Ballmer Overpaid For The Clippers

[Tugg Speedman]

Steve Ballmer's career is all about grotesquely overpaying for this and then choking on them.

This is why he is the FORMER head of Microsoft



Did Steve Ballmer Overbid for the Clippers? Of Course He Overbid

http://blogs.wsj.com/moneybeat/2014/05/30/did-steve-ballmer-overbid-for-the-clippers-of-course-he-overbid/?KEYWORDS=ballmer

Of course Steve Ballmer overbid for the Clippers. Why would you expect anything different?

News this morning is that Mr. Ballmer, the former CEO of MicrosoftMSFT +1.20%, offered $2 billion to buy the LA Clippers from Donald Sterling, in as bizarre a fire-sale auction as you’ll ever see. Mr. Ballmer outbid – by hundreds of millions – other high-profile suitors, including a group comprising David Geffen, Oprah Winfrey, and Steve Jobs‘ widow, Laurene Powell Jobs, and a group that included former baller Grant Hill. It’s not even clear if Donald Sterling, who bought the team for $12.5 million in 1981 and owns it along with his wife, is going to sell or not; his lawyers says he’s going to oppose a sale.

For Clippers fans, Ballmer for Sterling is a trade they’ll take any day of the week. But we’re MoneyBeat, not the Daily Fix, so what we want to analyze is the deal.

Mr. Ballmer bid $2 billion for a franchise Forbes estimated was worth $575 million. That’s roughly a 248% premium, and nearly quadruple the $550 million the Milwaukee Bucks fetched in April, the previous record deal for an NBA franchise. It’s also not far off the $2.15 billion the cross-city Dodgers went for in 2012, a record price for a franchise in any sport.

The Clippers have made 10 playoff appearances in their 44-year history. They have never been to even the conference finals, to say nothing of the NBA finals.

For anybody else, $2 billion for the Clippers may seem unreasonable, but Mr. Ballmer, who ran Microsoft from 2000 to 2014, has a history of overpaying for (generally underperforming) assets. The last big one he pulled off was so contentious within the boardroom, it drove employee #30 out of the company. And of course who could forget the $44.6 billion large he offered for YahooYHOO -1.07%?

Let’s take a look at some of the more notable deals of the Ballmer era:


aQuantive. In August 2007, Microsoft acquired aQuantive, a online ad agency, for $6.3 billion cash, and 85% premium. At the time, it was Microsoft’s largest deal. “This deal takes our advertising business to a new level,” the company’s COO, Kevin Johnson, said at the time. How’d it work out? Microsoft took a $6.2 billion write-off on the business in 2012. “The acquisition did not accelerate growth to the degree anticipated,” the company said.

Skype. In May 2011, Microsoft acquired Skype for $8.5 billion in an unsolicited bid “even though there were no signs of other serious bidders,” as we wrote at the time. The price tag was three times what the company had gone for just 18 months prior, as the company was scrambling to catch up in the mobile and Internet markets. How’d it work out? Microsoft doesn’t break out Skype revenue, so it’s hard to really know. But the service is popular, and they just unveiled a gee-whiz “Star Trek” like universal translator service.

Nokia. In September 2013, Microsoft acquired Nokia’s handset business, for $7.2 billion in cash. “It’s a bold step into the future – a win-win for employees, shareholders and consumers,” Mr. Ballmer said at the time. How’d it work out? You could argue, if you like, that it’s too soon to say; the deal closed only in April. But Microsoft controls less than 4% of the U.S. smartphone market. Moreover, whether it’s a win-win for employees, shareholders, and consumers, it was a definite loser for Mr. Ballmer: the Nokia deal was apparently the deal-breaker for him, and the internal fight over it led to his ouster.

Yahoo. Of all the deals Microsoft did do, it’s the one that it didn’t do that may be the most instructive. In February 2008, Microsoft offered $44.6 billion for Yahoo, a 62% premium to the company’s stock, in an attempt to merge two struggling search businesses. It was a huge deal in the high-tech world, and it was a huge, public, messy battle that Microsoft eventually lost in one way, and won in another. Yahoo ultimately rejected the deal, although angry shareholder would later boot founder Jerry Yang over it. Yahoo’s stock, which was in the $30 range when the deal was announced, would soon sink into the single digits, and would languish in the teens range for years after.

