Thursday, May 29, 2014

What We Can Learn About Sports Law From Donald Sterling Episode

It appears Donald Sterling will get his walking papers from fellow NBA owners next Wednesday, and the potential court battles have sports law junkies drooling with anticipation.

That's because the NBA likes to act not as 30 individual businesses, but as a single business. 

Neil deMause explains in further detail:
Let's start with that word "franchise." As we're reminded every time a team owner tries to do something that the league doesn't agree with -- move to a new city without permission, for example, something that Sterling himself once got into hot water with the league for -- owning a sports team is less like running an independent corporation than like running a Dunkin' Donuts: You have the right to operate your local outlet, but it's the umbrella corporation that makes the rules. In this case, the NBA has a constitutional provision that requires team owners to fulfill certain contractual obligations to remain part of the league, which includes not just paying your bills on time (the technicality that MLB got Frank McCourt on) but also maintaining ethical conduct (the clause that MLB used to push Marge Schott out after her "Hitler was good at the beginning, but he just went too far" remarks).
But on the other hand, if you paid attention to the landmark Supreme Court case of American Needle v. NFL, you'd know there's case law to support sports franchises (except in baseball, with its antitrust exemption) actually operating as individual businesses.

It makes great fodder for legal watercoolers and sports talk shows...but I don't think it'll ever materialize that way.

That's because Sterling's wife holds all the cards.

She says she wants to stay married and sell the team.  If Sterling fights the sale, all Mrs. Sterling has to do is demand a divorce and 50% of Sterling's net worth.  Assuming he doesn't have a billion in the bank or in assets he's willing to give up, he'll have no choice but to sell the team and split the proceeds McCourt-style.

1 comment:

  1. Well, he can do anything he wants except own a NBA team...