The NBA remains committed and steadfast in doing whatever is necessary to oust Donald Sterling from the league and terminate his ownership in the Los Angeles Clippers. On May 19, the NBA released a document titled, Summary of Sterling Termination Charge, providing the public with access to what the NBA believes is its foundation to pry away Sterling’s team and then sell it to a new owner or ownership group. The league is resting on four different causes of action , including multiple violations of the NBA’s Constitution, as grounds for terminating Donald Sterling’s and his wife’s ownership interests in their NBA franchise.  A termination charge against the entity owned by both Donald and Rochelle Sterling was filed on the same day that the summary was released and is based on the now widely disseminated racially insensitive and discriminatory recording along with Donald Sterling’s public reaction thereafter. The key element in all causes of action is that Sterling’s commentary has led and will continue to lead to a material adverse impact on the NBA and its teams. Sponsors have either entirely withdrawn their support from the Clippers or temporarily suspended their relationships. Players came close to boycotting playoffs games and have been rumored to be willing to sit out future games if the Sterlings do not have their ownership interests taken away. Politicians and civil rights activists demand change.  The strongest grounds for the NBA to terminate the Sterlings’ interest in the Los Angeles Clippers is found in Article 13(d) of the NBA Constitution. That is why the summary provided by the NBA lists such provision first among the four causes of action.  Article 13(d) states, “The Membership of a Member or the interest of any Owner may be terminated by a vote of three fourths (3/4) of the Board of Governors if the Member or Owner shall . . . Fail or refuse 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.” Adversity is a subjective concept; however, it is likely to be proven based on sponsor, player, coach and politician reactions to Sterling’s comments. Donald Sterling’s contractual obligations are found within the myriad of documents signed to become an owner of an NBA team, which include a franchise agreement and joint venture agreement with the league. Those documents are laden with broad morals clauses, which require owners to adhere to certain conduct as not to detriment the NBA.  The section on Article 13(d) is followed by the NBA’s claims that the Sterlings breached their duties of loyalty to the NBA, willfully violated the NBA’s Constitution (Article 13(a)) and failed to pay a required $2.5 million fine (Article 13(c) contains a requirement that indebtedness owing to the league be paid). What is most interesting about the Article 13(a) and 13(c) claims is that they both became ripe after Sterling’s recordings were disseminated by TMZ. The Article 13(a) claim is based on the NBA’s discovery that Donald Sterling “destroyed evidence, provided false and misleading evidence, and issued a false and misleading public statement.” The $2.5 million fine Sterling refuses to pay (serving as grounds for an Article 13(c) violation) was imposed on Sterling after the NBA was informed of the recordings.  Now that a formal charge has been filed by the NBA against Donald and Rochelle Sterling, the current owners of the Los Angeles Clippers have the choice of responding to same. If they choose to respond, such a filing is due by May 27 and a hearing will be held on June 3. Failure to respond will allow the NBA to set into place the procedure for transferring the Clippers into the hands of NBA Commissioner Adam Silver. Donald Sterling’s attorney has reportedly requested a three month extension to respond to the NBA’s charge; however, the NBA plans on rejecting the request.  Mark all calendars for June 3. If Donald Sterling responds to the NBA’s charge and a hearing is held, a total of twenty-two out of twenty-nine majority owners of NBA franchises are required to vote in favor of officially terminating the Sterlings’ ownership in the Los Angeles Clippers. That does not mean the Sterlings’ fight is over. Yet, it does mean the NBA is one step closer to selling the Clippers to a new owner or ownership group.  Want to learn more about the business of sports? Order my book How to Play the Game and follow me on Twitter.
Donald Sterling has received formal charges from the NBA, which seeks to terminate his and his wife's ownership of the Los Angeles Clippers before the start of the 2014 NBA Finals.