There's A Huge Problem With Donald Sterling's $1 Billion Case Against The NBA
Sterling will struggle to prove he was been damaged by the sale now that former Microsoft CEO Steve Ballmer has offered to buy the Clippers for $2 billion, which is significantly more than its recently projected value, two experts in sports law told me.
Sterling filed the suit in federal court on Friday, accusing the NBA of breaking antitrust law, violating his constitutional rights, conversion (which means the NBA allegedly took his property away from him), and breach of contract. He filed the suit because the league fined him $2.5 million and tried to terminate his ownership of the team after the gossip site TMZ published an audio tape with him making racist comments.
In order to succeed in a civil suit like Sterling's, a plaintiff has to prove he's been injured by the defendant and therefore entitled to monetary damages.
"The Achilles heel with all of these claims is that Sterling will have a nearly impossible time proving damages," law professor and sports business expert Marc Edelman told me.
That's because the same day he filed his suit, the NBA announced a deal with Sterling's estranged wife, Shelly Sterling, to allow her to sell the Clippers to Ballmer. The Sterlings own the team together through the Sterling Family Trust, so he stands to make a lot of money from the deal. Given how much he paid for the team in 1981, Sterling will get a 15,900% return on the sale, as The New York Times reported.
"The real significant issue is, how has he been harmed, given that the sale price is $2 billion, almost four times what any other franchise has sold for," Matt Mitten, director of the National Sports Law Institute at Marquette University, told me.
While the damages issue will probably doom Sterling's suit, the case does have some strengths. Sterling says the NBA violated his rights under the California constitution because it based its termination proceedings against him on a recording that his ex-girlfriend illegally made of him asking her not to bring black people to his games.
California law specifies that no evidence obtained from an illegally recorded telephone conversation can be used in any "judicial, administrative, legislative, or other proceeding." The NBA's termination proceeding could arguably fit into that last category.
If damages weren't an issue, Sterling could also make a good argument that the NBA violated its contract with him "given the ambiguity in the language of the league constitution about what grounds would lead to the termination of an owner," Marc Edelman told me.
For its part, the NBA says the lawsuit is "entirely baseless." Here's what NBA Executive Vice President and General Counsel Rick Buchanan said in a statement quoted by the Wall Street Journal:
Among other infirmities, there was no 'forced sale' of his team by the NBA-which means his antitrust and conversion claims are completely invalid. Since it was his wife Shelly Sterling, and not the NBA, that has entered into an agreement to sell the Clippers, Mr. Sterling is complaining about a set of facts that doesn't even exist.
Indeed, Mitten, the sports law professor, said Sterling may have been better off suing his wife.
"One of the questions I have is whether he sued the appropriate defendant," Mitten said. "It is his wife who entered into thie agreement, and my question is whether she had the authority to do so."