Former Microsoft Corporation (NASDAQ:MSFT) CEO Steve Ballmer became the newest member of the NBA owners club on August 12th of this year when he purchased the Los Angeles Clippers for $2 billion. Even though he’s never owned a sports club before, if he approaches owning with the same passion he showed in buying the team, he literally can’t go wrong.
Steve Ballmer already got things off on the right foot with the players and coaching staff by meeting them at Spago for dinner on August 17th. He arrived in a suit and tie and left with the top button of his shirt undone and a big smile on his face.
Steve Ballmer always loved basketball
Steve Ballmer loves basketball. He was the statistician of the basketball team at Harvard, coached some of his sons’ teams and was well-known for joining pickup basketball games at Microsoft headquarters. Following the SuperSonics departure from Seattle, he tried twice to bring an NBA team back to Seattle, but it was not in the cards.
Then the Donald Sterling scandal broke. A day later one son phoned him. “Dad, pay attention,” he said. “The Clippers will sell.”
Chasing the Clippers
Steve Ballmer decided to go for it. He telephoned friends and acquaintances who were owners or part owners of NBA teams asking for advice. When Commissioner Silver announced Donald Sterling’s punishment for his racist comments, a friend who is part-owner of the Golden State Warriors, told Ballmer to go to the Clippers-Warriors game that night. “Get your face out there,” he said.
The Clippers won an emotional playoff game. It was Steve Ballmer’s first time at a Clippers game
Buying the Clippers was not going to be easy. Entertainment moguls Oprah Winfrey and David Geffen, along with Oracle Corporation (NYSE:ORCL) billionaire Larry Ellison, were all in the bidding mix.
“Pay Dodger money,” one adviser told him, referring to the record $2 billion a group paid in 2012 for the Los Angeles baseball team. For reference, the most recently sold NBA franchise, the Milwaukee Bucks, sold just a few years ago for $550 million.
Mr. Ballmer did his research to calculate the value of the franchise, focusing on the two media contracts coming up soon, but including costs such as NBA fees and player salaries.
“I priced it at a multiple of earnings, based on what I think I can do to make this work,” Mr. Ballmer said. “It’s aspirational, high-achievement, high-performance, but not insane.”
He sat with Commissioner Silver at another Clippers game on May 11th. Silver, who was speaking to all bidders, suggested Ballmer contact the Sterlings directly rather than waiting for official league actions.
Steve Ballmer decided to approach Shelly Sterling personally, not through lawyers. Former Disney CEO Michael Eisner, who had season seats next to the Sterlings, called Shelly Sterling to introduce Ballmer.
Ms. Sterling agreed to take Ballmer’s call. He on May 24 at around 7 a.m. and they agreed to meet the next day, one day ahead of the other bidders.
Ms. Sterling’s first question to Ballmer arrived at her Malibu mansion was would he move the Clippers to Seattle?
“The answer is no,” he said unequivocally. Moving the team would be financially disastrous, he replied, and “I’m committed to L.A. I love L.A.”
Ballmer had a deal sheet ready to go, but he decided to try bonding first.
“Steve charmed Shelly with his passion about basketball and a future Clippers championship,” said Mr. Baradaran. Importantly, she told her lawyer, Mr. Ballmer was one person, not a group, and “this isn’t a toy for him.”
The discussion continued over dinner at Nobu, where they discovered they both had distant relatives from the Ukraine.
However, Steve Ballmer’s attorney, Scott Roades, warned him that bidding for the Clippers was escalating into “a very competitive and fast-paced process.” He told Ballmer to be available to Ms. Sterling’s lawyers and bankers 24/7.
Ballmer decided to take his advice and stay in LA. Eventually it came to appear his $1.75 billion bid was the highest.
Then, Ms. Sterling asked for $2 billion, courtside seats, parking spaces and the title of “owner emeritus.” Steve Ballmer agreed without hesitation and even included the title of “Clippers #1 Fan.”
After signing the paperwork, she told Baradaran: “Steve is my favorite. I would have considered a lower bid to get him as the owner.”