Steve Ballmer, the former chief executive of Microsoft (NASDAQ:MSFT), scored a $2 billion deal to buy the NBA’s Los Angeles Clippers, more than tripling the previous record for a professional basketball team.
The sale was confirmed early Friday morning after the conclusion of a bidding war that also attracted media mogul David Geffen, Oracle (NYSE:ORCL) CEO Larry Ellison and Oprah Winfrey. The three bidders teamed up with two principals of Guggenheim Partners to offer $1.6 billion, according to multiple reports. Los Angeles investors Tony Ressler and Bruce Karsh submitted a bid of $1.2 billion.
Shelly Sterling signed a binding contract for the sale of the Clippers on behalf of the Sterling family trust. Sterling initiated the sale process after her husband, Donald Sterling, relinquished control of the Clippers.
The longtime Clippers owner came under fire for controversial remarks that were made public last month. Sterling received a lifetime ban from the NBA and was fined $2.5 million.
His attorney, Max Blecher, confirmed to FOX Business that Sterling plans to sue the NBA for $1 billion. The lawsuit will seek damages related to the league's actions against Sterling.
Sterling, a real estate developer, acquired the team for $12.5 million in 1981, when the Clippers were located in San Diego.
“I am delighted that we are selling the team to Steve, who will be a terrific owner,” Shelly Sterling said in a statement. “We have worked for 33 years to build the Clippers into a premiere NBA franchise. I am confident that Steve will take the team to new levels of success.”
Bank of America (NYSE:BAC) Merrill Lynch acted as financial adviser to Sterling.
Ballmer was known for playing pickup basketball games with Microsoft employees near the company’s Redmond, Wash., campus. His 4% stake in Microsoft is valued at around $13.4 billion, and he still serves on the software giant’s board. Ballmer stepped down as CEO in February, ending a 14-year stint at the helm.
Ballmer said he looks forward to submitting his name to the NBA Board of Governors for approval as the Clippers’ new owner. Both the NBA and Donald Sterling must approve the sale. It remains unclear if Sterling will attempt to block the move. Sterling could be forced to sell the team at a hearing on June 3 if 23 of the remaining 29 NBA owners vote in favor.
As a condition of approval, Ballmer could be asked to commit to keeping the team in Los Angeles. Ballmer, 58, was part of a group that made an unsuccessful bid last year to take over the Sacramento Kings and move the team to Seattle. Ballmer has publicly indicated he would keep the Clippers in Los Angeles.
“I love basketball. And I intend to do everything in my power to ensure that the Clippers continue to win – and win big – in Los Angeles,” Ballmer said, adding that he worked with NBA Commissioner Adam Silver throughout the process.
A Clippers spokesperson said the team didn’t have any comment.
Mike Bass, the NBA’s executive vice president of communications, issued a statement saying the league was informed of the agreement on Thursday night, and the owners’ advisory and finance committee discussed the developments on a conference call.
“Commissioner [Adam] Silver has consistently said the preferred outcome to the Clippers proceeding would be a voluntary sale of the team,” Bass said. “We await the submission of necessary documentation from Mrs. Sterling. In the meantime, the June 3 special meeting of the NBA Board of Governors remains as scheduled.”
The $2 billion price tag is substantially higher than the $550 million two hedge fund billionaires, Wesley Edens and Marc Lasry, agreed to pay for the Milwaukee Bucks in April.
Ballmer’s proposal also comes just shy of the $2.15 billion transaction for MLB’s Los Angeles Dodgers, which was acquired by a Guggenheim-led group in 2012. Former NBA player Magic Johnson is also part of the Dodgers ownership team.
Unlike the Dodgers deal, the Clippers’ value is largely based on the team itself. The new owners of the Dodgers acquired an expiring television rights deal that was turned into a more lucrative package with Time Warner Cable (NYSE:TWC). They also entered into a joint venture with former owner Frank McCourt over Dodger Stadium’s parking lots and land surrounding the ballpark.
The Clippers play in L.A.’s Staples center, which is owned by a third party. The team does have a training facility in Playa Vista.