The Economics of Race: Donald Sterling and the NBA a Brand in Crisis

The most exclusive club in America is not a country club or a political party but being a majority team owner in American sports.  This privilege is reserved for a select few, the entry point has nothing to do with college degrees, GPA or how smart an individual is.  Majority sport team owners are extremely wealthy, in the NBA 14 of the 30 of team owners are Billionaires and the remaining 16 have a net worth north of $200 Million.  As a talking point there are a sufficient number of African Americans that fit this category but their net worth alone won’t get them on this short list.

On Saturday morning (04/26) I opened my email inbox at about 7:00am to find out Donald Sterling owner of the Los Angeles Clippers was reportedly caught on tape making racist remarks to Girlfriend which was first reported on TMZ.com on April 25, 2014.  I was very disturbed as a human being more so than as an African American to hear the ignorant statements that he made.   Does it appear that Sterling was setup by V. Stiviano his girlfriend and recorded without his knowledge?  Do most people say things in the privacy of their home that they wouldn’t say in public?  The answer is yes to both questions and under California law V. Siviano probably illegally recorded their conversations.  But in the words of Drake, “…now we’re here…”, the statements Donald Sterling made are now public record and the NBA has no choice but to deal with it.

Race Impacts Everything

Race impacts almost every decision that we make everyday and I am sure that are many people will totally disagree with this point.  Think about where you live, what schools your children attend, who you married, your friends/network, employment, mortgage rates, automobile insurance rates, and deal flow to name a few.  Having said that, sports is the purest example of the economics of race, so now lets dig into the NBA brand.

The NBA Brand

The NBA has been the poster child for diversity in American sports from the coaches on the sidelines, to the executive’s they hire and obviously to the players on the court.

  • 81% of NBA players are people of color

  • 3/4 of NBA players are African-American

  • 27% of NBA coaches are African-American

I have spent a considerable amount of time pouring myself into the subject matter of branding and I realize that at it’s very core that brands are more than colors, logos, and names.  Brands are stories, they are a collective of experiences and impressions that people make an emotional connection to, that drive economic outcomes in our purchasing decisions and the market value of the organizations that they are developed for.

The NBA Has Only One Solution

As a brand strategist if I were advising the NBA here is what I would recommend as the only course of action.  I am not a lawyer so I don’t know all the complexities of the NBA by-laws or the sanctions that the NBA can impose on Donald Sterling as an NBA owner, but here is what has to happen from an NBA brand management standpoint.

  1. Indefinite Suspension of Donald Sterling: There should be an indefinite suspension of Donald Sterling while the NBA is investigating the authenticity of the tape which should be concluded this week.  Basically Sterling needs to stay out of public view and not interact with the the team during the playoffs.  The Clippers organization has already made a statement about the audio without admitting that Donald Sterling is the other voice which no lawyer worth her salt is going to do.

  1. Donald Sterling has to sell the team to Magic Johnson:  Magic and the Guggenheim Partners investment group that own the Dodgers recently purchased the WNBA Los Angeles Spark and are the perfect partners to purchase the team.  It is a great story:  Magic along with Bird saved the NBA in the 80’s.  Magic is in phase II of his career is a highly successful businessman in LA that could save the NBA again during this brand crisis.  He is also a 5-time NBA Champion with the Los Angeles Lakers and is at the heart of the crisis with the instagram photo that was posted.

  1. Provide Donald Sterling with a way out (Mianzi): In the Chinese business culture there is a principle called Mianzi which centers around the idea of saving face.  In China they believe when a business person or company has a public failure that the option of giving them a way out should be provided.  Donald Sterling a billionaire with a network of $1.9B can’t give his way out of this situation regardless of how much he gives to the NAACP or any other organization.  The reality is, is that Donald Sterling could probably maintain ownership of the team but it would be a living a “H___”.  He wouldn’t be able to seat courtside and would no longer be able to hang out with the players in the locker room, no player on the team is going to want to be connected with him whatsoever.  This allows him to ride off into the sunset with his money.

  1. Crisis Management PR (Magic, Sterling and the NBA):  As part of the agreement Sterling can negotiate that Magic and the NBA work with him to salvage his reputation.  It would be the best alternative on the table.  It would be an incredible story that people could get behind and believe in.  It is also the only authentic story that can be developed out of this situation, there is no way to spin this story but you could have an amicable ending for all parties.

I know the NBA is going to move swiftly and decisively in their course of action.  The solution outlined is the best case scenario for all parties involved.  Let’s see what happens.

  • YaBoyLV

    I agree with your suggestions. I really like the point of Sterling and Magic working together.

    • YaBoyLV,

      I think there is an opportunity for that to happen we will see what happens moving forward.

  • Amber Easton

    Great read! “Sell the team to @MagicJohnson”. That would be perfect.

    • Amber,

      Thanks. The story would come full circle with Magic as the owner.

  • AJ

    Does Magic Johnson, the single black person at whom these remarks were most directly targeted, really want to contribute to Sterling’s wealth by buying the team? Does Magic Johnson or the NBA really have an incentive to help repair Sterling’s reputation?

    • Kyle Howard

      I don’t think Magic, nor his partners would look at the purchase of a team as contributing to Sterling’s wealth. While it would I think the impact Hajj spoke about of having an owner such as Magic in the league would be far more influential and impactful than the money going to Sterling.

      • Kyle,

        Appreciate your post and agree with your comments.

    • AJ,

      There is no way to stop Sterling from benefiting from the sell of his team! I gave the only steps I could see in repairing his reputation. The problem is that you can’t unring the bell there is no PR that can undo what has been said.