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The question raised by NBA’s Stephen A. Smith, Spike Lee, and several NBA players, current and past, is “Why is it taking so long to fire Donald Sterling?” NBA Commissioner Adam Silver was so strong and strident in his announcement that steps would be taken “immediately” to do just that. There was no ambiguity about whether they were going to fire Sterling for his racist comments against African Americans. It is a done deal. Commissioner Silver surely would not have made such a profound announcement without having consulted the other NBA owners. So why hasn’t the first shoe dropped?
Like an onion, the answer has several smelly layers, and several lawyers. The first shoe is Donald. The second shoe is Shelly, his estranged wife and 50% owner of the family trust that owns the LA Clippers. The NBA is more concerned about the second.
The most important deliberative point I suspect is this: One or both of those shoes may sue the NBA and its owners. I have several legal reasons for why they suit would ultimately fail, not the least of which is that the controlling owner from the trust was Donald. He is the only one on the governing board, and the removal of him effectively removes the trust. But that does not stop either Sterling from commencing the action, and getting to a stage we call discovery. During discovery, a lot of dirt can be discovered about the other owners.
Donald, himself a lawyer has been litigious in the past. Shelly is lawyered up with tall cotton firms. While their lawyers oppose each other for divorce purposes, I bet their lawyers will agree on exposing any evidence they can find that current owners have been complicit, accepting, acquiescing, or joking along with Donald in ways that are considered racist. The claim would be, “See these guys are just as bad, so ousting Donald is arbitrary or an antitrust-level conspiracy, and an abuse of discretion of its own rules.”
So even if there is enough legal support for ultimately winning at trial, the possibility of negative exposure in the media during months, if not years of discovery and motion hearings is probably causing the NBA to consider a form of pretrial settlement to avoid litigation. And I would bet your season tickets that a primary strategy being considered is the creation of a new diverse ownership group and then carving a non-operating passive piece of it for Shelly.
As for Donald, someone is likely looking at ways to structure a deal where he minimizes his multi-million dollar capital gains taxes he would pay on his forced sale. The taxation of capital gains is one of the most complicated least-understood areas of the law. To find loopholes is not a new quest among lawyers so the IRS has a myriad of regulations to avoid them.
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