News Surrounding the L.A. Clippers Sale - ABC FOX MONTANA NEWS, WEATHER, SPORTS - KTMF/KWYB

News Surrounding the L.A. Clippers Sale

All of the most recent news surrounding the sale of the Los Angeles Clippers. (Photo: MGN) All of the most recent news surrounding the sale of the Los Angeles Clippers. (Photo: MGN)

NBA Cancels Sterling Hearing, Agrees to Sale

by Tami Abdollah - Associated Press

LOS ANGELES (AP) - The NBA has canceled its hearing to consider Donald Sterling's ownership of the Los Angeles Clippers, saying the team will be sold to Steve Ballmer.

The league says in a statement that it has resolved its dispute over the franchise's ownership with Shelly Sterling and the Sterling Family Trust. They agreed to sell the franchise to Ballmer on Thursday for $2 billion.

According to a statement Friday, Shelly Sterling and the Trust "also agreed not to sue the NBA and to indemnify the NBA against lawsuits from others, including from Donald Sterling."

With that, "the NBA will withdraw its pending charge to terminate the Sterlings' ownership of the team."

The NBA had charged Donald Sterling with damaging the league by making racist comments and planned the hearing for Tuesday, where league owners could have terminated his ownership - and Shelly's as well.

Is the Clipshow Really Worth $2-Billion?

by Jon Krawczynski - AP Basketball Writer

A high-profile NBA franchise in a major media market was suddenly available. A handful of power brokers from the technology, entertainment and venture capital fields were lining up for a chance to join the party.

And all the while the clock was ticking on the bidding, with the league waiting and threatening to impose its will on the process if Donald and Shelly Sterling didn't unload the Los Angeles Clippers.

The result? A $2 billion record bid from former Microsoft executive Steve Ballmer that sent sticker shock through the worlds of sport and finance.

The offer, which comes after recorded racist comments made by owner Donald Sterling prompted the NBA to force a sale of the Clippers, is among the highest amounts ever paid for a pro sports team. It roughly ties the $2 billion paid for baseball's Los Angeles Dodgers in 2012 and exceeds the $1.47 billion paid for soccer's Manchester United in 2005.

A perfect storm may have inflated the price.

A small time frame to negotiate, skyrocketing television rights fees that pushed professional sports franchise values through the roof, an owner-friendly collective bargaining agreement negotiated in 2011 and Ballmer's own desire to land the team after missing out in his bid to buy the Sacramento Kings last year collided to drive the Clippers price into the stratosphere, experts say.

"I'm completely hornswaggled -- if that isn't a word, it should be -- by the going price," said Michael Leeds, professor of economics at Temple University. "It is almost unimaginable that the Clippers would go for about the same price as the Dodgers did just a year or so ago."

Ballmer may have overpaid for the Clippers through an economic theory called "the winner's curse," which states that the winning bid is always the highest bid and not necessarily the most accurate one.

But with a meeting scheduled for Tuesday in which the NBA was expected to vote to oust the Sterlings as owners of the Clippers, the window for negotiating a deal was closing quickly. That can often prompt prospective buyers to be more aggressive with their initial offers than they normally would be, according to John Vrooman, profressor of sports economics at Vanderbilt.

But Ballmer had good reason to overpay, Vrooman said. The Clippers will soon be renegotiating their local television packages. Their current deal reportedly nets them about $20 million annually.

Thanks to the team's recent success, star power on the roster with Blake Griffin and Chris Paul and a voracious Los Angeles marketplace that could include bids from three networks, the revenue gained from a new contract will be much closer to the estimated $200 million that the Los Angeles Lakers earn annually as part of their deal with Time Warner, Vrooman said.

On top of that, the NBA will get a new national television contract in 2016 that figures to add another $50 million to each team's balance sheet.

The expected television revenue alone - not even taking into account revenue from tickets, luxury suites and in-arena advertising - pushes the value of the Clippers to the $1.2-$1.6 billion range, Vrooman said.

"These buyers are perhaps irrational and exuberant but not altogether foolish," Vrooman said. "There is method to Ballmer's 'madness.'"

The extra $400 million added to Ballmer's bid is what Vrooman called the "blowaway factor" - additional money aimed at grabbing the seller's immediate attention and emphatically distancing his bid from others.

"About $1.6 billion of the price is sustainable investment and the extra $400 million may be what a billionaire owner with a Harvard degree in economics simply wants to pay for his NBA buzz," Vrooman said.

Owning a sports team has always been one of the ultimate status symbols, with billionaire playboys flexing their financial muscle to purchase the biggest, shiniest toys available. But in recent years, thanks to resounding victories by owners over players in collective bargaining negotiations, sports teams are getting closer to becoming fool-proof moneymakers as well.

"You would almost have to be the dumbest kid in class if you didn't make money on professional sports teams today," said Red McCombs, who has owned the San Antonio Spurs and the Minnesota Vikings in the past.

Teams are also rarely available, and there are lots of interested buyers, so the sales prices continue to rise. McCombs was on the front end of the trend when he sold the Vikings, a team he purchased for $220 million in 1998, for $640 million in 2005.

McCombs made his deal before the NFL owners won a labor battle to reduce the players' portion of the revenue split to 50 percent in 2011, an arrangement the NBA duplicated later that year. Reducing player salaries - the biggest recurring expense for an owner - provided cost certainty to prospective buyers.

"Essentially, the commissioners and the owners have done a great job of pretty well identifying from the cost side what their total nut is going to be on salaries," McCombs said. "Through a lot of sweat and tears and lockouts, we have a fairly decent feeling as to what the cost to the players is going to be."

