BY Art Thiel 07:31PM 05/29/2014

Ballmer, Clippers: A seismic dropping of jaws

This is what happens when a guy has no job and $20 billion. He does silly things. Like pay three times more than the previous top price for an NBA team. Oh, yeah — bye, Seattle.

Steve Ballmer: The face the rocked the sports world. / Wiki Commons

Imagine that — a Seattle guy buying a California pro sports team.

For years, the sun-kissed business monarchs came north with their millions to amuse themselves with the moss-covered fishermen and lumberjacks. Sam Schulman, Danny Kaye, George Argyros, Ken Behring, Joe Roth. They couldn’t buy into the sports action in the home state, so they went rogue in a place that defined wealth in clams dug instead of  clams banked.

Seattle sports fans often seemed at the mercy of guys whose priority diversions were tee times at Riviera Country Club and jet-set “safaris” with women who had to sign non-disclosure agreements.

But now, Steve Ballmer, Detroit-born but Seattle-monetized, outspent California’s barons for the NBA Los Angeles Clippers. The most misbegotten pro sports franchise in America,  suddenly a free agent after its owner was illegally and preposterously exposed for being himself, was even more preposterously worth $2 billion. The agreement to purchase was first reported by the Los Angeles Times Thursday afternoon.

Think about it: Every owner in the NBA, which includes Seahawks owner and Seattle guy Paul Allen, will be significantly wealthier in equity because Donald Sterling, a man who sat among them for more than 30 years, was too stupid to know it was a bad idea to be a bigot.

These people will be enriched because a Seattle guy, who in 2008 and 2013 tried to make the NBA work here, got so fed up with his hometown he took his billions to Los Angeles, where he blew up the entire sports world’s sense of financial value by exploiting Sterling’s absence of humanity.

This story could get more astonishing, but only if Jack Nicholson becomes the Clippers coach.

For Seattle sports fans eager for a return of the Sonics, there is no joy in seeing one of their own out-dilletante SoCal’s Botoxed gentry. Ballmer was Seattle’s muscle when it came to getting the NBA back to town. He partnered with Seattle native Chris Hansen to seek an arena in SoDo and relocate the Kings from Sacramento, a futile 15-month saga that previously led the Can You Top This? list of implausible sports-business stories.

When Sacramento, led by Kevin Johnson, an ex-NBA star turned Sactown mayor and forever the pet of former commissioner David Stern, found the money and the arena plan one year ago to keep the Kings, it was the beginning of the end for Ballmer’s Seattle ambitions.

For years under criticism from shareholders, employees and the tech industry for his leadership at Microsoft, he reluctantly announced in August he would be retiring. The stock price shot up 10 percent on the news. By February, the shove out the door was complete, with remarkably little ceremony, all of it dry-eyed, given his 14-year tenure at the helm.

After Hansen came under fire of his own for foolishly allowing some of his money to be used in an anti-arena campaign in Sacramento — he was fined $50,000 by state election officials — the arena project was further slowed by the inevitable Seattle process (an environmental impact statement) as well as smarter opposition. Then he lost his biggest political proponent, Mayor Mike McGinn, who was defeated in his re-election bid.

Somewhere last summer, Ballmer pulled away from the Hansen project. During the winter, he put in a serious bid for the only other NBA team known to be for sale, the Milwaukee Bucks. He lost that one too, when a couple of  New York guys paid $550 million to buy the team, plus another $100 million toward a new arena.

In April, the Sterling storm hit the NBA, a league that took great pride in its progressive actions on diversity, inclusion and globalization. Suddenly the owners found among them a Confederacy general still fighting the Civil War — even though anyone who dealt with Sterling over 30 years was surprised at nothing on the recording made public by his archivist/lover/arm-candy/model/whatever.

New NBA Commissioner Adam Silver quickly stripped Sterling’s epaulets — a $2.5 million fine, a permanent ban and a launch of a fast plan to unhitch Sterling from Clippers’ ownership. Silver was lauded for his decisiveness, which was curious since a sponsor boycott was underway and a player boycott was hours away. What else was Silver going to do — say, “Tut, tut”?

In true Microsoft fashion, Ballmer sensed vulnerability and went nuclear with a C-bomb  — cash. Last week, he signaled everyone to seek shelter when he told the Wall Street Journal that he wanted to be an NBA owner and if it wasn’t in Seattle, “so be it.” He also said moving the Clippers from LA would be “value destructive.” Then Thursday. . . boom.