Not exactly a sterling record, no pun intended, and we didn’t even mention Microsoft’s stock, which went from $58 when Mr. Ballmer took over in 2000 to $40 and change today.

[GGGG]

While its clear that he overpaid for stuff at Microsoft, that article certainly doesn't make much of a case for why he overpaid for the Clippers.  Past, on-court performance isn't relevant here.

Financially, how has Ballmer overpaid?  I have been hearing that people "overpaid" for sports franchises for a couple decades now, but that has rarely proven to be the case considering for how much they are eventually sold. 

Is this deal different?  I have no idea.  But at least make a case based on the financials - not what he did in his previous job.

[ThatDude]

Ballmer wanted to buy the bucks and move them to seattle

[Tugg Speedman]

While its clear that he overpaid for stuff at Microsoft, that article certainly doesn't make much of a case for why he overpaid for the Clippers.  Past, on-court performance isn't relevant here.

Financially, how has Ballmer overpaid?  I have been hearing that people "overpaid" for sports franchises for a couple decades now, but that has rarely proven to be the case considering for how much they are eventually sold. 

Is this deal different?  I have no idea.  But at least make a case based on the financials - not what he did in his previous job.

Forbes had the Clippers valued at $575 million.  Ballmer paid 347% of this valuation

Forbes had the Bucks valued at $405 million, Lasry and Eden paid $550 million, 36% over this valuation

No one has ever paid this big a premium over Forbes valuation.

But you're right, they are all made up numbers.  Sterling should have held tight and Ballmer would have paid $4 billion.

[LAZER]

Forbes had the Clippers valued at $575 million.  Ballmer paid 347% of this valuation

Forbes had the Bucks valued at $405 million, Lasry and Eden paid $550 million, 36% over this valuation

No one has ever paid this big a premium over Forbes valuation.

But you're right, they are all made up numbers.  Sterling should have held tight and Ballmer would have paid $4 billion.

Do you remember what the Dodgers value at when they went for $2B? Or what the Dolphins were when they went for $1.1B?

[Tugg Speedman]

Do you remember what the Dodgers value at when they went for $2B? Or what the Dolphins were when they went for $1.1B?

Dolphins valuation was $947 million in 2007

http://www.forbes.com/lists/2007/30/biz_07nfl_Miami-Dolphins_303017.html

Sold for $1.1 billion in 2008, 17% permium



Dodgers were valued $800 million in 2011

http://www.forbes.com/lists/2011/33/baseball-valuations-11_Los-Angeles-Dodgers_338671.html

Sold for $2 billion in 2013, 250% premium



At a 347% premium over Forbes valuation, Ballmer stands alone as a poor judge of value.

[Coleman]

The $575 million valuation Forbes put out is ridiculously low for an NBA team in the LA market.

Ballmer might have overpaid, but not by 347%. The Clippers are easily worth more than a $billion.


The bottom line is in the free market where supply and demand are the ultimate determinations of value, an item, even a professional sports team, is worth what someone is willing to pay.

Its impossible to say right now if Ballmer is overpaying. If he sells the Clippers in 20 years (he's only 58) for $3 billion, which is entirely possible, this will have been an amazing investment. Look at the trajectory of prices for NBA franchises over the past 10 years.

[brandx]

Steve Ballmer's career is all about grotesquely overpaying for this and then choking on them.

This is why he is the FORMER head of Microsoft

Did Steve Ballmer Overbid for the Clippers? Of Course He Overbid

Of course Steve Ballmer overbid for the Clippers. Why would you expect anything different?

Terrible CEO. Under his leadership MS annual revenue only went up from $25 Billion to $70 Billion even as they paid out BILLIONS in dividends. Even though he took over at the height of the bubble. Even though they were mire in an anti-trust lawsuit as well as many class-action suits.

And as to one example, Skype was an outstanding acquisition helping in MS's transition to cloud computing.

Not to say he hasn't made mistakes, which he has, but he has overseen tremendous annual growth as well.

