Why This Donald Sterling Debacle Was Different From All Others
After tolerating Donald Sterling's racism, misogyny, cruelty to employees and incompetence for thirty years, the NBA decided to terminate Donald Sterling within four days of the publication of his now-infamous recorded conversation with V. Stiviano on tmz.com. Why was this incident different from all others? Three reasons stand out:
Millions of people heard Donald Sterling voice his racism via TMZ and social media;
The players credibly threatened to shut down the playoffs if the NBA did anything less than oust the entire Sterling family; and
The NBA owners understood that a protracted fight to defend a racist threatened to destroy billions in franchise value.
Hearing Is Believing
Before April 25, 2014, the public could read accusations that Donald Sterling was a vile racist, but they never heard the racism pour out of his mouth. In February 2003, the Housing Rights Center of Los Angeles sued Sterling for discriminating against African-American and Hispanic tenants in his Koreatown buildings. According to sworn testimony in that suit, Sterling told his employees that one of his properties had an odor "because of all the blacks in this building. They smell. They're not clean." After two years of litigation (and 15,000 hours of work by the plaintiffs' attorneys), Sterling settled the case for an undisclosed amount of money plus $5 million in attorneys fees. In 2006, the United States Department Of Justice sued Donald Sterling (along with his wife Shelly and the Sterling Family Trust) for housing discrimination against African-American and Hispanic tenants. The DOJ obtained a record settlement of $2.725 million against Sterling in 2008. In 2010, Elgin Baylor (a member of the Basketball Hall Of Fame and former Clippers GM) sued Sterling and the Clippers for racial and age discrimination. Among Baylor's accusations were that Sterling would bring women into the Clippers locker room while the players were showering to "look at the beautiful black bodies."
These accusations against Donald Sterling failed to penetrate deeply into public opinion. The media sporadically reported on Sterling's alleged wrongdoing and there was countervailing information. In 2009, the Los Angeles chapter of the NAACP presented Donald Sterling with a Lifetime Achievement Award. The two housing discrimination cases were settled without a trial and without an admission of guilt by Sterling. Elgin Baylor dropped his racial discrimination charges before trial, and Sterling won the trial on the age discrimination charges. The public was not interested in Donald Sterling, let alone sifting the evidence to determine whether he was a racist.
When TMZ published the tapes on April 25, 2014, the story exploded. The tape had sex, money, racism and Magic Johnson, plus it took only ten minutes to listen to the entire thing. TMZ made certain that the story was not confined to the sports pages, but rather splashed across all media from tabloid to the New York Times. With the push of a button, everyone with a computer or smart phone could hear Donald Sterling trumpet unambiguous and unfiltered racism.
The Players Put The Owners On A Short Leash
Even with Donald Sterling convicted of racism in the court of public opinion, it was far from certain that the NBA would ban him for life or force the sale of the team. The NBA Players Association, which has been without an executive director for the past two years, quickly tapped Sacramento Mayor Kevin Johnson (a former NBA All-Star) to handle the issue. Over the weekend of April 26-27, Johnson put the NBA on a very short leash. He made it clear that the NBA had a very short timeframe - measured in days - to investigate the incident and take corrective action. Johnson also made it clear that the only question to be investigated was the authenticity of the Sterling recording. Johnson stated that - assuming Sterling had made the statements - the players would not be satisfied unless the NBA imposed the harshest possible penalty, the players would take further (unspecified) action.
The NBPA's demand for quick action assured that the Sterling decision would be made while the media frenzy surrounding Donald Sterling was at its height. It also assured that he decision would be made during the playoffs, when the players leverage was at its height. There would be no cooling off period.
The NBA - like other American professional sports leagues - is most vulnerable to a work stoppage during the playoffs. As a financial matter, the playoffs are the profit margin for many teams. Playoff games command higher prices, and virtually all of the games sell out. Players receive only a small "playoff share" payment that is far below regular season salaries. Because television ratings for playoff games far outstrip regular season contests, most of the value of the NBA's television rights comes from the playoffs. With a new television deal scheduled for the summer of 2016, the NBA owners were loath to face a work stoppage. Moreover, the NBA has trained its fans that the championship ring is the measure of the season. Playoff success or failure not only defines the current season, it sets the expectations for the following season. Without playoffs, the season is meaningless.
Behind the scenes, the NBPA began a whisper campaign that anything less than a lifetime ban of Donald Sterling and termination of the current Clipper ownership would lead to a work stoppage. The NBPA had to tread lightly, because the NBA collective bargaining agreement expressly forbids any strike or any concerted activity to induce the breach of any player contract. Rather than explicitly threatening a boycott, the NBPA simply made it clear that they would not take any option off of the table. Six teams, including the Clippers, the Warriors (their playoff opponents) and Lebron James' Miami Heat, leaked to the league that they would boycott the remainder of the playoffs unless Adam Silver imposed the harshest penalties available.
The Owners Would Not Risk Their Franchises To Allow The Sterlings To Keep The Clippers
Once the NBPA drew its line in the sand, the NBA had to decide whether to go to war against the union. If they had, it would be the second war in three years. In the summer of 2011, the NBA had imposed a "lock out" on the players in an effort to decrease player compensation. The owners bet their franchises that the players would crumble once they missed their regular season paychecks. After the first two months of the season were cancelled, the players agreed to lower their share of NBA gross revenues from 57% to 50% - a transfer of over $280 million/year. The players decided that it was better to accept the new CBA than to risk missing more paychecks.
The key leverage point in the lockout was the differing time horizon of the players and the owners. The average length of an NBA career is 6 years. Players get injured and they get old. Owners, on the other hand, do not have to worry about physical decline. They can hold teams for decades. Because most players have such short careers, they would lose more from cancelled games than they would from lowered paychecks. Most of the lower salaries would be borne by players who had not yet entered the league.
During the lockout, one of the NBPA's counter moves was to attempt to stage all-star games to demonstrate that they cold attract fans without the NBA franchise names, history or infrastructure. The NBPA's all-star games were a failure. NBA fans have invested decades rooting for their teams. Going to a Knicks, Celtics or Lakers game is a way to assert a tribal loyalty. Parents pass rooting interests on to their children. It quickly became apparent that fans were not willing to pay NBA prices to see mere exhibition games that were not part of that narrate and did not "count." In short, it turns out that Jerry Seinfeld was right and we are just rooting for shirts.
But, the Donald Sterling controversy flipped the value of the owners' longer time horizon. In a boycott, the players would only risk a few small playoff checks. Politicians and fans were already supporting a potential boycott. The owners would risk their brand equity if they attempted to force the players to accept the Sterlings. Even if a court were to order an end to they boycott, how many fans would proudly wear a team uniform, if that team was aligned with a racist like Donald Sterling?
Under these circumstances, the NBA decided to ban Donald Sterling for life and to seek to terminate the Membership of the Los Angeles Clippers so that the team could be sold to new owners. Although Dallas Mavericks owner Mark Cuban initially stated that he feared that the NBA was headed for a "slippery slope" if they terminated Donald Sterling, once the penalties were announced, even Cuban immediately voiced his support.