The Economics Of Donald Sterling Selling The Clippers

April 30, 2014 in Daily Bulletin

Donald Sterling is the owner of an American basketball team called the Los Angeles Clippers. He was recently caught on tape making racist comments and the National Basketball League is now trying to force him to sell the team. Jordan Weissmann looked at some of the economics behind this:

  • Sterling bought the team in 1981 for $12.5 million. According to one estimate, today the team is worth $700 million.
  • This means that Sterling’s “punishment” could gross him a profit of $687 million.
  • He will have to pay Californian and Federal Capital Gains and other taxes of $420 million if he’s forced to sell.
  • Sterling is 80 and may have never intended to sell the team. If instead he had left it to his heirs only about $280 million in inheritance taxes would be owed to the government.
  • Therefore Sterling’s estate will lose hundreds of millions of dollars in taxes if he is forced to sell – though Sterling himself will make a tidy profit.

Read more about the breakdown of the taxes that Sterling will have to pay, other fines that have been imposed on him, and more over here.

Source: Slate