Former Microsoft CEO Steve Ballmer has won bidding for the Los Angeles Clippers for a record $2 billion as the wife of Donald Sterling pushed through a sale without gaining the approval of the embattled owner.
Shelly Sterling has now signed a binding contract with Ballmer, according to a PR Newswire statement. She was acting under her authority as the sole trustee of The Sterling Family Trust, which owns the Clippers.
The transaction was done five days before a vote by National Basketball Association team owners on whether to force a franchise sale because of racist comments Donald Sterling made that were recorded by his female friend.
Mr. Ballmer, 58, outbid at least four other suitors. Each of the bids shattered the previous record sale price for an NBA team of $550 million paid in April for the Milwaukee Bucks.
"Ballmer made a tremendous, tremendous buy, he got a bargain," former Sacramento Kings owner Joe Maloof said in a telephone interview. "There's nothing like sports franchises in the big cities. Steve did the right thing, even if he overpaid in the short term. Long term, it's a smart play."
Music executive David Geffen said in an e-mail that his bidding group -- which included fellow billionaires Larry Ellison and Oprah Winfrey, as well as executives from Guggenheim Partners, owners of baseball's Los Angeles Dodgers -- had dropped out of the process.
The agreement with Mr. Ballmer could provide relief for a franchise and league that have undergone intense scrutiny since audio of Donald Sterling making racist remarks was released in April. Sponsors deserted the Clippers, and NBA players threatened to boycott.
Mr. Ballmer, with a fortune of $18.9 billion, is the 39th-richest person in the world, according to the Bloomberg Billionaires Index. He stepped down as Microsoft CEO in February, having joined the company as employee No. 30 in 1980. According to Bloomberg data, he owns 333 million shares of the software maker.
Mr. Ballmer was part of a group that last year tried to buy the Kings for $650 million from the Maloof family and move the franchise to Seattle. NBA owners rejected the bid, accepting a $525 million offer from a group that included Tibco Software founder Vivek Ranadive and agreed to keep the team in Sacramento.
"If I get interested in the Clippers, it would be for Los Angeles," Mr. Ballmer said in a May 15 interview with The Wall Street Journal. "I don't work anymore, so I have more geographic flexibility than I did a year, year-and-a half ago. Moving them anywhere else would be value destructive."
Pickup games with Microsoft managers
Mr. Ballmer is an avid sports fan who served as team manager for the Harvard University football team while an undergraduate. For years, he played in a Wednesday morning pickup basketball game along with some other Microsoft managers at the health club where the company gave employees memberships.
Hall of Fame player Earvin "Magic" Johnson, the target of some of Donald Sterling's racist remarks and at one point considered a candidate to bid for the Clippers, welcomed the sale. "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!" he said in Twitter messages. "Steve Ballmer loves basketball, is smart businessman & he'll probably shake every fans hand outside the arena on opening night!"
Donald Sterling has sent mixed signals in recent weeks as to whether he'll acquiesce to the sale. The NBA's Board of Governors is set to meet June 3 for a possible vote on whether to force an ownership change.
NBA Commissioner Adam Silver banned Sterling from the league for life on April 29. The league on May 9 installed former Citigroup and Time Warner Chairman Dick Parsons to run the Clippers until the ownership issue is resolved.
Mr. Sterling has made conflicting statements about whether he would allow his wife to sell the franchise they've owned since 1981, or fight their possible ouster in court. He signed a May 22 letter authorizing Shelly Sterling to negotiate with the league regarding all issues in connection with a sale of the team.
In a May 27 letter that served as his official response to the charges against him, however, he called the proceedings against him a "sham" and said he should be able to keep the team.
Seeking minimum bids of at least $1 billion, Shelly Sterling received offers from five prospective owners on May 28. One group, backed by Ares Management Chairman Tony Ressler and Oaktree Capital's Bruce Karsh, offered $1.2 billion, according to a person familiar with the bidding. That's more than double the record amount Avenue Capital Management's Marc Lasry and Fortress Investment Group cofounder Wesley Edens paid for the Bucks. Milwaukee is the 34th-largest TV market and Los Angeles is No. 2, trailing only New York.
Chuck Baker, who heads sports mergers and acquisitions as a partner in DLA Piper's Global Sports, Media and Entertainment practice, said he was shocked by the reported bid.
"Given the number of viable buyers in this market eager for a trophy asset, $1.5 billion wouldn't surprise me," he said in an e-mail. "However, the $2 billion reportedly being paid by Ballmer is an absolutely staggering price for this asset, even with the anticipated boost from local and national television revenues anticipated after the 2015-16 season."
Audio of Mr. Sterling telling a female friend that he didn't want her bringing black people to his games was posted on the website TMZ on April 25. People including U.S. President Barack Obama as well as current and former NBA All-Stars expressed outrage at the comments.
Mr. Silver, who succeeded David Stern as NBA commissioner on Feb. 1, banned Sterling four days after the audio surfaced and said he would urge the league's owners to force the team's sale. The forceful action provided a unifying moment between the league and its players, who said they would have boycotted the playoffs that night had Silver not acted as he did.
A forced sale would require support from 23 of 30 owner votes. The NBA has not said whether it would accept a bid that Shelly Sterling receives or seek to find its own buyer after the owners' vote.
The previous record sale price for a U.S. sports franchise was $2.15 billion, paid in March 2012 for the Los Angeles Dodgers by a group that included Guggenheim's Mark Walter, Magic Johnson and former Atlanta Braves and Washington Nationals president Stan Kasten.
Mr. Sterling paid $12.5 million for the Clippers, who have never advanced past the conference semifinals. Following a 57-25 performance this season, the Clippers were eliminated in that round by the Oklahoma City Thunder.
~ Bloomberg News ~