The Sterling Charges Come Down, But What Do They Mean?

This is going to be a long post, a complicated one, and I'm not sure I'm going to get all my points across correctly.

On May 19^th, the NBA formally charged Donald Sterling with numerous violations over a three-decade period, culminating in the racist tapes.

This begins a five-day period in which Sterling will have to respond, and, once he does, a ten-day period then ensues until a meeting of the NBA Board of Governors to remove him.

… or is that what the NBA actually is trying to do?

You see, in reading the actual Statement of Charge – the actual written statement required under the NBA Constitution to start the clock – I see more questions than answers.

And, even if I don't get around to it, I want to use this opportunity, in going through this Statement of Charge, to show how fouled up our sports culture is in this country, that a “man” like Sterling can be an owner of a professional sports franchise in North America in the 21^st century, and no one bats an eyelash.

In talking about the Statement of Charge, I am going to use the .PDF copy the NBA itself provided in it's Media Center.

"Summary of Sterling Termination Charge

Below is a summary of the charge that was initiated by the NBA on May 19, 2014 against LAC
Basketball Club, Inc. (“LAC”), which owns the Los Angeles Clippers and is itself indirectly owned
in equal shares by Donald and Rochelle Sterling. If the NBA Board of Governors sustains the
charge, the ownership interests of Mr. and Mrs. Sterling in the Clippers will be terminated.”

Seems simple enough, right?

There's one major problem: The charge is in fact against the corporation owning the Clippers, not just Donald and Rochelle Sterling.

This is very important later on, but it's clear that they are not only trying to get Donald out, but Rochelle as well, which should be obvious to anyone.

Now, they lay out the case before making the charge itself in the “Key Facts Supporting Charge”:

"As evidenced by the recording made public on April 26, 2014, and by a subsequent media interview, Donald Sterling has taken discriminatory actions and supported discriminatory positions that have had (and will continue to have) a material adverse impact on the NBA and its teams. Among other things, Mr. Sterling:”

Any remaining doubt that the NBA fixed Games 5 and 6 of the Oklahoma City series to eliminate the Clippers as quickly as possible should go away here. Also, there should be no doubt that there is no coincidence that the charge is filed on the first Monday after the elimination.

An important factor to keep in mind: The NBA recognizes that it will continue to be damaged for Sterling ever having been associated with it.

• “disparaged African Americans and “minorities”;
• denigrated the contribution of NBA players;
• directed a female acquaintance not to associate publicly with African Americans;
• admonished that acquaintance for posting pictures of herself with African Americans on social media;
• directed that acquaintance not to bring African Americans to Clippers games;
• andcriticized African Americans for not supporting their communities.”

The more that I read of this, the more I become convinced that the only reason Donald Sterling is not in a jail cell right now is because of the fact he is worth several billion dollars.

This isn't “freedom of speech”. This level of racist conduct is known to be civilly illegal (through numerous civil penalties against Sterling), and is almost certain, on some level, to be criminally illegal.

But none of this was really not known already. This was basically on the tapes.

The most important factor here: The NBA, Adam Silver, and all relevant parties basically openly state that this is an African-American league – that the predominance of players in the league are African-American, and that community must have full acceptance within the NBA for it to continue to function in any respect at all.

These actions and positions

• significantly undermine and call into question the NBA’s commitment to diversity and inclusion;
• damage the NBA’s relationship with its fans;
• harm NBA owners, players and Clippers team personnel;
• and impair the NBA’s relationship with marketing partners and licensees, as well as with government and community leaders.”

This is something Silver would probably do better to be honest with, especially given something I will say later: The NBA does not play next year with Donald Sterling in the league in any capacity. Period.

This next part is not widely known:

"In the course of the investigation into Mr. Sterling’s conduct, it was discovered that relevant evidence was destroyed, false and misleading evidence was provided to the NBA’s investigator, and LAC issued a false and misleading press statement regarding this matter.”

Now you definitely have criminality here. The level of criminality involved depends on the actual ability of the investigators to force truthful statements under penalties of law, but there's clearly some form of obstruction going on – on top of everything else!!!

Finally:

Mr. Sterling also has refused to pay the $2.5 million fine imposed on him by Commissioner Silver on April 29, 2014, despite receiving a Notice of Default from the NBA. Through outside counsel, Mr. Sterling has claimed that “no punishment” is warranted for his conduct.”

This is probably the quickest slam dunk they have, but it is relevant to add to the list.

Frankly and bluntly, I would actually think the NBA would be remiss if it didn't add one more supporting charge to the list.

The predominance of players in the league being African-American, Sterling’s racism is a contributing factor to Donald Sterling and LAC Basketball Club Inc. being the worst owners in the history of North American professional sports – that Sterling and LACBC Inc. have the worst winning percentage in any major North American professional sports league with 15 or more years at the position of ownership.

Now, they go into the specific Constitutional “Basis for Termination”:

Charge One: Violations of Constitution 13 (d) – The Tapes

An NBA membership may be terminated if a member or owner fails or refuses to fulfill its contractual obligations to the Association, its Members, Players, or any other third party in such a way as to affect the Association or its Members adversely.”

Note that specific terminology from the NBA Constitution – they are actually charging the owning corporation of the Clippers with offenses which can terminate membership within the Assocation.

That raises a huge question I will address at the end of the document.

"LAC violated this provision because the acts described above constituted:

the taking or supporting of a position or action which may have a material adverse impact on the league or its teams, in violation of an agreement made by LAC, Mr. Sterling, and Mrs. Sterling in favor of the NBA and its members;”

This is one of the things I ask people to take a look at on a much higher level – this and the next statement:

"a failure to use best efforts to see to it that the sport of professional basketball is conducted according to the highest moral and ethical standards, in violation of the league’s joint venture agreement among LAC and all other NBA members”

Wait – wouldn't the mass epidemic of NBA tanking go with this?

