UPDATE 10:05 p.m. EDT: Former Microsoft CEO Steve Ballmer scored the winning bid for the Los Angeles Clippers with a reported offer of $2 billion. That is the highest selling price ever for an NBA team. Ballmer and Clippers co-owner Shelly Sterling reached a deal late Thursday afternoon, according to the Los Angeles Times. But an attorney for Shelly Sterling's estranged husband, Clippers co-owner Donald Sterling, said "There's been no sale. There can be no sale without Donald's signature."
Nearly a month after being banned for life from the NBA after a racist recording went public, Los Angeles Clippers owner Donald Sterling is making headlines as questions surround the possible sale and price tag of the professional basketball club.
On Tuesday, Sterling attorney Max Blecher contradicted a letter from Sterling giving his wife, Shelly Sterling, authority to sell his share of the franchise. ESPN reported Blecher said Donald Sterling isn't selling and "is going to fight to the bloody end.”
"I don't know what agreement she has with him, but I'm saying to you today, he disavows anything she's doing to sell the team," Blecher said. "He says, 'It's my team, and I'll sell it when and if I get around to it.'"
The NBA Board of Governors plans to try to force Sterling to sell the Clippers with a vote set for June 3 in New York City.
In a 32-page letter Sterling sent to the league, the 80-year-old billionaire has said he has offers of more than $2.5 billion for the Clippers. While it seems highly unlikely that any potential ownership group would spend that kind of money on the team, there’s a good chance the sale of the franchise could shatter the previous NBA record of $550 million.
Dallas Mavericks owner Mark Cuban Sunday estimated the bidding for the Clippers could start at $1.5 billion. A source tells Ramona Shelburne of ESPN Los Angeles the first bids will begin around $1 billion.
Not everyone is convinced Sterling will receive 10 figures for the club. More conservative estimates have the team going for approximately a third of what Sterling claims he could get.
“I would expect the Clippers to sell at somewhere between $500 [million] and $800 million,” Marc Edelman, a sports law professor at the Zicklin School of Business at Baruch College, told International Business Times. “The greatest pro of owning the Clippers, as opposed to another NBA team, is their territory rights to the Los Angeles market. However, the con is the Clippers share these rights with the L.A. Lakers, and also arguably the Los Angeles Kings of the NHL.”
“With a significant level of competition, the Clippers will need to develop a product that competes favorably against these other options. At present, the Clippers’ team name has very little brand equity, and the Clippers have not proven as successful in the basketball marketplace as the Lakers.”
In 2010, Joe Lacob, managing partner at private equity firm Kleiner Perkins, and Peter Guber, chairman of Mandalay Entertainment, made NBA history by purchasing the Golden State Warriors for $450 million. That figure was surpassed last year when the Maloof family sold the Sacramento Kings for $534 million.
Just hours after Sterling’s letter to the NBA was made public, a press conference was held to announce the official sale of the Milwaukee Bucks. Hedge-fund billionaires Wesley Edens and Marc Lasry have agreed to buy what Forbes has deemed the least valuable NBA franchise for $550 million.
In January, Forbes calculated that the Bucks were worth $405 million. The same list ranked the Clippers 13th among all NBA teams, valuing the franchise at $575 million. If the Clippers are sold for the same percentage of their Forbes value as the Bucks recently, Sterling could expect more than $780 million for his club.
Even though the Clippers are nowhere near being the league’s most valuable franchise, it’s conceivable the number of prospective buyers could lead to a record price.
“Unlike the purchase of many other businesses, there are individuals that are willing to pay more than the fair market value for a professional sports team, simply to join the club of ownership,” Edelman said “If there’s only one NBA team on the market at a given time, several individuals that want to own the team, based on the prestige that comes along with team ownership, can reasonably get into a bidding war, where the ultimate price they’re willing to pay has no bearing on the expected short-term revenue streams derived from the team.”
Six bidders have already contacted Shelly Sterling about purchasing the club, ESPN reported. Several celebrities, including Oprah Winfrey and David Geffen, have been reported to have interest in the Clippers.
Sterling paid $12.5 million for the Clippers in 1981. If the team is sold for $1 billion, there would be approximately $329 million in federal and state capital gain taxes, according to Sports Illustrated.