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Clippers Owner to Pursue Lawsuit Against NBA

NEW YORK (The Deal) -- Donald Sterling, the embattled owner of the Los Angeles Clippers basketball franchise, has decided to push forward with a $1 billion lawsuit against the National Basketball Association and not pursue a $2 billion sale to former Microsoft (MSFT - Get Report) CEO Steve Ballmer.

"From the onset, I did not want to sell the Los Angeles Clippers," Sterling said in a statement he issued Monday night. "I have worked for 33 years to build the Team."

The announcement comes eleven days after Sterling's wife, Shelley, said on May 30 that she had reached an agreement to sell LAC Basketball Club Inc., the Clippers' corporate parent, to Ballmer for a record price.

While Donald Sterling initially signed off on the sale, telling a local California television station that he wanted to "move on," the 80-year-old former personal injury attorney turned real estate mogul has reversed field and decided to push forward with the lawsuit, which was lodged in the U.S. District Court for the Central District of California in Los Angeles.

Donald Sterling is seeking $1 billion in damages and is insisting that the league-forced sale of the team is not providing his trust fair market value for the club.

The sale of the team was sparked by the release of taped statements made by Donald Sterling to V. Stiviano in mid-April which has led Sterling to be widely criticized for being a racist.

Action from the league was swift, with NBA commissioner Adam Silver on April 29 imposing a lifetime ban from the league and a $2.5 million fine on Sterling.

"The action taken by Adam Silver and the NBA constitutes a violation of my rights and fly in the face of the freedoms that are afforded to all Americans," said Sterling in a statement. "I have decided that I must fight to protect my rights."

Donald Sterling acquired a controlling interest in the Clippers in 1981 for around $12 million, according to Forbes.

While the lawsuit has been filed, industry onlookers are skeptical it will hold up in court.

"It is unclear if the NBA constitution can supercede antitrust laws and Constitutional rights to own property," said one restructuring lawyer who has worked with a number of baseball teams who asked not to be identified. "It is an interesting question as to whether Sterling can argue that the league owners colluded against him to force him to sell and [if] they [stripped] his property rights through an arbitrary and capricious process."

The lawyer said league constitutions typically give a commissioner a "broad powers" to act in the best interest of the league, but "if the contract itself raises antitrust concerns, [the league] might not be able to excise the owner."

The source added that there is no grounds to argue that the Sterling Family Trust didn't receive full market value for the club, given the lofty valuation Ballmer is willing to pay.

The $2 billion pricetag is the highest price ever paid for any NBA franchise, almost quadrupling the previous record set by the Milwaukee Bucks, which sold for $550 million to hedge fund investors Wesley Edens and Marc Lasry on April 16.

While Donald Sterling said he would fight the sale, Shelley Sterling, which is controlling the team through the Sterling Family Trust, has said that her estranged husband has been deemed mentally unable to make decisions regarding the trust. No court decision has been made with regards to Donald Sterling's involvement with the trust.

Donald Sterling's attorneys, Maxwell M. Blecher of Los Angeles-based Blecher Collins Pepperman & Joye PC, and Bobby Samini of Costa Mesa, Calif.-based Samini Scheinberg PC, didn't respond to calls seeking comment. Bank of America Merrill Lynch, which is representing Shelly Sterling and the Sterlings' trust, also didn't respond to calls.

Kirkland & Ellis LLP is legal counsel to the Sterling Family Trust. The Kirkland team includes David Fox, Rick Madden, Andrew Herman and Bianca Levin-Soler. Kirkland didn't respond to calls.

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