There's a "black box" joke here somewhere, but I can't find it.ifmanis5 said:Rumor has it that Sterling will be on CNN tonight. We'll see I guess.
"And I don't wish that girl any bad luck but I hope she gets hit with a car."
Here's Lasorda's entire statement:
"I've been a friend of that guy's for 30 years. It doesn't surprise me that he said those things. And he shouldn't have said it. He just hurt himself by talking too much and doing things he shouldn't be doing."
Just as well. I wonder if he backed out like the way he backed out with us at the last minute.OilCanShotTupac said:There's a "black box" joke here somewhere, but I can't find it.
I have read it and IMHO it's nothing like a franchise agreement. For starters, there is no single franchisor. These are articles of association (with accompanying by-laws) for the self-governance of a trade association.Average Reds said:
As I said earlier in the thread, referring to it as the NBA Constitution makes it sound a lot more important than it is. It's essentially a franchise agreement.
Brickowski said:I have read it and IMHO it's nothing like a franchise agreement. For starters, there is no single franchisor. These are articles of association (with accompanying by-laws) for the self-governance of a trade association.
Average Reds said:
I agree that it does not fit neatly into any normal classification, but I would have a hard time classifying the NBA as a trade association.
It's a franchise agreement where the franchise owners also own the league. If that feels more like a trade association agreement to you, I'm fine with that.
soxhop411 said:
I bet, that if the NBA did very little to Sterling after this, not just Clipper sponsors would be jumping ship. NBA sponsors would bail (and those are the BIG ones) which then would result in a loss of profits for the NBA… Which I bet is one of the reasons they are going to use to kick him out
No you're right, "trade association" doesn't fit either. The NBA is an unincorporated association of interdependent "sports franchises" formed for mutual benefit. The "constitution" is what the owners agreed to as an instrument of self-governance. Maybe "Articles of Association" would have been a better title for the document.Average Reds said:
I agree that it does not fit neatly into any normal classification, but I would have a hard time classifying the NBA as a trade association.
It's a franchise agreement where the franchise owners also own the league. If that feels more like a trade association agreement to you, I'm fine with that.
As noted way upthread, that is the reality that no one can change in court or out of it. The NBA just needs to make the disposition very financially attractive to the Sterlings and convince them of the obvious -- they own a wasting asset. That work needs to be done behind the scenes and not via lawyer bluster. Both Sterlings have the wherewithal to turn this into a complete shit show if they are willing to go down with the ship.soxfan121 said:
IIRC, State Farm was one of the Clippers sponsors who immediately cancelled the contract with the team. They also have used Chris Paul in ads. And they've been an NBA and WNBA sponsor since at least 2010.
State Farm also quit their association with Penn State in the aftermath of that scandal.
Basically, yes. Sponsors were prepared to stop doing business with the NBA (in general) and the Clippers (specifically), which would have been a potentially massive revenue loss for the league and the team.
That's a fair characterization, but it seems to me that the debate is more than ontological. There is a body of settled case law covering "franchises", another body of case law involving trade associations, there are cases interpreting corporate charters, etc. The lens through which a judge might elect to view this particular document (that the NBA calls a "constitution") may affect how he construes it.maufman said:I don't see the point in this ontological debate. The NBA is closer to a trade association than to a traditional franchising arrangement, but neither is a suitable label. I guess you could say it's a cartel, minus the connotation of illegal collusion that usually goes along with that word.
There is no way to make this financially attractive to the Sterlings. The family comes out way ahead in taxes if they sell the team after Donald Sterling dies.dcmissle said:As noted way upthread, that is the reality that no one can change in court or out of it. The NBA just needs to make the disposition very financially attractive to the Sterlings and convince them of the obvious -- they own a wasting asset. That work needs to be done behind the scenes and not via lawyer bluster. Both Sterlings have the wherewithal to turn this into a complete shit show if they are willing to go down with the ship.
This would not be the first time an a-hole owner had his way with a league. Peter Angelo's had zero territorial rights to the DC market but extracted a king's ransom from MLB to move the Expos to Washington.
gammoseditor said:There is no way to make this financially attractive to the Sterlings. The family comes out way ahead in taxes if they sell the team after Donald Sterling dies.
You would have to ask a CA trusts and estates lawyer, but I believe that in the case of community property, she would get the step up when he dies.Average Reds said:
Given that she's co-owner, don't both Sterlings have to die in order to have the cost basis re-set and avoid capital gains?
she pays no tax or anything when he dies, assuming no sale when she dies someone is getting hammered with the estate tax then the inheritors tax basis will be the fair market value if the inheritor were to sellAverage Reds said:
Given that she's co-owner, don't both Sterlings have to die in order to have the cost basis re-set and avoid capital gains?