For those who aren’t following the NBA, the Clippers and Lakers share Staples Center, which was built to house both, and are huge financial successes. If Ballmer/Hansen couldn’t get the failing Kings out of Sacramento, there is no pry bar in the cosmos stout enough to force the NBA to move the Clippers out of LA.

If it seems as if he has quit on Seattle . . . well, he has. As someone acquainted with Ballmer put it to me recently, “If he sits courtside in Seattle (as team owner), he’s surrounded by Microsofties. If he sits courtside in LA, he’s surrounded by Hollywood celebrities.”

Any questions?

For as ruthless as Ballmer was in business, he’s not in business anymore. He has $20 billion, no job and would like to be liked. And the NBA really likes him, because he’s already been vetted and can write one check to buy the team without seeking permission from anyone.

By agreeing to buy the Clippers for more than the huge Sterling real estate empire is worth (an estimated $1.9 billion), there is no public tussle, no vote to strip Sterling, no court fight. And since the NBA’s annual showcase, the Finals, begins Wednesday, the NBA will dissolve all red tape to get the Sterlings on their way to the new digs in hell.

But $2 billion will buy a lot of air-conditioning. And the episode offers inspiration for all of us who wish to say something profoundly moronic and be rewarded.

As for Hansen, there’s still a lot of rich Seattle guys who want the NBA to return to Seattle. If only to beat the Clippers. That will make Seahawks-49ers seem like grade-school dodgeball.


YourThoughts

  • Jamo57

    Sterling, “Ken Bering had the girls sign non-disclosure agreements? Dang!”
    Oh well, on the bright side I’m glad VBC is so easy to get to for scratching my NHL itch. And the locals are so much more welcoming of us out of town sports fans than Seattle is. Now if they could just get back to the Cup Finals……..

    • art thiel

      Glad you don’t mind the two-hour waits at the border. Gives you a chance to pull up SPNW while you’re waiting.

      • Jamo57

        As a matter of fact one day I was sitting in the Blaine border crossing listening to you being interviewed by the guys on the TEAM1040. LOL.

  • DixDachshund

    While we know there are a gaggle of quadrillionaires in Seattle, would any single one of them be willing to stick his neck out publicly and open his wallet sufficiently wide enough to have $1 billion extracted for a new or suddenly available established NBA team? The league is, in a sense, just what Donald Sterling probably would have endorsed: an exclusive mega-rich guys’ enclave, no longer open to anyone.

    • art thiel

      No one is a rich as Ballmer, but there are a number of lower-profile whales who could get this done as a group. But they will want to see an arena plan green-lighted.

      • DixDachshund

        Ah, forgot about the “whales” designation!

  • Leon Russell

    Very good column.
    I do think you missed one thing, though. Again, Ballmer has raised the price of any franchise in Seattle, or anywhere else. Just like the bid he made for the Kings raised the price of an expansion franchise, or buying an existing team, the $2 billion he just offered for the Clippers has raised the price for any NBA franchise another huge notch.
    And who are the rich guys in Seattle who are going to take Ballmer’s place? Unless its Bill Gates, or Jeff Bezos no Seattleite has nearly the money that Ballmer has (Paul Allen already owns the Blazers). If Gates or Bezos are interested in bringing the NBA to Seattle, you have a real scoop.

    • JimC

      Art alluded to this. Every other owner in the NBA now has an erection of the heart, or wallet, for Stevie B. Every owner should now write an e-mail to Ballmer saying, “You are just one of my favorite people on earth!” What the next NBA franchise sells for, who knows; it won’t be 2 billion, but it could be 1 billion.

      It’s just a breathtaking number. I imagine he overbid by maybe 500 million, possibly more, to buy into the fraternity. What the Oprah/Ellison/Geffen bid was, I would love to know. But, then I shrug and say, more power to him. He’s got 18 billion left, he can buy a beachfront house in Cali and retire. The Clips won’t lose him any money. When he kicks it in 25 years or so, the team will be worth more than he paid for it.

      • art thiel

        Geffen group’s bid reported by the LA Times was $1.6B, so your overbid estimate is close.

        And you’re right. The man can afford.

