A foundation run by Shelly Sterling could retain up to a 10% stake in the Clippers, according to the agreement to sell the franchise to Steve Ballmer.
By June 15, Sterling has to elect whether to sell 100% of the Clippers to Ballmer for $2 billion or designate that as much as 10% of the franchise will be held by a foundation or another charitable organization that she would head. If Sterling decides to sell just 90% of the team, the purchase price would be decreased accordingly to $1.8 billion.
Sterling has the option, according to the May 29 "binding term sheet" with Ballmer, to sell some other percentage — between 90% and 100% to the Seattle-based former Microsoft CEO, with the sales price to be reduced by an according percentage. The unsold percentage would go into the charitable fund, which could be called the Shelly Sterling Foundation.
The foundation would receive up to 10% of the Clippers' net annual revenue to create programs benefiting minorities, abused women and other causes, according to an individual familiar with the agreement. Shelly Sterling's representatives have said she wanted the transaction to aid some of the types of individuals who were targeted by her husband, Donald Sterling, in a recorded rant that sparked a furor around the franchise.
Shelly Sterling would serve as chair of the foundation and she and Ballmer would each select six members of the board of directors.
Regardless of the percentage of the team Sterling designates to put in the hands of the charitable group, Ballmer would retain full control over management and operation of the Clippers.
After Sterling's death, the agreement said, Ballmer will have a 90-day option to purchase the foundation's interest in the Clippers.
The sales term sheet gave no indication that Sterling's proceeds from the sale of the Clippers will go directly to fund the foundation, though members of her team have indicated she might choose to use some of the profits that way. But NBA officials said they believed that it was the proceeds of the sale that would fund the proposed foundation.
"The option is a mechanism to donate up to 10% of the proceeds from the sale to charity," said Mike Bass, the league's chief spokesman. "It is something that she has not elected to do yet, but we think it would be very positive for up to $200 million to be used to support positive causes."
The 13-page binding term sheet also outlines a variety of other perks for Sterling. Those include giving her the title of "Owner Emeritus" and "Clipper's Number 1 Fan" for the remainder of her lifetime.
In addition, for each Clippers games at Staples Center, Sterling receives two courtside tickets, 10 tickets in other sections, six parking spaces and 12 VIP passes. In the event the Clippers win an NBA championship, Sterling gets three championship rings.