Ballmer, Sterling trust strike $2B deal
Shelly Sterling announced late Thursday night that she has signed an agreement to sell the Los Angeles Clippers to former Microsoft chief executive Steve Ballmer for $2 billion.
A source close to the situation told ESPN's Ramona Shelburne that Sterling and Ballmer signed the final papers of the sale shortly before midnight Thursday at the offices of her Los Angeles-based attorneys. Sterling announced that she was acting under her authority as the sole trustee of the Sterling family trust, which owns the Clippers.
"I am delighted that we are selling the team to Steve, who will be a terrific owner," Sterling said in a statement. "We have worked for 33 years to build the Clippers into a premiere NBA franchise. I am confident that Steve will take the team to new levels of success."
Ballmer, who previously had been involved in a failed bid to buy the Sacramento Kings and relocate them to Seattle, released a statement saying he was "honored" by the opportunity.
Ballmer has said both publicly and privately that he will not relocate the Clippers from Los Angeles.
"I love basketball," he said. "And I intend to do everything in my power to ensure that the Clippers continue to win -- and win big -- in Los Angeles. L.A. is one of the world's great cities -- a city that embraces inclusiveness, in exactly the same way that the NBA and I embrace inclusiveness. I am confident that the Clippers will in the coming years become an even bigger part of the community."
Shelly Sterling became the sole trustee of the Sterling family trust very recently, sources told Shelburne and ESPN's Darren Rovell, when Clippers controlling owner Donald Sterling, 80, was found by experts to be mentally incapacitated. The rules of the trust did not require a court hearing first to declare that Donald Sterling is in that state.That allowed Shelly Sterling to negotiate directly with Ballmer and the NBA to sell the team.
The agreement will be sent straight to the NBA for final approval, sources told ESPN's Ramona Shelburne. It must be approved by the league office, and Ballmer must be approved by three-fourths of the league's owners.
Donald Sterling's lawyer Max Blecher did not return messages asking for comment on Shelly Sterling's actions. However, earlier in the day, Blecher said in an e-mail to ESPN that his client had not signed off on the sale.
Bobby Samini, another attorney for Donald Sterling, told the Los Angeles Times, "There's been no sale. There can be no sale without Donald's signature."
Shelly Sterling and Ballmer proceeded with their deal, despite the threat of legal action by Donald Sterling, because they were, as one source put it, "very confident the sale would go through" even if there were "bumps in the road or delays."
ESPN reported earlier Thursday that Ballmer's $2 billion bid was the highest submitted, topping those from groups led by music mogul David Geffen ($1.6 billion) and L.A. investors Tony Ressler and Bruce Karsh ($1.2 billion).
Shelly Sterling had pushed to negotiate a sale before Tuesday's NBA Board of Governors meeting at which both of the Sterlings' ownership interests could be terminated, while Donald Sterling had vowed to fight the league's attempts to force a sale. Donald Sterling's attorney sent a 32-page response to the league this past Tuesday, but the rebuttal did not address Sterling's mental capacity as part of his defense. Shelly Sterling told the "Today" show earlier this month that she thought her husband might have been developing dementia.
Blecher had told ESPN in an interview Wednesday that "When this thing first happened, [Donald Sterling] was kind of like in a trance. It was like a state of shock. His whole system was disoriented."
That led to a May 22 letter from his longtime personal attorney, not Blecher, informing the NBA his client intended to sell the team and had given his wife authority to negotiate for him. Blecher said Sterling had changed his mind since then and "as time has evolved he's come to a much more hard-line position" and "was the old Don I knew. ... Now he says, 'look what they've done to me. I'm not going to take this lying down.'"
While there remains concern, and even an expectation, that Donald Sterling will continue to fight, sources said all parties involved in the sale felt confident it will proceed.
NBA commissioner Adam Silver publicly stated May 20 that the league preferred a voluntary sale, not a forced sale by the league after a vote to terminate Sterling's ownership by the board of governors on June 3. The league had devised a complex legal strategy to oust Sterling, sources said, had it come to that. Ballmer will own 100 percent of the team. However, Shelly Sterling requested as part of the sale that she continue to have an association with the team, and Ballmer was able to satisfy those terms, sources said.
News of Ballmer's $2 billion bid was first reported by the Los Angeles Times.
Magic Johnson, who was referenced in the racist remarks Donald Sterling made that resulted in the owner's ban from the NBA, expressed his excitement over Ballmer's bid in several tweets Thursday evening.
Steve Ballmer owning the Clippers is a big win for the City of LA and all the people who live in the City of Angels!
- Earvin Magic Johnson (@MagicJohnson) May 30, 2014 The $2 billion price tag is just for the Clippers and ranks among the richest ever for a North American professional sports franchise.
The Los Angeles Dodgers were sold to the Guggenheim group in 2012 for $2.15 billion, but that price included land, parking lots and TV deals, making it more expensive. The only real estate involved in the Clippers deal is their training facility in Playa Vista.
The Clippers deal would be the most paid by far for an NBA team, after the $550 million paid for the Milwaukee Bucks earlier this year.
Ballmer, 58, was CEO of Microsoft from 2000 to '14 and is worth $20.3 billion, according to Forbes.
He would become the richest majority owner in major U.S. sports, passing his former boss, Seattle Seahawks and Portland Trail Blazers owner Paul Allen (who is worth $16 billion, according to Forbes). Ballmer was the only investor who did not immediately seek out other partners when preparing a bid.
On Wednesday, Seahawks (and former USC Trojans) coach Pete Carroll took to Twitter to back Ballmer.
The Clippers would be so fortunate to get Steve Ballmer as owner. He's a great competitive force & would bring big energy to the LAC fanbase
- Pete Carroll (@PeteCarroll) May 28, 2014 Ballmer told The Wall Street Journal earlier this month that, should he obtain the Clippers, he would not attempt to move the franchise from Los Angeles, saying that would be "value destructive."
Sources told ESPN that Ballmer has told friends he is moving to Los Angeles.
Geffen's group also included Oracle CEO Larry Ellison; Oprah Winfrey; Guggenheim executives Todd Boehly and Mark Walter; Steve Jobs' widow, Laurene Jobs; Steve Wynn's ex-wife, Elaine Wynn; and Beats by Dre co-founder Jimmy Iovine.
Former NBA All-Star Grant Hill was part of Ressler and Karsh's group.
On a $2 billion sale, the Sterlings would pay approximately $662 million in capital gains taxes, according to accountant Robert Raiola, sports and entertainment senior group manager at O'Connor Davies LLP in New Jersey.
ESPN.com's Ramona Shelburne and Darren Rovell contributed to this report.