        And thanks for pulling up the Clay Bennett email quote to David Stern. I don’t ever want Seattle sports fans to forget that.

    • art thiel

      Leon, where you been? Good to read you.

      It’s plain that Ballmer raised stakes for all. But there are numerous other wealthies with lower profiles who together can do it. It will be much harder now. The town is loaded. It’s a question of whether Hansen can get green-lighted on the arena. Most of the potential owners don’t want to be part of a public fight with the port, Mariners, et al.

  • Jared S.

    Well, this isn’t good for our chances of getting the NBA back in the relevant future, but they probably weren’t very good to begin with. I hope fans won’t be mad at him, since this was probably the only way for him to get a team, and I appreciate him for being willing to spend big to try to keep the Sonics here in 2008 and bring a team back last year.

    I hope we can at least find a way to respond to the NHL’s apparent desire to be here, but Ballmer’s exit from the Hansen group probably doesn’t help there, either.

    • art thiel

      See my follow up column Friday.

  • Jared S.

    Then he lost his biggest political proponent, Mayor Mike McGinn, who was defeated in his re-election bid.

    How much did that really change the equation, though? Murray has said he supports the deal, and every member of the council who voted yes on it is still there, and the deal still is supported by Constantine and the county council.

    • Jeanine Curtis

      I think Murray is non-committal at best. He won by being the ”anti-McGinn” and is reported to have close ties to the Port of Seattle, who have been staunch arena opponents.

    • art thiel

      Again, Jeanine below is correct. Murray has been non-commital and reluctant to expend political capital where he has no skin in the game. In light of Hansen’s politcal misdeed in Sactown and the lack of progress in getting a team, the city council has grown cold. Things change with every election.

  • jafabian

    Some things just aren’t adding up for me. Ballmer has never expressed becoming an owner for ANY team until recently. Why? He’s resisted even when the NBA made overtures ih the past to him. Neither he or Chris Hansen have publicly made a statement that I’m aware of on how this impacts Hansen’s group. Why is Ballmer willing to pay so much for a franchise with a history of losing? And if he had billions at his disposal why didn’t he bring out that trump card when trying to acquire the Kings? $2 billion would have made a bigger splash than the $500 million offered for the Kings.

    Though I believe Ballmer and the Clippers will be in LA a part of me questions what’s going on behind the scenes. Pretty expensive ticket if he’s doing this to sit next to Hollywood celebrities. They’re just people despite their fame. And most of them go to the Laker games despite their problems.

    • Jeanine Curtis

      And if he had billions at his disposal why didn’t he bring out that trump card when trying to acquire the Kings? $2 billion would have made a bigger splash than the $500 million offered for the Kings.

      1) They DID try to up the bid to $625MM, but NBA refused to acknowledge it.
      2) Once Sacramento agreed to subsidize a new arena, it was game-over. $2 Billion wouldn’t have made a difference.

      I’m guessing that Ballmer saw this as his last best chance to become an NBA owner. Things on the expansion front aren’t looking so hot. Ballmer is pushing 60 yrs old and didn’t want to wait any longer.

      • jafabian

        We’ll have to agree to disagree then. I don’t see the NBA saying no to $2 billion at al, not with their money issues. Sure if the Hansen group tacks on another $100 million to their orginal offer the NBA can opt to be foolish and decline it but they wouldn’t have said no to $2 billion. I guarantee it. Especially for a smaller market than LA like Sacramento. And if they accepted it then the Kings would be here and Phil Jackson would be coach and GM. Or GM with Nate McMillan or Jack Sikma as coach. And they’d be targeting Durant as a free agent in 2016.

        Some think this puts someone at the table to support a future Seattle bid but I don’t see that. It just means a future vote will be 21-9 rather than 22-8.

        • art thiel

          C’mon J. Ballmer still had a day job when the Kings came up. And $625M wasn’t enough to get Stern to blow up his hard-won CBA by admitting another team had failed its market on his watch.

          Doesn’t matter who plays pn or coaches the team. The Clips were suddenly available. He made a power move, as he as always attempted to do. This one worked.

      • art thiel

        You gots it, Jeanine. Sterling’s unexpected rants caused the Clippers to fall in his lap. $2B was nothing to him.

    • art thiel

      He was stoned by the NBA in May, announced his retirement in August, was forced out in February, and bid on the Bucks in March. He’s out of work and has $20B to turn. What doesn’t add up?