Did he overpay for the Clippers? I don't know that you can ever overpay for a money tree. There were certainly plenty of other potential buyers out there who thought a price in the same ballpark was reasonable.

[brandx]

The bottom line is in the free market where supply and demand are the ultimate determinations of value, an item, even a professional sports team, is worth what someone is willing to pay.

To quote Homer, "winner, winner, chicken dinner".

[LAZER]

Enlighten me

Ha I was genuinely asking...I'm curious to know.

I'm wondering if this will become the new trend with sports teams as the owners aren't necessarily looking for the same returns as a typical business.

[LAZER]

Dolphins valuation was $947 million in 2007

http://www.forbes.com/lists/2007/30/biz_07nfl_Miami-Dolphins_303017.html

Sold for $1.1 billion in 2008, 17% permium



Dodgers were valued $800 million in 2011

http://www.forbes.com/lists/2011/33/baseball-valuations-11_Los-Angeles-Dodgers_338671.html

Sold for $2 billion in 2013, 250% premium



At a 347% premium over Forbes valuation, Ballmer stands alone as a poor judge of value.

Stands alone?  I'd put a 250% and 347% premium in the same ballpark.

[GGGG]

Ha I was genuinely asking...I'm curious to know.

I'm wondering if this will become the new trend with sports teams as the owners aren't necessarily looking for the same returns as a typical business.

Well, Sterling made a 16% annualized return on the Clippers - not including any dividends he (or whatever legally owns the team) received.  

[Tugg Speedman]

The $575 million valuation Forbes put out is ridiculously low for an NBA team in the LA market.

Ballmer might have overpaid, but not by 347%. The Clippers are easily worth more than a $billion.

You're defending made up numbers by making up your own set of numbers.  

If Ballmer sells the team in 10 years for $3 billion, it will have proven to be a terrible investment.  The gauge is not getting more than you paid.  Ballmer could have put $2 billion in the stock market (S&P fund), will his sale of the Clippers outpace that?  Only then will it be a good "investment."

[Tugg Speedman]

Stands alone?  I'd put a 250% and 347% premium in the same ballpark.

When it is not your money, of course!

[Coleman]

You're defending made up numbers by making up your own set of numbers.  

If Ballmer sells the team in 10 years for $3 billion, it will have proven to be a terrible investment.  The gauge is not getting more than you paid.  Ballmer could have put $2 billion in the stock market (S&P fund), will his sale of the Clippers outpace that?  Only then will it be a good "investment."

It is not a made up number. 2 billion is what he paid (aka what the "market valuation" was), and based on the trajectory of NBA team sales, it is entirely possible, perhaps even likely, they he will fetch 3 billion or more in a decade or two.

[GGGG]

You're defending made up numbers by making up your own set of numbers.  

If Ballmer sells the team in 10 years for $3 billion, it will have proven to be a terrible investment.  

If no dividends are paid, etc. then you are talking about a 4% or so return.  That isn't "terrible," especially if he earns some intrinsic value with owning a basketball team that he can't get from a S&P Index Fund.

[LAZER]

Well, Sterling made a 16% annualized return on the Clippers - not including any dividends he (or whatever legally owns the team) received.  

There is definitely money to be made, I meant that sports teams are bought for more entertainment value than actual income/investments.

[Coleman]

You're defending made up numbers by making up your own set of numbers.  

If Ballmer sells the team in 10 years for $3 billion, it will have proven to be a terrible investment.  The gauge is not getting more than you paid.  Ballmer could have put $2 billion in the stock market (S&P fund), will his sale of the Clippers outpace that?  Only then will it be a good "investment."

And that's not including all the profit he makes while he owns the team.

I doubt the S&P500 would top that.

[Coleman]

At this point in his life, Steve Ballmer doesn't have to make another god damn penny until the day he dies.

I'm guessing there are other reasons for him wanting to own the Clippers than pure profit motive.

[ChicosBailBonds]

Berg, all it takes is one....that's what I told you guys a month ago.  All it takes is one, and there are many people with so much cake they don't know what to do with it.  This allows them to be in an exclusive club.

The only thing that makes me chuckle is that they think they can monetize this because the major lever to do that is television and it ain't happening anymore.  Some of these guys don't want to learn.