That's irrelevant about being unaware of cap gains. The point is the sterlings should be willing to spend up to 200 million dollars to fight this if they think it will secure continued ownership. The calculation is slightly more complex as they don't want a huge legal fee and then lose.Brickowski said:You would have to ask a CA trusts and estates lawyer, but I believe that in the case of community property, she would get the step up when he dies.
You know, the cap gains tax was not something of which these wealthy investors and their counsel were unaware when they unanimously agreed to the terms of a document which, among other things, permits the owners, by a 3/4 vote, to force the sale of a team at a time when the owner of that team might not want to sell.
So instead of allowing the members of a billionaire's club to self-regulate, a court should do it, because one of their number doesn't want to pay taxes on his $500,000,000 windfall?luckiestman said:That's irrelevant about being unaware of cap gains. The point is the sterlings should be willing to spend up to 200 million dollars to fight this if they think it will secure continued ownership. The calculation is slightly more complex as they don't want a huge legal fee and then lose.
Brickowski said:So instead of allowing the members of a billionaire's club to self-regulate, a court should do it, because one of their number doesn't want to pay taxes on his $500,000,000 windfall?
"I'm talking to a girl. I'm trying to have sex with her," Sterling says, shattering records for the unsexiest thing you've ever heard. (You can hear the audio at Radar.)
"I'm trying to play with her. If you were trying to have sex with a girl and you're talking to her privately and you don't think anybody's there, you may say anything in the world, what difference does it make?...
"The girl is black. I like her. I'm jealous that she's with other black guys. I want her. So what the hell? Can't I in private tell her, 'I don't want you to be with anybody?'"
"You're trying to play with her, and you might say anything. You might say you have the biggest penis in the world! I would have said I could fly over a high rise building if I had to!"
I'm assuming (perhaps incorrectly) she would get the stepped up basis upon his death if the Clippers franchise is community property. So there would be no tax advantage for her to continue to own the team.luckiestman said:Dont you mean until his wife's death (assuming she lives longer than he does)?
Yeah, it is community property (I wasn't positive), but in Cali, seems like it would be stepped up even if it wasn't.Brickowski said:I'm assuming (perhaps incorrectly) she would get the stepped up basis upon his death if the Clippers franchise is community property. So there would be no tax advantage for her to continue to own the team.
Mrs. Sterling is the one who is likely to benefit from Donald's efforts to fight the forced sale. In connection with their counterclaims, the NBA and the other owners will conduct a massive fishing expedition (they call it "discovery"). They will attempt to subpoena every document, every email, his telephone records and anything else they can get, looking for evidence that Sterling was a "bad" owner who was undermining the value of other franchises. There will be depositions involving Sterling, Ms. Stiviano and key Clippers employees (including Doc Rivers). If there's dirt, they'll find it, and if they find it, Mrs. Sterling will use it to extract every last penny from Donald in the divorce proceeding.
As to whether or not Sterling will fight anyway, that's a question for a psychologist.
Average Reds said:
Given that she's co-owner, don't both Sterlings have to die in order to have the cost basis re-set and avoid capital gains?
Bllomberg just covered this:gammoseditor said:
Is she actually a co-owner? I assumed she wasn't, and that's why she's filing for divorce. If she files for divorce she argues she gets half his assets, and half the team. If she gets half the team and she did nothing wrong the nba can't make her sell. If she's already co-owner then the divorce part doesn't change anything.
The removal of Donald Sterling from the NBA becomes more complex each day, while rumors of pending litigation grow louder. Sources familiar with the NBA's strategy have provided SI.com with key legal insights on how the NBA plans to oust both Donald Sterling and his wife, Shelly Sterling.
Shelly Sterling is a non-controlling owner of the Clippers
The league, sources say, is not worried about Shelly Sterling's long-term involvement with the team. Currently, she is—as she stresses to the media—a "co-owner" of the Clippers. She and her husband own the team through a family trust. Her husband is barred from any involvement with the Clippers, not because he may later be forced to sell the team, but rather because he has been banned for life. Shelly Sterling, as commissioner Adam Silver has made clear, is not subject to any ban. She can attend games and partake in all activities consistent with those of co-ownership.
But Shelly Sterling's ownership of the Clippers should not be confused with control of the Clippers. This distinction reflects the different layers of NBA ownership. Most NBA owners are not in charge of their teams. They have been approved by the NBA to own some percentage of a franchise, but they do not represent their franchise on the NBA's Board of Governors and are not considered the official voice of their franchises. They are regarded as "non-controlling" owners. There are many perks to being a non-controlling owner, including attendance privileges, inside access to team operations and the ability to tell the world that you own an NBA team. But actual control over the team is not one of those benefits. Shelly Sterling is a non-controlling owner of the Clippers.
