Ballmer Agrees To Buy Clippers For $2 Billion - Will Donald Sterling Agree To Sell?
The Donald Sterling saga got one step closer to resolution with the announcement that former Microsoft CEO Steve Ballmer had reached an agreement with Shelly Sterling to purchase the team for $2 billion. Now, there are two hurdles left, one small and one large. The small hurdle is getting the approval of the other 29 NBA owners (75% required). The big hurdle is getting Donald Sterling to allow the sale to go through.
$2 billion for the Clippers is a jaw-dropping figure. It is not only a record, it is nearly four times larger than the highest price ever for an NBA franchise. Just last month, the Milwaukee Bucks were sold for $550 million. Four years ago, the NBA literally had to purchase the New Orleans Hornets (now Pelicans) for $300 million when no other buyer would step forward. The league held on to the New Orleans franchise for over a year before they could find a buyer: Tom Benson (also owner of the NFL's New Orleans Saints) who purchased the team for $340 million. Seems like he will get a pretty good return on that investment.
The other NBA owners have every incentive to approve the sale to Ballmer. Ballmer has an impeccable record from his decades of service at Microsoft. His net worth is $20 billion, so he can afford to make the purchase for all cash and with no limited partners. He previously was vetted when he bid on the Sacramento Kings (for a possible move to his hometown of Seattle). Ballmer has committed to keep the Clippers in Los Angeles: "I intend to do everything in my power to ensure that the Clippers continue to win — and win big — in Los Angeles,” Ballmer said.
The other NBA owners would love a sale to Ballmer in order to end the public spectacle of Donald Sterling. Sterling's May 27 response to the NBA's charges highlighted misconduct by Kobe Bryant, Shaquille O'Neal and Orlando Magic owner Richard DeVos. Sterling was not wrong when he warned that terminating him for his recorded racist rant would firmly set the precedent that any owner could be terminated for private misconduct that became public. Litigation against Sterling would have threatened to tie up the franchise for months or years.
Finally, this sale to Steve Ballmer will multiply the market value of just about every team. The Clippers may be particularly attractive because of their Los Angeles home and soon-to-expire television deal, but this will set the bar for team value significantly above the $550 million just paid for the Bucks.
So, will Donald Sterling sell? I am not crazy enough to make a guarantee about the actions of any other person. Only a fool would guarantee what Donald Sterling is going to do next. But the only rational move for Donald Sterling is to take his $2 billion ($1.4 billion after taxes) and laugh all the way to the bank. He literally will have traded his reputation for a fortune that he could not spend in the rest of his life.