Sterling scandal: Loss of Clipper sponsors could spur NBA suspension
Major sponsors of the Los Angeles Clippers are fleeing in droves as they rush to distance themselves from racist comments attributed to team owner Donald Sterling.
CarMax, Virgin America, Kia, State Farm, Red Bull and a growing list of other sponsors are canceling or suspending their deals with the basketball team amid allegations that Sterling ordered a friend to avoid publicly fraternizing with black people.
The lost revenue could give the NBA additional incentive to suspend Sterling for conduct detrimental to the league, one sports attorney said.
“When sponsors are threatening or taking action to terminate their sponsorship agreements, that’s detrimental to the league,” said Irwin Raij, a sports business attorney with Foley & Lardner in New York. “The NBA is a very powerful brand. These statements clearly are prejudicial and can negatively impact the business of the NBA. As a result, I think the commissioner has a very strong argument to say the statements are detrimental to the league.”
Fans and even an NBA coach are calling for boycotts of games and merchandise. Free agent players may steer clear of the team, hurting future ticket sales and income tax revenues. Companies once loyal to the Clippers may start reserving corporate boxes for Lakers games.
“This casts a pall over the entire Clippers franchise and would affect their ability to do business in the present tense, but also possibly going forward,” said Robert Boland, a professor of sports business at New York University’s Tisch Center. “It’s very serious. And what makes it more serious is there’s no easy solution.”
It appeared unlikely that the NBA could force Sterling to sell the team, but it could make a case to remove him from day-to-day operations and pressure him to sell.
By prohibiting Sterling from attending games or managing the team, the NBA “can take away the joy of ownership and the benefits of ownership to the point where it requires Mr. Sterling to think about whether or not it’s something he wants to continue to do,” Raij said.
The Sterling backlash began over the weekend when celebrity gossip site TMZ released an audio recording in which a person identified as the Clippers owner lambasts V. Stiviano, a friend, for posting a photo of herself with Lakers legend Magic Johnson on Instagram.
“It bothers me a lot that you want to broadcast that you’re associating with black people,” says a voice said to be Sterling’s.
In rapid succession Monday, Clippers sponsors began dropping from the team’s advertising roster.
The timing couldn’t have been worse. The team, historically lackluster and overshadowed by the glitzy Lakers, with whom it shares the Staples Center arena, has been on a roll recently.
Popular players such as Chris Paul and Blake Griffin helped the Clippers rank seventh for home-game attendance this season out of 30 NBA teams, besting the Lakers for the third year in a row. The Clippers have sold out 140 home games in a row starting in Feb. 2, 2011, including playoffs games.
Television viewership was strong too. The Clippers are having their third-highest-rated season ever on PrimeTicket, a regional sports network owned by Fox. And the Clippers were the 10th most popular NBA team in terms of merchandise sales, according to the NBA.
All that has helped the Clippers’ value skyrocket in recent years, to as much as $700 million.
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