The MLB Commissioner’s Power To Discipline A Donald-Sterling Like Owner

Less than 96 hours after TMZ.com published a racist and hate-filled audio recording between Los Angeles Clippers owner Donald Sterling and his then-girlfriend V. Stiviano, NBA Commissioner Adam Silver suspended Sterling from any and all NBA activities for life; fined Sterling $2.5 million; and asked the other 29 NBA owners to force a sale of the Clippers. When asked at his press conference what authority he had to force Sterling to sell the team, Silver replied:

The owners have the authority subject to three quarters vote of the ownership group, of the partners, to remove him as an owner.

Silver didn’t go into specifics, and when asked questions about his authority to suspend Sterling for life and impose a $2.5 million fine, he replied:

I’ll let the lawyers lay out for you the specific provisions of our constitution. Let’s just leave it that we have the authority to act as I’ve recommended.

A few hours later, the NBA made its Constitution and By-Laws available to the media through the league’s media center website. Deadspin, among others, published the document in full and provided a link for those of us who aren’t NBA media members.

So let’s take a  look at Silver’s authority.

First, we need to see how the NBA Constitution and By-Laws defines the various entities at the team level. In a section entitled “Interpretation” are the following definitions:

“Member” shall mean a person or Entity that has been granted a Membership in the Association. For purposes of this Constitution and By-Laws, an action on behalf of a Member by any of its Owners, employees, officers, directors, managers, agents or representatives, or its Governor or Alternate Governors, shall be the action of a Member.

“Owner” shall mean a Member and each individual or Entity (including both the trustees and beneficiaries of any trust) that, directly or indirectly (including through one or more intermediate Entities), owns of record or beneficially an interest in, or has effective control over, a Member or its Membership.

“Team” shall mean the professional basketball team organized and operated by a Member to play in the league operated by the Association.

An owner is a member. A member takes action through its owner and other executives. A team is what the member operates as part of the league.

On the issue of terminating ownership or membership in the NBA, Article 13 of the Constitution says, in part:

The Membership of a Member or the interest of any Owner may be terminated by a vote of three fourths (3/4) of the Board of Governors if the Member or Owner shall do or suffer any of the following:

(a) Willfully violate any of the provisions of the Constitution and By-Laws, resolutions, or agreements of the Association.

…

(d) Fail or refuse to fulfill its contractual obligations to the Association, its Members, Players, or any other third party in such a way as to affect the Association or its Members adversely.

(emphasis added).

Subsections (b), (c) and (e) through (j) address financial failures, gambling on games, rigging game scores, not fielding a team or misrepresenting facts in a membership application. Those aren’t likely implicated by Sterling’s conduct, at least based on the facts we now know.

My best guess is that Silver and the NBA owners will rely on subsections (a) and (d) should the owners vote to remove Sterling as an owner of the Clippers. The question then, is, what provision of the Constitution or contractual obligations did Sterling violate with his racist diatribe captured in the audio recordings?

For that we turn to Article 35A, which reads, in part:

The provisions of this Article 35A shall apply only to

Members and Owners. . . .  The word “persons” as used herein shall include all such Members [and] Owners . . . . [irrelevant definitions deleted for brevity].

(c) Any person who gives, makes, issues, authorizes or endorses any statement having, or designed to have, an effect prejudicial or detrimental to the best interests of basketball or of the Association or of a Member or its Team, shall be liable to a fine not exceeding $1,000,000 to be imposed by the Commissioner. The Member whose Owner, Officer, Manager, Coach or other employee has been so fined shall pay the amount of the fine should such person fail to do so within ten (10) days of its imposition.

(d) The Commissioner shall have the power to suspend for a definite or indefinite period, or to impose a fine not exceeding $1,000,000, or inflict both such suspension and fine upon any person who, in his opinion, shall have been guilty of conduct prejudicial or detrimental to the Association.

In other words, owners agree to not make statements or act in any way that is prejudicial or detrimental to the NBA. If they do, they are not only subject to suspension and fine, but to a vote by the remaining owners on whether to terminate his or her interest. That’s the argument, at least.

Note that Article 35A limits a fine to $1 million, and Silver fined Sterling $2.5 million. There is a provision that refers to a potential $2.5 million fine, but it is a more general, catch-all provision under the Commissioner’s enumerated duties and responsibilities. Typically, a more specific contract provision will be applied over a more general one.

Article 24 establishes the Commissioner’s powers. Subsection (l) states:

(l) The Commissioner shall, wherever there is a rule for which no penalty is specifically fixed for violation thereof, have the authority to fix such penalty as in the Commissioner’s judgment shall be in the best interests of the Association. Where a situation arises which is not covered in the Constitution and By-Laws, the Commissioner shall have the authority to make such decision, including the imposition of a penalty, as in his judgment shall be in the best interests of the Association. The penalty that may be assessed under the preceding two sentences may include, without limitation, a fine, suspension, and/or the forfeiture or assignment of draft choices. No monetary penalty fixed under this provision shall exceed $2,500,000.

It may be that Silver imposed the maximum fine mentioned in the NBA Constitution knowing there was a possibility Sterling could convince a judge or arbitrator to reduce the fine on appeal. But there was enormous public pressure — from the players, fans and corporate sponsors — to take quick and decisive action against Sterling. Few would have been satisfied with a lawyerly response like: “Well, we’d would have liked to do more, but we’re not sure if subsection (l) of Article 24 applies.”