They averaged a 1.28 rating this last year in arguably the best year in Clippers history.  The Lakers, in arguably their worst year since being in Los Angeles got a 2.7 average rating.

If they think the television guys are going to turn around and throw billions at them to help justify the expenditure, they may want to look at the landscape.  If they think they are going down another route to monetize, like online $$$....they're going to be in for an even ruder awakening, much like WWE right now is getting blown out of the water trying that route.   But hey, some people want to keep pounding their head into the wall...if you have a lot of money, guess it doesn't hurt as much.

[brandx]

They averaged a 1.28 rating this last year in arguably the best year in Clippers history.  The Lakers, in arguably their worst year since being in Los Angeles got a 2.7 average rating.

If they think the television guys are going to turn around and throw billions at them to help justify the expenditure, they may want to look at the landscape.  If they think they are going down another route to monetize, like online $$$....they're going to be in for an even ruder awakening, much like WWE right now is getting blown out of the water trying that route.   But hey, some people want to keep pounding their head into the wall...if you have a lot of money, guess it doesn't hurt as much.

It's not fair to compare the ratings of an historically bad team to one of the 2 premier franchises over the last 30 years. After a few years where the Clip are a better team than the Lakers, we'll see what happens.

The online thing will definitely happen. The model hasn't exactly been figured out yet, but with the change to mobile computing, it will be figured out sooner rather than later.

As to what I think is your main point, I think I agree - we may be getting to to the limit with the Sports Rights bubble.

[ChicosBailBonds]

It's not fair to compare the ratings of an historically bad team to one of the 2 premier franchises over the last 30 years. After a few years where the Clip are a better team than the Lakers, we'll see what happens.

The online thing will definitely happen. The model hasn't exactly been figured out yet, but with the change to mobile computing, it will be figured out sooner rather than later.

As to what I think is your main point, I think I agree - we may be getting to to the limit with the Sports Rights bubble.

It will not happen in the sense of delivering the money, not anytime for a LONG time.  The sports teams are riding high on $$$$$ because people who don't give a rip about sports have to pay for it.  The biggest oh $hit moment for the sports world is going to be when they don't get that money anymore from folks that don't want to pay for it, and then they have to rely just on the hard core fans.  They CANNOT make up that money via online, unless the online folks are going to pay 300%, 400%, 500% what the sports guys got from everyone else. 

Don't confuse my comments with the technology, I'm talking about the ability to get money from people that don't want your product, which is what the sports leagues and teams have been living on forever and what scares the $hit out of them with how the Dodgers, Pac 12, CSN Houston and others are no longer just getting what they thought they could get.  What scares them more, people aren't leaving in droves from those tv distributors that have called their bluff.  You also have the contractual protections built into place by those that do carry them.

I'll be in my retirement in Idaho or Eastern Oregon when it all happens, and I'm not that old.

[brandx]

It will not happen in the sense of delivering the money, not anytime for a LONG time.  The sports teams are riding high on $$$$$ because people who don't give a rip about sports have to pay for it.  The biggest oh $hit moment for the sports world is going to be when they don't get that money anymore from folks that don't want to pay for it, and then they have to rely just on the hard core fans.  They CANNOT make up that money via online, unless the online folks are going to pay 300%, 400%, 500% what the sports guys got from everyone else. 

Don't confuse my comments with the technology, I'm talking about the ability to get money from people that don't want your product, which is what the sports leagues and teams have been living on forever and what scares the $hit out of them with how the Dodgers, Pac 12, CSN Houston and others are no longer just getting what they thought they could get.  What scares them more, people aren't leaving in droves from those tv distributors that have called their bluff.  You also have the contractual protections built into place by those that do carry them.

I'll be in my retirement in Idaho or Eastern Oregon when it all happens, and I'm not that old.

I don't have the numbers to know if it is happening. But it surprises me how many people on this board (who are true sports fans) have gone away from cable or satellite.

I realize most of us are stuck. I will be getting rid of phone and premium channels this summer, but I am not ready to cut the cord for sports yet. What hurts is that I travel at least a couple months a year, so much of the money I am paying is wasted.

