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Serious business litigation may be ahead in Sterling-NBA fight

| May 9, 2014 | Business Contracts & Disputes |

The ongoing dispute over the NBA basketball team owned by Donald Sterling promises to bring unusual and challenging legal disputes to the table. Business litigation of this kind is virtually unprecedented, both in North Carolina and nationwide. The complex web of agreements between the NBA and the club owners is a mystery at this point, making it still unclear whether the NBA can compel an owner to sell his team.

The dispute involves the NBA’s decision to compel Sterling to sell the club due to his seemingly outrageous racial remarks made in a tape that has been played on all of the national media. Actually, the Sterling family would probably be well-advised, at least economically, to sell the team. Reports have it that they bought it for a mere $20 million and can probably get $1 billion for it today. However, it seems that Mr. Sterling, and even more importantly, his wife will not go down without a struggle.

The latest public event is the release of a tape in which Sterling purportedly tells an unnamed friend that he is not a racist. He also states that an owner cannot be forced to sell his property in America. With a history of prior litigation on the record, Sterling is liable to wage a vicious court fight.

However, it seems more likely that the door may remain open for Mrs. Sterling to retain her 50 percent of the team in a passive, non-managerial role. She has retained counsel and is making strong sounds like that’s what she plans. She has disavowed her estranged husband’s remarks and declared that she is not a racist.

If a serious dispute demanding business litigation arose between a North Carolina team and its official league, similar principles would be at play. In the current situation, one theory is based on Mrs. Sterling trying to preserve 50 percent of the family ownership in the team and, in that way, providing a shield behind which her husband can continue to assert some partial degree of influence. Based on the strong opposition rallied against him, however, it may be that Sterling would have fared much better if he had simply made a sincere and heart-rending apology upfront and pleaded for forgiveness.

Source: Press-Telegram, “Legal challenges loom in removing Donald Sterling from Clippers“, Mark Medina, May 6, 2014

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