As LA Clippers owner Donald Sterling prepares for his June 3 hearing in front of 30 other National Basketball Association team owners over his highly publicized racist comments, his wife Shelly has been taking care of business.
After her husband handed his interest in the Clippers over to her several days ago, her legal team has retained Bank of America Corp. (NYSE: BAC ) to handle the sale of the Los Angeles-based sports team. With one estimate of potential bids as high as $1.8 billion in the offing, Bank of America stands to take home a nifty profit on the deal.
A race against the clock
With at least six parties showing interest in the team – including former Microsoft CEO Steve Balmer – selling the team before the hearing will likely bring in a better price. Since Donald Sterling has been banned from the NBA for life over his recent remarks by Commissioner Adam Silver, handing control to Shelly Sterling is a sensible move.
Silver has stated that allowing the Sterlings to sell the team themselves is preferable to a forced sale, which could conceivably be the outcome of the June 3 hearing. For her part, Mrs. Sterling has said that she wants at least $1 billion for the team.
There seems little doubt that the rumpus caused by Mr. Sterling's antics has added quite a bit of value to the team. Forbes lists the value of the Clippers as $575 million, with $128 million in yearly revenues, and no debt. The LA Lakers, by comparison, is valued at $1.35 billion.
For B of A, the deal's timing couldn't be better. Bank of America Merrill Lynch has been ramping up its merger and acquisition activity over the past year or so, coming in second in Bloomberg's M&A rankings for 2013 – a big jump from its ranking of No. 6 for 2012. With 32.8% of the U.S. market share of deals in which the bank had a primary role. Bank of America also played a role in the sale of Texas Rangers a few years ago.
The fees on the LA Clippers sale will likely be grand, but the potential press exposure on this deal simply can't be given a dollar value. Bank of America is no stranger to headline-hogging, but the press coverage of this sale should be off the charts – particularly with celebrity names like Oprah Winfrey, David Geffen, and Larry Ellison rumored to be queuing up to put in their own bids on the team.
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