[forgetful]

If no dividends are paid, etc. then you are talking about a 4% or so return.  That isn't "terrible," especially if he earns some intrinsic value with owning a basketball team that he can't get from a S&P Index Fund.

The Clippers made $15 million last year in profit.  At that rate, it would take him 133 years to recoup his investment.  That is a poor investment any way you look at it.

By trading out $2 Billion in Microsoft stock, he is giving up $60 million a year in dividends alone.  I figure over the next decade microsoft stock outperforms the value of the Clippers.

He clearly wanted a basketball team and way overpaid to have it.  He could likely have gotten it for 30% less.

[brandx]

The Clippers made $15 million last year in profit.  At that rate, it would take him 133 years to recoup his investment.  That is a poor investment any way you look at it.

By trading out $2 Billion in Microsoft stock, he is giving up $60 million a year in dividends alone.  I figure over the next decade microsoft stock outperforms the value of the Clippers.

He clearly wanted a basketball team and way overpaid to have it.  He could likely have gotten it for 30% less.

Totally discounting the increased value of the franchise.

[forgetful]

Totally discounting the increased value of the franchise.

I talk about that in the next paragraph.  Right now, if he sold the franchise tomorrow, he couldn't get close to $2 Billion.  He's already in the hole and the yearly income is less than his most obvious alternative investment.

[Tugg Speedman]

I talk about that in the next paragraph.  Right now, if he sold the franchise tomorrow, he couldn't get close to $2 Billion.  He's already in the hole and the yearly income is less than his most obvious alternative investment.

+1

The next highest bid was $1.5 billion.  That's when he would get if he was to sell the team tomorrow.  So he starts 25% in the hole.

[Coleman]

+1

The next highest bid was $1.5 billion.  That's when he would get if he was to sell the team tomorrow.  So he starts 25% in the hole.

I didn't hear him say he was selling it tomorrow.


You could say the winner of any auction is "in the hole" because  the next closest bidder would pay him less.

[SoCalEagle]

I talk about that in the next paragraph.  Right now, if he sold the franchise tomorrow, he couldn't get close to $2 Billion.  He's already in the hole and the yearly income is less than his most obvious alternative investment.

Dude's got $20B in the bank. Gotta spend it on something. What do you earn it for if you never spend it?

[Tugg Speedman]

I didn't hear him say he was selling it tomorrow.

You could say the winner of any auction is "in the hole" because  the next closest bidder would pay him less.

it is true all auction winners start in the hole.  Most are barely in the hole as the best losing bid is a lot closer to the selling price than 25%.

[Tugg Speedman]

Dude's got $20B in the bank. Gotta spend it on something. What do you earn it for if you never spend it?

Not in the bank, Microsoft stock.

He exchanged 2 billion of MSFT for the clippers.

[brandx]

+1

The next highest bid was $1.5 billion.  That's when he would get if he was to sell the team tomorrow.  So he starts 25% in the hole.

Next highest bid was $1.6B

[Tugg Speedman]

Next highest bid was $1.6B

Then he is 20% in the hole, not 25%

[keefe]

Not in the bank, Microsoft stock.

He exchanged 2 billion of MSFT for the clippers.

I think he can afford it. Our lead designer on an IT project I'm involved in reported to Ballmer at MS. Dave spoke with Ballmer after the announcement and the bottom line is that Ballmer is bored out of his mind and this is the next great challenge. Ballmer is also not convinced the deal is going through anytime soon, if at all.

[brandx]

I think he can afford it. Our lead designer on an IT project I'm involved in reported to Ballmer at MS. Dave spoke with Ballmer after the announcement and the bottom line is that Ballmer is bored out of his mind and this is the next great challenge. Ballmer is also not convinced the deal is going through anytime soon, if at all.

+1

Heisenberg looks at this deal as a normal investment - but these are vanity investments (see Mark Cuban). If he was looking to maximize his return, he would have headed in another direction.

[Chicos' Buzz Scandal Countdown]

Sorry but why is it that Forbes' valuation is the gold standard here?

I always understood the value of something to be that which the market bears. If SB think he'll get $2B of value out of it, cool. Guess other people don't.