The rising prices have led to concerns about a bubble in the pro market similar to the one that brought about the housing crash. Vrooman said the lack of inventory separates pro sports from real estate.

"The housing bubble was caused by too many houses being built whereas this bubble is caused by too few franchises being created here and abroad," Vrooman said.

Ballmer, who stepped down as CEO of Microsoft in February, may also view the purchase - which still has to be approved by the NBA's owners - as a way to cast himself as a savior swooping in to rescue the Clippers from Donald Sterling after the fallout from the racist comments.

"Add to that the fact that he is a serious basketball fan, and, again, you have a formula for a higher-than-usual bid," Leeds said. "Still, all this reasoning comes after the fact and does not significantly lessen my astonishment."

Former Microsoft CEO Ballmer Wins Clippers Bid

by Tami Abdollah - Associated Press

LOS ANGELES (AP) - Shelly Sterling reached an agreement Thursday night to sell the Los Angeles Clippers to former Microsoft CEO Steve Ballmer for $2 billion in what would be a record deal if approved by the NBA, according to an individual with knowledge of the negotiations.

The individual, who wasn't authorized to speak publicly, told The Associated Press that Ballmer and the Sterling Family Trust now have a binding agreement. The deal now must be presented to the NBA.

Shelly Sterling negotiated the sale after her husband, Donald Sterling, made racist remarks that were made public. The remarks included Sterling telling girlfriend V. Stiviano not to bring blacks to Clippers games, specifically mentioning Hall of Famer Magic Johnson. Donald Sterling must also approve the final agreement as a 50 percent owner.

Ballmer beat out bids by Guggenheim Partners and a group including former NBA All-Star Grant Hill after presenting an "all-around superior bid," the individual said. Ballmer made more than an hour-long personal visit to Shelly Sterling's Malibu home Sunday and laid out his plan.

"He knocked their socks off, they bonded, had a good connection," the individual said. The amount was also the largest of the offers, and Ballmer was one potential buyer to deal with rather than multiple in a group.

On Thursday, Magic Johnson posted on his Twitter account: "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!"

It's unclear if the deal will go through. The individual said that though Donald Sterling was not involved in the negotiations, "at the end of the day, he has to sign off on the final process. They're not going to sell his 50 percent without him agreeing to it."

Donald Sterling's attorney says that won't happen. "Sterling is not selling the team," said his attorney, Bobby Samini. "That's his position. He's not going to sell."

That's despite a May 22 letter obtained by The Associated Press and written by another one of Sterling's attorneys that says that "Donald T. Sterling authorizes Rochelle Sterling to negotiate with the National Basketball Association regarding all issues in connection with a sale of the Los Angeles Clippers team." It includes the line "read and approved" and Donald Sterling's signature.

Samini said Sterling has had a change of heart primarily because of "the conduct of the NBA." He said NBA Commissioner Adam Silver's decision to ban Sterling for life and fine him $2.5 million as well as to try to oust him as an owner was him acting as "judge, jury and executioner."

"They're telling me he should stand back and let them take his team because his opinion on that particular day was not good, was not popular?" Samini said. "That his team should be stripped from him? It doesn't make sense. He's going to fight."

It's unclear how the agreement will affect a special hearing of NBA owners planned for Tuesday in New York to consider the charge against Donald Sterling for damaging the league with his comments. A three-quarters vote of the 30 owners to support the charge would have resulted in the termination of both Sterlings' ownership of the franchise.

The deal with Ballmer will go to the NBA for the league's approval sometime before Tuesday, the individual said, ostensibly rendering Tuesday's hearing moot.

Silver has said his preference would be for the franchise to be sold rather than seized - and that means sold in its entirety, with neither Sterling retaining a stake. Though according to the deal's terms Ballmer will own 100 percent of the team, Shelly Sterling may continue to be involved under conditions worked out privately with Ballmer, the individual said.

Franchise sale prices have soared since the current collective bargaining agreement was ratified in 2011. The Milwaukee Bucks were just sold to New York investment firm executives Marc Lasry and Wesley Edens for about $550 million, an NBA record.

Last year, Vivek Ranadive's group acquired a 65 percent controlling interest in the Sacramento Kings at a total franchise valuation of more than $534 million.

The bid for the Clippers, purchased by Sterling in 1981 for a little more than $12 million, blew right past those.

It is not Ballmer's first foray into potential NBA ownership. Ballmer and investor Chris Hansen headed the group that agreed to a deal to buy the Kings from the Maloof family in January 2013 with the intention of moving them to Seattle, where the SuperSonics played until 2008.

But Sacramento Mayor Kevin Johnson lobbied the NBA for time to put together a bid to keep the team in California, and though the Ballmer-Hansen group later increased its offer, owners voted to deny the bid for relocation and the Kings were sold to Ranadive.

The person with knowledge of the deal said that Ballmer would have to ensure the team remains in Los Angeles.

The former Microsoft CEO helped Bill Gates transform the company from a tiny startup with fewer than 40 employees and $12 million in annual revenue into the world's most valuable business. The pair met in 1973 while living down the hall from each other at a Harvard dorm.

During his tenure at Microsoft, Ballmer was known for his competitive drive and wild displays of emotion and hand-waving.

At his farewell address to Microsoft employees, he high-fived and hugged audience members, pumped his fists in the air, and even shed tears as the popular 1987 song "(I've Had) The Time of My Life" played on the sound system. In a video of the event widely viewed on YouTube, he screams: "You work for the greatest company in the world!"



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