      The Clippers history doesn’t matter. They’re one of 30 teams, and available now. And it’s LA.

      Regarding Sactown, Stern wasn’t going to move the Kings almost no matter what. Stern knew he’d get Ballmer’s money sooner or later.

      Ballmer wanted to be an NBA owner NOW. Not in three years when Seattle is ready. I see zero mystery in what happened.

  • Gerry M

    Is that the Ballmer picture that will be used for his involuntary commitment? If a picture’s worth a thousand words, that one’s got a 60 day mental evaluation written all over it!

    • art thiel

      Believe me, the Ballmer gallery has far worse. He would scare McMurphy and the Chief (hope you saw the movie).

  • Tim Durkan

    nailed it, Art…

    • art thiel

      Thanks.

  • PokeyPuffy

    This whole episode reminds me of an NBA game, in that you always have to wonder if its fixed. All of this played out during their peak ratings season.BTW how was 2 billion arrived at , as it is so grossly over other franchise values?

    • art thiel

      The value was reached because the next high bid was $1.6B, and Ballmer, as the Seahawks like to say, wanted to leave no doubt.

  • Matt712

    Dream scenario: Ballmer just doubled the price of every team in the NBA. Who then will vote against his moving the team to Seattle? Then, when Kevin Durant’s contract is up, he makes an equally outrageous offer. Sorry, I’m drunk.

    • art thiel

      Jagermeister is such a bad hangover too.

  • Effzee

    Wow. The NBA: What a Racket.

    • art thiel

      Sorry you didn’t invest back in 1967, huh?

  • hb2p

    I was all for the financing arrangement the Hansen group proposed. Now however, the teams are worth more than the arenas. If they have the cash to buy the team at 1-2X the price of the arena, the guys buying the teams need to build their own arenas.

    • 1coolguy

      I agree – after this one, to hell with supplying arena cash anymore.
      They are on their own!

    • art thiel

      That, of course, is what most of the plan’s critics say: Fund it your damn selves. That way, no need to be tied to the political process. It’s how they do things in San Francisco.

  • notaboomer

    why didn’t ball(m)er just buy the freaking sonics for Xbillion from howard schultz’s group or buy the team for $1/2b and put another $1/2b into an arena, etc? oh i think it’s b/c sonics fans were tepid at best from about 1999 til the team left. that’s the real story. not enough seattlites really gave/give a damn about the nba anymore. la’s got no football. it’s a hoops town. stay inside and keep the $500 hairdo intact yo.

    • art thiel

      nota, not sure what you’re on, but save me some.

  • notaboomer

    it’s totally worth $2b of hush money to the sterlings to let blacks attend clippers’ games in peace, right?

  • notaboomer

    i hear ball(m)er and mrs. sterling consummated the deal after seeing rochelle rochelle (a young girl’s strange, erotic journey from milan to minsk)

  • notaboomer

    stevie b knew it was time to push donald sterling out of the nest.

  • notaboomer

    uhh mister ballmer there’s a v. stiviano for you on line 3. says it’s urgent.

  • notaboomer

    and to think i bought a mere sports car for my mid-life crisis.

  • notaboomer

    i am in awe of our overlords a bit more each day.

  • jdkicker

    So Ballmer is paying half again the valuation of the Lakers despite making just over a third of the revenue the Lakers bring in. On top of that you have a deal with AEG that brings in well under half of what the Lakers bring in Arena revenues. Ballmer says it would be bad business to move the Clippers, yet it was bad from a business standpoint to spend 2 billion on the Clippers who will always play little fish in the big pond vs the Lakers. Throw in the fact that he’ll be watching AEG bringing in hundreds of millions in Arena revenues, while Ballmer makes out with 20 to 30 million annualy. I would love to see Ballmer turn Al Davis on a league that leveraged his deep pockets into 3 new public funded arenas. That said I do think any bitterness Ballmer might have had over being used for leverage by the NBA will probably be erased by the fact they are letting in him now. Plus his pockets are deep enough he doesn’t really have to worry to much about any of the above.