A franchise like this is worth more than just its utility in finances. How much utility does a diamond with a G versus D color have? Its value is just what the market will bear.

[Tugg Speedman]

+1

Heisenberg looks at this deal as a normal investment - but these are vanity investments (see Mark Cuban). If he was looking to maximize his return, he would have headed in another direction.

Sports franchises are like impressionist art or old Ferraris, they are worth whatever someone wants to pay for them, or the greater fool theory.

As such traditional analysis says Ballmer grotesquely overpaid.  He probably knows this and does not care. 

[Tugg Speedman]

+1

Heisenberg looks at this deal as a normal investment - but these are vanity investments (see Mark Cuban). If he was looking to maximize his return, he would have headed in another direction.

Sports franchises are like impressionist art or old Ferraris, they are worth whatever someone wants to pay for them, or the greater fool theory.

As such traditional analysis says Ballmer grotesquely overpaid.  He probably knows this and does not care. 

[Silkk the Shaka]

Sorry but why is it that Forbes' valuation is the gold standard here?

I always understood the value of something to be that which the market bears. If SB think he'll get $2B of value out of it, cool. Guess other people don't.

A franchise like this is worth more than just its utility in finances. How much utility does a diamond with a G versus D color have? Its value is just what the market will bear.

That's the market value of something, whatever the most recent market price is/was. The intrinsic dollar value of something is the sum of the discounted future after-tax cash flows one expects to receive from it. This brings a lot of assumptions along with it (timing of cash flows, amount of future cash flows, rate at which the flows are discounted, timing and amount of expected exit price, etc.). If it's purely dollar value one is looking at, the $2 billion price tag brings some pretty aggressive assumptions along with it and is likely unjustified. However, to your point, this brings more to Ballmer (or any other billionaire looking to make a vanity purchase) than just the cash flow it will generate. Ego, prestige, white knight status, hobby, etc. all play into it as well.

[keefe]

He clearly wanted a basketball team and way overpaid to have it.  He could likely have gotten it for 30% less.

From what I am told he put in a bid that ensured victory. Look at the track record of MS M&A and this has always been Ballmer's approach to building the corporate portfolio.

But the bottom line is that Ballmer is a huge hoops nut and is currently bored silly. This acquisition slakes many thirsts for a man who can easily afford this purchase. And make no mistake: Ballmer has always envied Allen's ownership of the Blazers and the Hawks. Ballmer never viewed this acquisition in financial terms as it has nothing to do with return.

[StillAWarrior]

Sports franchises are like impressionist art or old Ferraris, they are worth whatever someone wants to pay for them, or the greater fool theory.

As such traditional analysis says Ballmer grotesquely overpaid.  He probably knows this and does not care. 

You can say that again.

[WellsstreetWanderer]

The 2 Billion dollars will put a lot of separation between the Sterlings and people of color.

[MU82]

It doesn't matter if Ballmer overpaid for the Clippers any more than if he overpaid for a Ferrari or a mansion or a private island.

It is "play money" for him.

2 billion bucks to Ballmer is like a nickel to me or you. In fact, we might miss the nickel more than he'd miss the 2 billion.

Something is worth exactly what somebody is willing to pay for it.

Ipso fatso, the Clippers are worth 2 billion bongo bux.

[HouWarrior]

This was a good deal. This deal had many hairs on it, all of which were cured by the $2B paid:

1) Timing:

Bidders had, at most, a one week window, to: a) put out a big enough bid to chase off the other bidders; b) get a consensual sale put together; and c) to avoid a legal morass/delay(see below)...so the figure had to have a wow factor to it.

2) Who can sell?

Ms. Sterling  was already relying on iffy legal authority, to totally bind seller consisting of : a)Donald's letter agreement giving her the right to negotiate a sale ( unclear if it included a right to conclude a sale and actually convey all interests, including Donald's,to a buyer); and b) a non judicial finding of 2 psychiatrists that Donald was non compis mentis, and relying on that to unilaterally remove Donald as a/the Trustee of the Sterling family trust, with Ms Sterling jumping in as Trustee. On Tuesday, the NBA governors vote was due to confirm Donald's ouster, and the NBA planned to take over the sole legal authority to negotiate and sell the team-- I doubt the NBA was totally confident in its rights to force and to control this forced sale. Only a private quick and binding sale before such actions would avoid this legal morass.

