Donald Sterling’s NBA ban
There had long been rumors that Donald Sterling was a racist. People who worked for him, or even simply crossed paths with him, all knew it. The NBA always knew it. But until the events of 2014 it seemed as if there was nothing that could be done about it.
In February 2014 NBA commissioner David Stern retired, and was replaced by Adam Silver. Soon after taking over as commissioner, reports surfaced of an audio recording of LA Clippers owner Donald Sterling berating his mistress for her friendship with an African-American man. He felt that posting photos with an African-American man on her Instagram page reflected poorly on him. The African-American man in question happened to be near-billionaire, former NBA star, and current LA Dodgers owner, Magic Johnson.
This was not the first incidence of Mr. Sterling exhibiting socially unacceptable, racist behavior. He earned his fortune as a property developer and real estate mogul. He has been involved in numerous housing discrimination cases, refusing to rent properties to people on the sole basis of race. He had a reputation for treating the African-American players on his team in a blatantly racist manner, and did the same to his former general manager, former NBA star Elgin Baylor. However, until the tape of Sterling berating his girlfriend, none of these indiscretions had been particularly public.
The tape was a serious embarrassment to the league. A racist team owner controlling an organization of mostly African-American players created a negative perception of a pseudo-slave relationship. The players responded extremely negatively, and there were reports that the LA Clippers and other teams considered refusing to play in any games until the league took strong action against Sterling. This stance was led by Clippers coach Doc Rivers, along with NBA star Lebron James. Importantly, league sponsors indicated that they were unhappy with the situation. Ultimately, this is likely what forced action.
In response to the pressure from the league and the public, commissioner Silver took a strong, unprecedented step. He instituted a lifetime ban against Sterling, fined him 2.5 million dollars and indicated that the league would act within their power to influence the sale of the team as soon as possible. Silver was widely praised for acting decisively to remove Sterling, who was perceived to be bad for league image, and quite simply a bad person. However, there was also an element of criticism, largely centered on the premise that the lifetime ban was excessive, unprecedented, and arbitrary. Sports leagues generally operate with little external oversight, and the decisions of the commissioner are only truly answerable to owners. The owners accepted and praised the decisiveness.
The events that followed are somewhat unclear. At one point Sterling appeared to have consented to allowing the sale of the team, to be administered by his wife. However, he later changed his tune, and began legal proceedings against the NBA and his wife which were intended to prevent the sale.
While the legal proceedings were ongoing, Mrs. Sterling solicited bids for the team. The highest bid was from Steve Balmer, the former CEO of Microsoft. The bid was for two billion dollars. This was approximately 100 times the value that Sterling paid for the team some twenty years prior.
The court ruled that because Mr. Sterling was suffering from Alzheimer’s disease, and based on medical opinion, he was incapable of managing the business affairs of the team. The court declared Mrs. Sterling to be the sole trustee of the team on that basis. The court granted an injunction allowing the sale of the team, and the sale to Balmer proceeded unhindered.
The events of the Donald Sterling scandal raised some serious concerns about the standard of conduct required for owners of professional sports teams. The personal views held by Mr. Sterling were clearly unacceptable, but it is questionable if this was sufficient grounds to force him to sell his team. However, ultimately the business structure of professional sports leagues is such that the commissioner as proxy for the owners legitimately has the right to force an owner who reflects negatively on the league out. This power should be used on a limited basis, however, since it derives from the authority of the owners, making a commissioner unlikely to act contrary to the owners’ wills. In the case of Sterling, there were exceptional circumstances such that it was likely appropriate for commissioner Silver to use this power. In using the power, Silver earned the respect and admiration of the owners, players, and the public, and protected the reputation of the league.