The Los Angeles Clippers soon may be for sale, triggering a billionaire bidding war that probably will result in a record price for a National Basketball Association team.
Commissioner Adam Silver yesterday took the unprecedented step of banning Clippers owner Donald Sterling for life and urging NBA owners to force the sale of a major professional sports team in the second-biggest U.S. media market. Among those who already have expressed interest in owning the team is music executive David Geffen, who the Bloomberg Billionaire Index says has a net worth of $5.7 billion. Oprah Winfrey’s spokeswoman said she and Oracle Corp. Chief Executive Officer Larry Ellison are in talks with Geffen about forming a joint bid.
“It’s like buying the worst house on the best street in Beverly Hills,” said Paul Swangard, the managing director of the Warsaw Sports Marketing Center at the University of Oregon. “Lots of folks with money would dream of owning this franchise. It’s a huge trophy in a trophy town, and it’ll command a price that won’t make it seem like a fix-it-upper.”
Silver wasted little time in jettisoning Sterling, who made racist comments that included not wanting Hall of Fame player Magic Johnson at Clippers games. Sterling’s recorded remarks, posted five days ago on the website TMZ, drew widespread condemnation, including rebukes from President Barack Obama and Charlotte Bobcats owner Michael Jordan, and prompted four team sponsors to cancel their contracts.
During a news conference yesterday in New York, Silver apologized to pioneers of the game, particularly Johnson, who along with Guggenheim Partners executives bought baseball’s Los Angeles Dodgers for a record $2.15 billion. Johnson also has expressed an interest in the Clippers.
The Milwaukee Bucks this month were sold to Fortress Investment Group LLC (FIG:US) co-founder Wesley Edens and Avenue Capital Management’s Marc Lasry for $550 million, prompting sports bankers to say the Clippers would easily eclipse that amount.
“The team will fetch in excess of the Bucks and possibly a record-setting price for an NBA team,” said Rob Tilliss, founder of Inner Circle Sports, which represented Apollo Global Management LLC (APO:US) co-founder Joshua Harris in his purchase of the NBA’s Philadelphia 76ers. “Should the Clippers eventually be sold, it will attract a wide group of potential investors -- both domestic and international.”
Geffen said he is friends with Winfrey and Ellison.
“Larry and I have been talking about buying a team for years,” Geffen said in a phone interview from his New York apartment.
Other possible suitors include real estate developer Rick Caruso; Oracle Corp. CEO Larry Ellison, who unsuccessfully tried to buy the Golden State Warriors four years ago, and Patrick Soon-Shiong, Los Angeles’ richest man and a part-owner of the Lakers.
Silver said he would urge the NBA board of governors -- one representative from each of the league’s 30 teams -- to force a sale of the team. Twenty-three owners must approve, according to NBA bylaws.
“I will do everything in my power to ensure that happens,” Silver, who replaced David Stern as commissioner on Feb. 1, said at the news conference. “I fully expect to get the support I need from the other NBA owners to remove him.”
A number of teams and owners released statements of support in the minutes after Silver’s news conference.
It’s unclear what recourse Sterling, 80, would have if the others owners move to sell the club he’s owned since 1981. Silver said he didn’t know if Sterling would acquiesce to a forced sale.
Gabe Feldman, director of the Sports Law Program at Tulane University, said Sterling might file an antitrust lawsuit against the league, which would complicate any proposed sale.
“It just raises the cost of doing business for all parties involved,” Feldman said. “But that may be necessary in this case.”
Even so, the lure of a marquee NBA team in a global league with $5.5 billion in annual revenue will outweigh any reservations held by potential bidders, said Shervin Mirhashemi, president of Legends, a joint venture between the Dallas Cowboys and New York Yankees.
“It doesn’t take a genius to know that’s an extremely valuable franchise in the heart of the second-largest media market,” said Mirhashemi, former president of global sponsorship at Anschutz Entertainment Group, which owns the Staples Center, home of the Clippers, Lakers and hockey’s Kings.
Any buyer would be getting a team on the rise, led by All-Stars Chris Paul, who is also president of the players union, and Blake Griffin. The Clippers, who had the third-best record in the league this season, defeated the Warriors 113-103 last night to take a 3-2 lead in their best-of-seven first-round playoff series, while the Lakers, buoyed by star Kobe Bryant, missed the playoffs this season.
“They have the ability to capture market within the city of Los Angeles,” Mirhashemi said. “They’re in position with their core, with the right owners, to continue that march to capture that share.”
The Clippers said in a statement they “wholeheartedly” support Silver’s decision to banish Sterling, a real-estate developer who had been the longest-tenured owner in the NBA.
“This will not be a fire sale,” said Michael Principe, chief executive officer of sports representation and marketing company the Legacy Agency. “The man has made his fortune in real estate. He knows what fair market value is. It will not be cheap.”
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