    • 1coolguy

      Ballmer is just being consistent with the money he repeatedly blew @ MS for all the horrible acquisitions he did.
      He was a caretaker put in charge of what should have been a dynamic tech company. Gates made him CEO based on friendship, not skill set.
      Instead he really was a failure, which I base on the MS stock price change during his tenure, which was @ $60 in 2000 when he was made CEO and is @ $40 today. Wow, what a loser!

    • art thiel

      Your last line says it all. This play had zero to do with annual operational profit.

      And the NBA loves the fact that they could pull Ballmer out of Seattle. Stern and Silver are dancing the night away.

      • jdkicker

        So Ballmer has been rewarded for helping leverage public funding to three new arenas, Seattle and Hansen out in the cold? What would be the ultimate irony is if the ownership group left standing had to turn to Seattle and ask for more money from the city to make up for Ballmers departure.

  • Desperately Seeking Approval

    So his penis is even smaller than his two greatest accomplishments: Windows Vista and Win 8.0. Can’t wait for the patches, which will forever be trying to fix the “vulnerabilities” in this Malicious Software Tool.

    Next time you want a basketball team, buy a Mac.
    .

    • art thiel

      Cold, dude. But funny.

  • Trygvesture

    Why? Why not overpay for the Bucks or Sac (even though 625m was rejected, 1B would’ve turned some heads) and save about half of that Clips price?Pretty pricey to get a hand stamp for entry into THAT club of goofballs.

    The rarified atmo of the way-too-wealthy must have a neuron interfering component. Or a rabbit hole to tumble into that normal people can’t access. Crazy.

    • art thiel

      I’ll also refer you to my follow-up column.

      Other groups bid $1.2B and $1.6B respectively, so that was the market floor. Ballmer overpaid by $400M. To him, chump change.

  • 1coolguy

    $2 BILLION for a team Forbes estimated @ $700 million? The Forbes estimates of NBA franchises have been fairly accurate, borne out by the past few recent sales.
    Frankly, Balmer can spend his bucks any way he wants, BUT as he did with Microsoft’s “funny money” (stock) which he used to consistently OVERPAY for acquisitions, he simply did the same brain-dead thing here with the Clippers.
    Let’s remember Wall Street thought so little of him that one day after he announced his resignation MS stock jumped 10%! No one in the tech community thinks much of Ballmer, who was a horrible CEO. If he had 1/10th the skill set of Steve Jobs MS stock would be 50 times what it is today.
    He was a technocrat with zero personnel skills and it was a sad day when Gates announced Balmer was to succeed him @ MS.
    The Clippers are said to have made $15 million last year, 2013. Yes: $15 MILLION, so tell me that paying $2 BILLION is not an over payment? there is no land, no stadium and just an ok local media contract.
    Here is what we have: Another tech billionaire playing with his silly monopoly money, who is bored to death and not working, does anything it takes to be relevant.
    So Steve buys himself court side seats and a team that MIGHT be worth $2 Billion in 10-20 years.
    Dumb and dumber………….

    • art thiel

      The ROI on this investment is completely immaterial to Ballmer at this stage of his life. If the Clips win 2-3 championships on his watch, do you think your calculations will mean anything to him? And even if they don’t win, he’s now the biggest sumbitch in the NBA valley. That’s all that matters to him.

      He bought himself an entire league.

  • 1coolguy

    ANOTHER DUMB BALLMER MOVE – of course, when you are playing with silly money (stock options) and you have a history of DUMB PURCHASES (see below, MS acquisition list) this is not surprising he paid THREE TIMES what Forbes valued the Clippers for.
    Do note this purchase does NOT include the Staples Center! This is $2B for the team ONLY, which made $15 MILLION last year!

    Here’s Ballmer’s tenure @ MS in a nutshell:
    CEO years: 2000 – 2014
    MS stock price: 2000: $60 2014: $40.

    Skype purchase: $8.5BILLION
    Nokia purchase: $7.2BILLION
    These are just a couple of Ballmer’s brain dead ideas he blew MS bucks on.
    Stunning to think Gates let him do these.

    http://en.wikipedia.org/wiki/List_of_mergers_and_acquisitions_by_Microsoft

    • art thiel

      This “dumb” move is strictly his nickel, so if he doesn’t care, why should you? His MS history does speak for itself, and his critics are many, mostly justified.

      Your one point about ’06 is valid. Ballmer should have busted a move then. But he was at the height of influence, and had young kids at home. Understandably, he didn’t want the hassle.