Donald Sterling, in contrast, is in a more exclusive and powerful category as one of the NBA's 30 controlling owners. Until his ban, he had final say over all matters Clippers and represented the team in league matters. In his absence, the office of the NBA commissioner has become de facto controlling owner. Earlier today, the league—not Shelly Sterling—installed a new CEO, former Time Warner CEO Dick Parsons, to run the team. While Shelly Sterling has signaled support for the move, her support is irrelevant under the law.
If Shelly Sterling wants to become controlling owner of the Clippers, the league would have to approve such a step. The NBA would not approve Shelly Sterling as controlling owner, sources close to the situation tell SI.com. The league would have compelling grounds to deny her attempt, as it would seem to constitute an "end-around" of the NBA ousting her husband. Shelly Sterling has also been implicated in some of the allegations of racism against her husband, particularly those concerning their ownership and management of housing properties in Los Angeles. Consequently, the NBA could refer to those transgressions as legal justifications to deny a transfer of her ownership from non-controlling to controlling.
California law works against Shelly Sterling keeping the Clippers
California is a community property state, which means that spouses in California jointly own assets acquired during their marriage. Shelly Sterling's ownership of the Clippers is thus inextricably intertwined with Donald Sterling's ownership under California law. In fact, it's believed the NBA could not take Donald Sterling's equity in the Clippers without also taking Shelly Sterling's equity, as the Sterling's joint ownership is legally one entity. There has been much speculation that California law would help Shelly Sterling keep the team, but attorneys familiar with the NBA believe the opposite is true: the unity in spousal assets achieved by California law means that Shelly Sterling must leave the NBA if the same fate befalls her husband.
Clippers franchise agreement will be used against Donald Sterling
In buying an NBA team, Donald Sterling signed a series of legal documents that contain covenants directly related to unethical conduct and immoral positions. These agreements include the franchise agreement to purchase the Clippers and the joint venture agreement in which Sterling contractually assented to the NBA having binding authority over independently-owned NBA teams. These agreements specify that owners are expressly forbidden from engaging in unethical conduct or "taking positions that have a materially adverse effect on the league." They also make clear the NBA commissioner is the final authority on interpreting owners' behavior as it relates to satisfying moral and ethical conduct.
Read More: http://sportsillustrated.cnn.com/nba/news/20140509/donald-sterling-legal-analysis-nba-clippers/#ixzz31Kz9gAvgArticle 13(d) is the key legal instrument for the NBA to oust both Sterlings
Article 13 of the NBA's constitution details grounds for terminating ownership of an NBA team. There are 10 separate grounds to justify termination. The ground that has received the most attention, 13(a), is apparently not central to the NBA's legal strategy. 13(a) bars any willful violation of league documents. Its expansive wording was thought to give the NBA wide discretion in linking Sterling's conduct to his ouster. However, the fact that Sterling was privately recorded and that the recording was shared without his consent would make it difficult to prove he possessed a willful state of mind to break NBA rules. This is an important distinction from when Cincinnati Reds owner Marge Schott made racist comments in public, and thus wilfully broke MLB rules. Unlike Schott, Sterling presumably did not intend to publicly embarrass the NBA in public and harm its business. If he had such a desire, he would have likely used a public forum.
13(d) is more limited in scope, but, crucially, does not require Sterling intended to harm the league. 13(d) states that an owner cannot "fail or refuse to fulfill....contractual obligations to the Association, its Members, Players, or any other third party in such a way as to affect the Association or its Members adversely." Sterling's failure to adhere to covenants contained in his franchise agreement and joint venture agreement, among other documents, arguably meant that he failed to satisfy his contractual obligations. The fact that players threatened a boycott and sponsors dropped their support of the Clippers after Sterling's words were made public suggest that Sterling adversely "affected" the NBA and its members adversely.
The NBA also interprets article 13 to mean that if Donald Sterling's financial interest in the Clippers is terminated, the same holds true for others who have legal claims in that interest. As the Clippers are owned through a Sterling family trust, all members of the trust would lose their ownership if the NBA ousts Donald Sterling. Put bluntly, once Donald Sterling is out, the same holds true for the rest of the Sterling family.
maufman said:When counsel to a party to a contract dispute (which is what this is) chooses to wrap his client in the U.S. Constitution, it's a good bet he has a weak argument.
That said, the Sterlings don't necessarily need an argument that has a 50/50 chance of convincing a judge. As others have said upthread, the Sterlings will face serious adverse tax consequences if they're forced to sell the team. If SS's attorney can concoct a colorable legal argument, will owners who are already uncomfortable with the precedent a forced sale could set (as I presume some of them are) allow Silver to pursue a course of action that carries the risk, however remote, that they will be compelled to cut a multimillion dollar check to cover their share of the Sterlings' tax bill? Or will those owners press Silver behind the scenes to work for a negotiated resolution?
Section30 said:What do they do if Sterling takes this to court and says it was a blackmail scheme? Who can prove a negative and say that it wasn't?