3)Donald's ability/plans to fight/ litigate

Donald's response to the Tuesday NBA hearing and pending actions was to fight the jurisdiction and right of the NBA to force him out and to take control of the sale. His filed suit included injunctive claims, preserving the status quo, and to get a court order preventing any sale, and holding up a sale in the courts...potentially, for years. Regardless of Donald winning or losing, it would have put a sale in limbo for an extended period, while the franchise, NBA brand and their PR battle damaged more than just value of this franchise - the entire sport and fanbase could blow up(NBA fear). Donald had delay/stall leverage here, regardless of the outcome.

4) The NBA/Ballmer $2B solution

a)Sterlings, as a family, faced a huge cap gains tax bill...a bid which grossed up to cover this tax hit would be attractive to all Seller parties, and promote the needed speed of the deal.
b)For all of the above, the NBA did not want to pull the Tuesday trigger, as the legal battles would delay any NBA controlled deal, and the PR nightmare would extend to years...it desperately needed a quick solution.
c)The NBA liked Ballmer of all the bidder options. His prior pursuit of teams had resulted in new arena deals in Sac. and Milw. being included in the closed deals, and his deep pockets /sole ownership assured them of a one man big bucks solution. Such also allowed this one man to go to Ms. Sterling directly in a one hour face to face meeting to establish the personal trust needed, quickly, for this deal to go.
d) The $2B price included a KEY sweetener : i)popular to the NBA (facing Donald's suit), and  ii)attractive to Ballmer, who also needed to assure the authority to sell issues of Ms. Sterling , and Donald litigation did not derail him (remember-- Ballmer was thwarted in a drawn out bidding war for Sacramento). The key sweetener from Seller was that there was full indemnification by Seller and the sale price proceeds of $2B to protect NBA and Buyer on all claims against them, including coming from Donald. This meant Donald would be, in substance, suing against his own money and interests...you have just cutoff Donald's litigation at the pass. Checkmate, Donald.

Well played NBA and Ballmer.

I dont see the $2B paid as a published franchise value vs amount paid issue, at all.

Rather this was a very sane logical and necessary sum paid to get a deal done,  to simultaneously and quickly resolve huge and expensive issues that had to be cured. All but Donald  should be congratulated for positive contributions. Maybe you could even congratulate Donald.. the timing and his leverages got his taxes paid, and handsomely paid him quicker and better than his suit could ever have done.

Ponder all of the above, and I think the $2B was well spent.

Factor in that : i) the Clips are due a huge revenue boost on their impending local rights deal, ii) that few other franchises are likely up for sale soon,iii)  the new CBA structure actually gives the owners annual operating profits, and that iv) the NBA and other owners are forever grateful for the Ballmer solution...this was a good deal, worth the $2B paid.

There isnt much not to like how the extra $$ paid made very very good sense.

[ChicosBailBonds]

Why Mr. Ballmer may not be able to monetize things

http://www.usatoday.com/story/sports/ncaaf/sec/2014/05/31/sec-network-espn-comcast-direct-tv/9812745/

[HouWarrior]

Team ownership or partnership with a sports network such as Comcast or Fox sports in a company providing local TV coverage of the team games remains viable and potentially lucrative, including for the Los Angeles Clippers and Mr. Ballmer.

The article you linked refers to the Houston situation as an example of the failure of a local sports network deal, but such is a unique anomaly and is not instructive for other teams. The failure of the Houston partnership between the Houston Astros, Houston Rockets and Comcast should totally be laid at the feet of the Houston Astros ownership. When Jim Crane bought the Astros from Drayton McLane, almost 50% of the $650 million purchase price was attributed to the valuation pegged to the Astros network ownership share. This valuation was premised, however, on projected carriage rights fees from satellite providers, but the carriage fee rights had not yet been formally reduced to any contract or agreement, so the amounts were merely projections. Crane paid full price, including for the projected valuation. After closing, it was clear that the satellite providers were not going to pay the projected rates. Although the Rockets were amenable to lowering the rates to ensure carriage by all of the satellite providers, Jim Crane had painted himself into a corner on his inflated purchase of the club and he would not permit the Rockets or Comcast to agree to lower carriage rights fees in order to obtain full broadcast by satellite providers. Many perceive that Crane does not have deep pockets and he was tapped out in paying the purchase price, so he foolishly tried to force the exorbitant projected carriage rights fee rates on his partners, but none of the satellite providers would go a long with his efforts.

