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Donald Sterling to File Lawsuit Against NBA

Embattled Los Angeles Clippers owner Donald Sterling will counter NBA commissioner Adam Silver's lifetime ban with a lawsuit of his own, per multiple reports.

May 1 2014, 2:30am CDT | by

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Donald Sterling to File Lawsuit Against NBA

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Donald Sterling to File Lawsuit Against NBA

Donald Sterling to File Lawsuit Against NBA
Photo credit: Getty Images

Los Angeles Clippers owner Donald Sterling is set to file a lawsuit against the NBA

According to The New York Daily News, Sterling will file legal action against the league if the 29 other owners force him to sell the Clippers: 

"Donald Sterling won't go down without a fight, according to an NBA executive who is close to the disgraced owner of the Clippers, and will sue the league if the other 29 owners vote to force him to sell.

"The wheels are in motion to remove Sterling, a process that the executive said Wednesday night would lead to a lawsuit by the disgraced owner, possibly tying up the future of the team for years. 

"'He is not going to sell the team,' the executive said.

"Members of the owners' advisory and finance committe, which includes Miami Heat owner Micky Arison, planned to hold a meeting Thursday to discuss the next steps in forcing Sterling to sell the team he has owned for 33 years. 

"Seventy-five percent of the league's 29 other teams would have to vote in favor of such a move."

The same update states Sterling will base his lawsuit on conduct constituting "willful acts."

"As the Daily News reported Wednesday, if Sterling sues, he would likely base his case on language in the NBA constitution that deals with conduct that constitues 'willful acts,' a term that can be difficult to interpret and enforce. 

"Generally those acts include criminal behavior, financial instability, or gambling or fixing games.

"'He'll sue and it'll take years to settle,' said the source close to Sterling." 

Sports Illustrated's Michael McCann argues Sterling could possibly file a court injunction which will prevent the NBA from banning him. Furthermore, Sterling being forced to sell the Clippers will result in capital gains taxes.

"In addition to concern about proper interpretation of the relevant language, some owners may worry about the prospect that Sterling will sue. Sterling, an attorney, is regarded as one of the most litigous owners in professional sports.

"If there is one owner who would sue over expulsion, it's probably him. Sterling could seek a court injunction preventing the NBA from expelling him.

"Such a move would likely happen immediately after he is voted out. He could also file a lawsuit raising breach of contract and antitrust claims.

"Sterling, who is 80 or 81 years old (his exact birthdate remains a mystery), has a key financial reason to fight the sale of the Clippers: to avoid capital gain taxes. This insight is from Robert Robert Raiola, senior manager in the Sports & Entertainment Group of the Accounting Firm O'Connor Davies, LLP.

"Sterling reportedly purchased the Clippers for $12.5 million in 1981. If he sold the team today, it would be worth at least $600 million, perhaps closer to $1 billion.

"Between federal and state capital gains taxes, Sterling would pay an approximately 33 percent tax rate on the difference between what he paid for the team and what he sold it for.

"For instance, if he sold the Clippers today for $1 billion, Sterling would pay capital gain taxes of 33 percent on a gain of $987.5 million. As a result, Sterling would owe federal & state capital gain taxes of approximately $329 million."  

The Los Angeles Times' Ben Bolch interviewed Cari Grieb, a Sports Law professor at the John Marshall Law School in Chicago, on April 29.

Grieb then weighed in on the matter: 

"Donald Sterling is paying his players. There were no economic issues like you saw with the Dodgers and MLB or with the (New Orleans) Hornets in 2010 when the league had to take over the team. 

"So here, a question whether or not the league can really terminate Donald Sterling's franchise agreement is a question that Donald Sterling is going to litigate. 

"If he's forced to sell at $575 million and he's alleging the team is actually worth $300 million more, you would then treble the damages and it would be be $900 million in damages." 

NBA commissioner Adam Silver issued a lifetime ban as well as a $2.5 million fine on Sterling on April 29 for racist comments he made in a recording. 

For more of the hottest sports stories, check out Sport Balla today. 

 

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Poch de la Rosa follows all major U.S. sports: NFL, MLB, NBA, NHL and the NCAA. His favorite teams are the Colts, Braves, Pacers, Sharks and Irish, respectively.

 

 

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