Business Take: Does the NBA's Donald Sterling Ban Set a Bad Business Precedent?

The NBA's quick decision to ban Los Angeles Clippers owner Donald Sterling for life due to racist remarks may have unintended consequences.

May 4, 2014 at 4:47PM

Be a not-so-secret racist and the NBA's owners and leadership looks the other way. Have your mistress release tapes of your racist remarks and get a lifetime ban.

In the first episode of Business Take, the show that gives you the Foolish perspective on the most important business stories of the week, host Jason Hellmann and Fool contributor Daniel Kline discuss the fallout of NBA Commissioner Adam Silver's decision to not only fine Los Angeles Clippers Owner Donald Sterling $2.5 million for his racist rant, but to ban him for life, and begin the process of removing him as an owner.

The two discuss not only the impact of the move on the NBA and its sponsors, but also the business implications of penalizing someone for expressing views that are repugnant but not illegal.  

Kline spoke about how Sterling has made no effort to distance himself from his comments or claim they are being somehow misinterpreted, and whether the NBA can actually strip him of the team. If Sterling decides to use every legal option to hold onto the team, would business concerns ultimately force him to sell? Between sponsors dropping out and fans not buying tickets or watching games on TV, the pressure on Sterling's wallet will be enormous.

Even the NBA's national television partners; which include Walt Disney's (NYSE:DIS) ABC and ESPN and Time Warner (NYSE:TWX), which have been quiet so far, are likely to distance themselves from the racist owner.

No matter what the NBA does and how quickly it moves, the future of the franchise is likely not with Sterling even if he chooses to fight. Because as Hellmann and Kline discussed, that won't make sense.

Now it's your turn to weigh in using the comments box below. Do you have any concerns that the NBA is creating a bad precedent? Could doing the right thing for the right reasons ever be wrong?

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Daniel Kline has no position in any stocks mentioned. Jason Hellmann has no position in any stocks mentioned. The Motley Fool recommends Walt Disney. The Motley Fool owns shares of Walt Disney. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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