Now you have to ask the question vis-a-vis resting players...

And I'll get to another article which revealed that Mark Cuban was prepared to do a lot more about the 2006 Finals than at first most thought – could that also be a violation of 13 (d)?

"and a violation of the contractual duty of loyalty to support the league in the attainment of its proper purposes, which include among other things the league’s commitment to diversity and inclusion.”

Would you expect a league like the NFL to do more than lip service in this regard?

Didn't think so.

On expansion of this last point:

Charge Two: Violation of the Duty of Loyalty

Under New York law [Blogger's Note: since the NBA's main offices are in New York, the NBA Constitution is administered under the laws of the State of New York], all member teams of the NBA owe each other a duty of loyalty to support the League in the attainment of its proper purposes.

LAC breached this duty of loyalty through the acts described above, which were injurious, harmful, and disruptive to the NBA.”

There is, in fact, legal precedent to indicate that a “faithless servant” (an employee who fails to observe Duty of Loyalty) may be forced to return compensations given him which he is such an employee.

New York, in fact, is one of the most stringent states in this regard.

The NBA, in my opinion, is planning to use this charge in a very specific manner, again to be explained at the end.

However, this charge has serious ramifications in the current sporting regime. Any league which has this clause in it's by-laws, etc., should be examining the role of the owners very carefully, because of the very definition of “Duty of Loyalty”:

"Duty of Loyalty is a term used in corporation law to describe a fiduciaries' "conflicts of interest and requires fiduciaries to put the corporation's interests ahead of their own."”

The owner of the Marlins?

The McCourts, before their expulsion??

Most any owner who is more than willing to put out a crap team year after decade?

Hmmmmmmmmmmmmmmm...

And I'll give you a second serious ramification, this one specific to the Board of Governors meeting:

This charge ensures a 29-0 vote to expel LACBC Inc., and it will by no means be a “fair trial”.

Why?

Any NBA owner/member of the Board of Governors voting no will join him in expulsion, as I am almost certain the NBA will view that as a charge-able offense in and of itself under Duty of Loyalty.

Charge Three: Violation of Constitution Article 13 (a) – Obstruction of “Justice”

"An NBA membership may be terminated if a member or owner willfully violates any of the provisions of the Constitution and By-Laws, resolutions, or agreements of the Association.

Various provisions of the Constitution were willfully violated when LAC destroyed evidence, provided false and misleading evidence, and issued a false and misleading public statement, as described above.”


This, combined with Duty of Loyalty, could make for serious criminal and civil sanctions, above and beyond the NBA itself. I think it's clear that the NBA is probably (if it's allowed – the reverse is not, but Sterling will almost certainly try to sue, the over-under I give is about Wednesday morning the 21^st of May) attempt to recover many millions of dollars from Mr. Sterling.

Charge Four: Violation of Constitution Article 13 (c) – The Fine

“An NBA membership may be terminated upon the failure of a member or owner to pay any indebtedness owing to the league.

This provision has been violated because LAC (through the acts of Mr. Sterling) has not paid, and has stated a refusal to pay, the $2.5 million fine that was imposed on Mr. Sterling on April 29, 2014.”

Pretty straight-forward.

Now, here's the money quote, and here's what brings forth the main questions I have with the entire situation:

"Termination of LAC’s entire membership – including Mrs. Sterling’s interest in the team – is called for by the Constitution and related agreements and is the only viable means for bringing Mr. Sterling’s interest in the Clippers to an end. Under the Constitution and related agreements, Mr. Sterling's words, actions, and views are attributable to and deemed to be the actions of LAC itself. More specifically, if the Board, by a 3/4 vote, sustains termination charges on the basis of Mr. Sterling’s words, actions, and views, the Constitution calls for the entirety of LAC’s membership in the NBA to be “automatically” terminated.”

Ladies and gentlemen, in my own opinion, and in mine alone, that last statement in the Statement of Charge indicates to me that the Nuclear Option – the option of the complete expulsion of the Los Angeles Clippers from the National Basketball Association, and all it implies – has just been invoked.

I believe (as of the time of writing, and I will attempt fan communication with the NBA for clarification the moment I post this) the headline most people are reading on this is incorrect – that this is NOT simply an action to force Sterling to sell the team.

I have been remiss or a bit sloppy in previous blog posts (as readers have pointed out) – if the Los Angeles Clippers are allowed to continue to exist, then LACBC Inc. and the Sterlings get all proceeds (minus the fine). If the Clippers are expelled, then the league gets the proceeds of whatever comes afterward.

I will admit to more than a bit of wishful thinking that I am correct in what I have just said: That we are about to see a Billion-Dollar Willy Wonka moment...

"YOU GET NOTHING!! GOOD DAY, SIR!!!!”

In moving against LACBC Inc. and going for termination of their membership in the National Basketball Association, they are going to remove the owners of the Clippers from the league.

It is my belief as I post this, and I may well be wrong in this, that by terminating their membership, and not simply ownership, that there will be 29 teams in the NBA the moment this vote goes through.

Again, look at Duty of Loyalty, and the strict nature in which New York addresses it and allows for sanctions of pay received.

Look at that they are charging the corporation to get both Sterlings out, and that they are moving for removal of membership, and not simply ownership...

It just got real.

Consider what happens if the Clippers are thrown out of the league by this action:

Mayweather/de la Hoya attempt to put a team in Las Vegas?
Paul Brown trying to put another team in Seattle?
Perhaps another attempt at Canada?

Oh boy...