NBA may need to cut a deal to finally get rid of Sterling

NBA may need to cut a deal to finally get rid of Sterling
May 23, 2014, 5:45 pm
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BOSTON — When you've amassed the kind of fortune Donald Sterling has, you do so in part because of your ability to cut deals that are often lopsided in your favor.

So as we look at all the intricacies and challenges and issues that have come into play in the NBA's efforts to pry the Los Angeles Clippers from Donald Sterling's control following racist remarks, we all know how this ends.

The only way to bring closure without having it drag out, is to cut a deal.

The Sterling family having a piece of the team when this is all said and done is a non-starter.

Donald Sterling knows this.

And having his wife Shelly negotiate on his behalf does nada to soften the league's stance towards the Sterling family's interest in the team.

In response to reports about Donald Sterling surrendering controlling ownership of the Los Angeles Clippers to his wife Shelly, here's what NBA spokesman Mike Bass had to say:

“We continue to follow the process set forth in the NBA Constitution regarding termination of the current ownership interests in the Los Angeles Clippers and are proceeding toward a hearing on this matter on June 3."

In other words, you go ahead and do what you do, Sterlings.

The NBA still plans to cut you off.

And while the Sterlings may seem backed into a corner, they do have one ace up their sleeve —  time.

The NBA doesn't want a prolonged legal proceeding, and the Sterlings have the ability to do just that . . . unless a deal is cut.

Future ownership of the team by anyone tied in with the Sterling family, is just not going to happen.

So short of that, the Sterlings are likely to focus on getting as much money as they can when this is over.

There's a strong possibility that the Clippers will sell for close to $1 billion, a far cry from the $12.5 million Sterling bought the team for in 1981.

But with that sale comes state and federal taxes, which will gobble up a pretty hefty slice of the profits.

And who'll be the happiest if this indeed goes down?

He's the family member most of us never like to talk about or own up to . . . yes, Uncle Sam!

Selling the team will jump-start a capital gains tax of 20 percent and a California state tax of 13.3 percent on the difference between what the team was bought for and what would become the eventual sale price.

So if we're talking a $1 billion sale, the Sterlings would be looking at more than $300 million in taxes.

Even for folks with pockets as deep as the Sterlings, which will get even deeper after this sale, that's a hefty tax hit that, naturally, they don't want to take.

So don't be surprised if the Sterlings agree to a sale but only if the new owner or the NBA agree to pick up the taxes that need to be paid for completion of the deal.

Of course, no potential owner or the NBA for that matter will want to do that.

But when you consider doing so would bring this to an end much sooner than anyone anticipated, it may prove to be a small price to pay if it avoids months and potentially years of litigation that might do even more harm to the NBA brand.