems clearly designed to lead to the sale of the Los Angeles Clippers:
Disgraced Los Angeles Clippers owner Donald Sterling has agreed to allow his wife, Shelly, to negotiate a forced sale of the team, sources with knowledge of the situation told ESPN.
Shelly Sterling and her lawyers have been negotiating with the NBA since commissioner Adam Silver banned her husband from the NBA for life on April 29 for making racially charged comments on an audiotape.
Although the league has yet to accept this arrangement, sources said that if she is willing to sell the entire team with terms that are acceptable to the league, this could bring a startlingly quick end to what appeared to be a protracted legal battle.
Heat star LeBron James said it was “very important” a resolution be reached quickly.
“We don’t want this lingering around our sport,” he said. “It sucks that it happened. The players and owners and everyone associated with this game knows there’s no need for it. So the quicker it gets done, the quicker we can move on.”
James said that Sterling selling the team was “the way it should be.”
“He shouldn’t be part of this league,” James added.
Shelly Sterling does intend to sell the Clippers, but it remains unclear how much of a share — if not all — she’s willing to sell, according to a source with knowledge of the situation. Sources said the only way the NBA would accept the terms of this agreement between Donald Sterling and his wife would be if the team was sold in its entirety.
Among the issues Shelly Sterling is considering, the source said, are the substantial tax obligations she would incur from the sale.
According to IRS rules, the Sterlings would have to pay a federal long-term capital-gains tax of 20 percent and a California tax of 13.3 percent. The tax would be on the difference between what the team was bought for and what it is ultimately sold for. If the team is sold for $1 billion, the Sterlings would be taxed $328.5 million on the sale. Sterling bought the team from Irv Levin in 1981 for $13.5 million.
Ever since NBA Commissioner Adam Silver announced the initial sanctions against Sterling and the league’s intention to seek a forced sale of the team, there has been much speculation about what Sterling would do in response to the controversy. Given that he is a lawyer himself and has had a reputation for being quite litigious in other business dealings, the possibility that he would take the league to court to attempt to block a forced sale, or at least delay it much longer than the league would like, has been openly discussed. At the same time, it’s obvious that Sterling would stand to make a substantial profit from the sale of the team even after taking any tax liability into account so the chance always existed that he would try to drag this process out. Tied up in all of that is the related issue of Mrs. Sterling’s interest in the team, which raises an entirely different set of legal issues.
If these reports are true, though, it would appear that both Sterlings have seen reality. It won’t work out too bad for them, though, given that the Clippers are likely to go for something north of $1 billion.