How Do You Solve A Problem Like Donald Sterling?

The Article: How Do You Solve A Problem Like Donald Sterling? by Heidi Moore in The Guardian.

The Text: When we see a rich man abusing his power, we like to imagine we know the way to cause him pain: hit him where it hurts – in his bank account.

It rarely works. Fines, lost businesses, even bankruptcies are all mere potholes on the road to wealth. That’s why a boycott is such an ineffective path to shaming our errant oligarchs, particularly in the case of LA Clippers owner Donald Sterling.

Sterling is the Archie Bunker of NBA team owners, an unreconstructed racist who has long used epithets against his talented black players and who, most recently, asked his mixed-race girlfriend not to be seen with black people – including Magic Johnson – at Clippers games.

As a result, a cohort of influential people – from Johnson himself to Jesse Jackson – are advocating that fans, or even NBA players, stay away from the Clippers’ playoff games. Today, the NAACP revoked its anticipated lifetime achievement award for Sterling.

The outrage is justified. The question is whether it will be effective in changing anything. On a business basis, it’s nearly impossible to financially damage Sterling into seeing the error of his ways. While symbolically satisfying, a boycott inflicts little damage in terms of dollars, and it will inflict even less on Sterling himself. There’s a moat of money around him. As a member of the NBA oligarchy, his fortune is guaranteed protection from the flailings of populism. The NBA’s greatest profits come from TV rights, followed by season ticket holders, followed by sponsorships. A boycott – either by fans, or players, or corporations – won’t make a dent.

Let’s count the ways a Sterling boycott will fail on every financial count. Multiple experts on the league told me today that an attendance boycott will fail because it would hurt only ticket sales, which are one of the smallest parts of the Clippers’ profits – and there are only a couple games left in the season anyway. Cutting sponsorships? Satisfying in theory, but none too quick. Corporations like Amtrak, Carmax, Kia, Red Bull, State Farm and Virgin America – all of which cancelled or reconsidered their sponsorships of the Clippers today – may have a harder time than they think getting their names disassociated with the team. As Tony Schiller of Paragon Marketing told me, it may not be possible for sponsors or even season ticket-holders to cancel contracts based on Sterling’s offensive statements. The most they can do is avoid future deals with his team.

Boycott all you want: the only way to hurt Donald Sterling is to get his fellow NBA oligarchs to force him to step away from the Clippers. The NBA is a cartel – a monopoly run by team owners – and its main financial purpose is to protect the profits of those owners. Nothing will change until they turn on one of their own, Lord of the Flies-style.

So far, this kind of enlightened self-interest seems elusive. The other owners in the league, as well as previous league commissioners, have ignored Sterling’s racist antics – even after decades of controversy. His moral rap sheet is long: he won’t rent apartments to blacks or Latinos. A court deposition of remarkable misogyny didn’t even get him suspended. As the owner of the Clippers, he lived off the welfare of other owners by keeping his team below the salary cap, instituting a system of churn that kept players young, cheap and disposable. “If you list the top 10 most horrible things [Sterling] has done, this wouldn’t even make the list,” says Dr Olugbenga Ajilore, an associate professor of economics at the University of Toledo who is also a long-suffering Clippers fan.

It’s simple math. No individual – or company – has the influence to turn a boycott of the Clippers into the anti-racist revolution it needs to be. The economic power is not in the hands of the people. You can’t Occupy the NBA.

For proof of that, I called Andrew Zimbalist, an economics professor at Smith College who follows sports, to ask what would happen if fans stopped attending the last three LA Clippers games left in this first round of the playoffs (assuming their series with the Golden State Warriors goes the full seven games). Zimbalist’s offhand estimate of the financial impact of a boycott: “it would add up to maybe $1m in ticket revenue, and several hundred thousand dollars in concessions and related revenue.”

At most, a boycott of the Clippers would add up to $2m, Zimbalist says. “That’s a drop in the bucket,” Zimbalist says, compared to the team’s $128m in yearly revenues – $48m of which come from ticket sales – or to the NBA’s revenues of nearly $4bn.

A boycott would, however, hurt the Clippers players. They staged a silent protest by hiding their team logos on Sunday afternoon, but they still have to play on the court for a vile human being.

Pulling sponsorships, while flashy, is also unlikely to work on its own. A lot of big companies are eager to distance themselves from the Clippers today. Carmax and Virgin America, which sponsor the Clippers, have said they will pull back their money. State Farm is “assessing its relationship” and Kia is suspending its sponsorship, as are Amtrak and Red Bull.

That won’t show Sterling much, but it may scare his fellow NBA team owners, who are probably concerned that the sponsorship-cancellation bug may hit the rest of corporate America.

Still, the loss of a sponsorship is a stronger financial blow to some players more than it would be to their boss. Chris Paul, the star Clippers player who has been starring in the “Born to Assist” ad camaign for State Farm for over a year, has to be wondering why he will end up paying for Sterling’s racist views. Another Clippers player, Blake Griffin has a longstanding relationship with Kia, which features him in its ads.

Sterling’s imperviousness shows the flaws in the NBA’s financial structure. The finances of the NBA are like a battalion of armored vehicles: the money’s inside, but it’s impossible to tell who’s it is, and even harder to get at it. It’s a unified front of rich men, sworn to protect each other.

Not even players get a break; when they objected to salary caps a few years ago, the owners simply locked them out of the league. Under the new collective bargaining agreement, if player salaries exceed 57% of the NBA’s profits in any given year, the players actually have to give some of their salaries back to the owners. When a team owner pays a “luxury tax” to hire more and better players, that money goes right to the other owners as well. It is nearly impossible to hurt the profitability of just one team owners.

Sensing the futility of all of this, Dr Ajilore himself is not boycotting the team. “It’s hard to be a Clippers fan,” he told me. “You just say, You know what, I am supporting a team that has one of the world’s most despicable people in the world as an owner. And I deal with it. I know the deal I’m making.”

It’s not clear, however, whether the NBA can say the same. We’ll find out on Tuesday afternoon, when the commissioner Adam Silver will try to fulfill his promise on moving “extraordinarily quickly” on an investigation. But increasingly, the league’s inaction on Donald Sterling’s racism looks like a deal with the devil.