Thursday, July 3, 2014

Tarnished Sterling


The trial deciding whether Shelly Sterling can sell the Los Angeles Clippers as trustee of her husband's trust will start on Monday, July 7.  Her husband, Donald Sterling, was banned from the NBA for life and fined $2.5 million after his "girlfriend" recorded him making racist statements.  After he was declared mentally incapacitated by 2 physicians, he was removed as trustee of his trust which enabled his wife to sell the team to Steve Ballmer for $2 billion.  The purchase price is the second highest for a sports franchise and is 2x the second highest American purchase.   Sterling only  paid $13.5 million in 1981.  The trial will focus on the trust terms.

Several points:

1.  The trusts I draft for my clients have similar provisions for removing a mentally incapacitated trustee.

2.  That Sterling is not accepting of the incredible $2 billion offer for a franchise known as the most inept in all of sports during his ownership tenure is evidence that he might be mentally incapacitated.

3.  His argument will be that he is not incompetent but simply racist and making a bad business decision.  He might wish to re-think that.