As a result, less than 40% of Houston homes have had access to Houston Rockets and Astros games, and the Comcast partnership entity was forced to a bankruptcy to try and hold the group together and work things out. Even in the bankruptcy, however, Crane has refused to budge and instead has filed a fraud/rescission  lawsuit against Drayton McLane claiming that he paid way too much money for the team and that he was assured all of these projections are real instead of merely projections. Crane will lose and this partnership will be dissolved with the rights eventually revesting with the Rockets and Houston Astros. It is really an anomaly and not any reason for any teams going forward to avoid pursuit of their own local TV rights network deals; they just have to be aware of the challenges and potential discounts they need to give satellite providers in order to obtain full market penetration. Given the hugely lucrative Lakers deal, and the upcoming expiration of the Clippers super cheap deal, by comparison, Ballmer will do better on the next deal… not Laker type $$, but assuredly better than the current deal.
LOL. Contrary to you satellite providers and your perceptions of leverage, you can muck it up and make it less lucrative – but you can't prevent Ballmer from monetizing and profiting from a more lucrative local TV network deal or partnership.

[ChicosBailBonds]

Team ownership or partnership with a sports network such as Comcast or Fox sports in a company providing local TV coverage of the team games remains viable and potentially lucrative, including for the Los Angeles Clippers and Mr. Ballmer.

The article you linked refers to the Houston situation as an example of the failure of a local sports network deal, but such is a unique anomaly and is not instructive for other teams. The failure of the Houston partnership between the Houston Astros, Houston Rockets and Comcast should totally be laid at the feet of the Houston Astros ownership. When Jim Crane bought the Astros from Drayton McLane, almost 50% of the $650 million purchase price was attributed to the valuation pegged to the Astros network ownership share. This valuation was premised, however, on projected carriage rights fees from satellite providers, but the carriage fee rights had not yet been formally reduced to any contract or agreement, so the amounts were merely projections. Crane paid full price, including for the projected valuation. After closing, it was clear that the satellite providers were not going to pay the projected rates. Although the Rockets were amenable to lowering the rates to ensure carriage by all of the satellite providers, Jim Crane had painted himself into a corner on his inflated purchase of the club and he would not permit the Rockets or Comcast to agree to lower carriage rights fees in order to obtain full broadcast by satellite providers. Many perceive that Crane does not have deep pockets and he was tapped out in paying the purchase price, so he foolishly tried to force the exorbitant projected carriage rights fee rates on his partners, but none of the satellite providers would go a long with his efforts.

As a result, less than 40% of Houston homes have had access to Houston Rockets and Astros games, and the Comcast partnership entity was forced to a bankruptcy to try and hold the group together and work things out. Even in the bankruptcy, however, Crane has refused to budge and instead has filed a fraud/rescission  lawsuit against Drayton McLane claiming that he paid way too much money for the team and that he was assured all of these projections are real instead of merely projections. Crane will lose and this partnership will be dissolved with the rights eventually revesting with the Rockets and Houston Astros. It is really an anomaly and not any reason for any teams going forward to avoid pursuit of their own local TV rights network deals; they just have to be aware of the challenges and potential discounts they need to give satellite providers in order to obtain full market penetration. Given the hugely lucrative Lakers deal, and the upcoming expiration of the Clippers super cheap deal, by comparison, Ballmer will do better on the next deal… not Laker type $$, but assuredly better than the current deal.
LOL. Contrary to you satellite providers and your perceptions of leverage, you can muck it up and make it less lucrative – but you can't prevent Ballmer from monetizing and profiting from a more lucrative local TV network deal or partnership.

Well, I would look right here in So. Cal to show that the problem is much bigger than just Houston.