But action for the sake of public relations may not hold up under legal challenge. Michael McCann — the founder of the Sports and Entertainment Law Institute at the University of New Hampshire School of Law — wrote in this post at Sports Illustrated about the reasons owners might be reluctant to strip Sterling of his ownership interest. It all boils down to whether Sterling’s racist and offensive beliefs — caught on tape for all the world to hear — violate the NBA Constitution or any contractual obligation by the NBA.

What if Donald Sterling were an MLB owner? Or one of the 30 current MLB owners was shown to have expressed racist and hateful views? What would be the maximum penalty the MLB Commissioner could impose?

We start with the MLB Constitution (link here) and Article II, which outlines the authority of the Commissioner. Section 3 reads:

In the case of conduct by Major League Clubs, owners, officer, employees or players that is deemed by the Commissioner not to be in the best interests of Baseball, punitive action by the Commissioner for each offense may include any one or more of the following:

(a) a reprimand; (b) deprivation of a Major League Club of representation in Major League Meetings; (c) suspension or removal of any owner, officer or employee of a Major League Club; (d) temporary or permanent ineligibility of a player; (e) a fine, not to exceed $2,000,000 in the case of a Major League Club, not to exceed $500,000 in the case of an owner, officer or employee, and in an amount consistent with the then-current Basic Agreement with Major League Baseball Players Association, in the case of a player; (f) loss of the benefit of any and all of the Major League Rules, including but not limited to the denial or transfer of player selection rights provided by Major League Rules 4 and 5; and (g) such other actions as the Commissioner may deem appropriate [emphasis added].

Note the similarities and differences between the MLB and NBA Constitutions. The MLB Constitution gives the Commissioner broad authority to fine, suspend and remove owners who act contrary to “the best interests of baseball.” In the NBA, the Commissioner can fine and suspend (but not remove) an owner who “gives, makes, issues, authorizes or endorses any statement having, or designed to have, an effect prejudicial or detrimental to the best interests of basketball.”  So while both leagues demand that owner always act in the best interests of the sport, MLB’s Commissioner has the power to remove an owner, and the NBA’s does not.

On the other hand, the NBA Constitution authorizes higher monetary penalties: at least $1 million, if not the $2.5 million imposed by Silver on Sterling. In MLB, the maximum monetary fine for an owner who acts contrary to the best of baseball is $500,000. Both Commissioners have full authority to suspend owners.

MLB’s Constitution also has provisions governing the involuntary termination of a Major League Club but that section doesn’t use the word owner. (Article VIII). That differs from the section on the Commissioner’s authority to act in the best interests of baseball, which specifically refers to owners. This makes sense if MLB’s Commissioner has the power to remove an owner, whereas the NBA Commissioner can only fine or suspend one.

Major League Clubs can terminate the rights, privileges and property rights of another Major League Club with the approval of 3/4 of all Major League Clubs for financial improprieties, gambling, throwing games, and failing to maintain an adequate ballpark. They may also act to terminate a Club’s rights when it “willfully violates any provision of the Constitution” or “fails or refuses to fulfill its contractual obligations.”  This section is on par with Article 35A of the NBA Constitution in terms of voting structure and the kinds of misconduct that can lead to the expulsion of a team. But, again, in MLB, the involuntary termination provisions do not specifically apply to owners.

Baseball’s commissioner has never removed an owner for acting contrary to the best interests of baseball. Nor has the commissioner ever imposed the maximum $500,000 fine on an owner or suspended him or her for life. [I was wrong. As my fine colleagues Grant Brisbee and Steven Goldman noted at SBNation, one owner was removed by Commissioner Landis for gambling on baseball].

The harshest penalties ever imposed on an MLB owner not involving a crime involved former Cincinnatti Reds owner Marge Schott. In February, 1993, then-acting Commissioner Bud Selig suspended Schott for the 1993 season and fined her $25,000 after her racist and anti-semitic views and conduct were brought to light. Selig also ordered Schott to attend sensitivity training. Jay Jaffe of Sports Illustrated detailed Schott’s vile transgressions in this post earlier in the week, as the Sterling news broke and the world waited for the NBA’s response. As Jaffe wrote, Schott became known for calling her black players and other employees by the N word and for saying that “Hitler was okay in the beginning” — statements on par with — if not more offensive than — what Sterling said to his girlfriend.

Schott was not deterred or sensitized and continued on with her racist and anti-semitic comments, including praise for Hitler. Again, Selig responded with a suspension, in June 1996, to last through the end of the 1998 season. When the suspension expired, the commissioner threatened further action if Schott didn’t relinquish ownership of the Reds. She wasn’t removed as an owner under the commissioner’s authority, but pressured to sell the team or face another, longer suspension. She relented in 1999 and sold all but one share of the team.

Thanks to the 24/7 news cycle and the exponential effect of social media on news stories, Sterling’s comments received much greater public scrutiny and condemnation than Schott’s ever did. Corporate sponsors fled the Clippers and the NBA. The players’ union took a strong, united stand, with the players on teams in the postseason threatening boycotts if Silver didn’t quickly and harshly punish Sterling. Silver did the right thing in imposing the maximum penalty permitted by the NBA Constitution, but doing less would not have been in the best interest of the sport. It’s still up to the owners whether to force Sterling to sell the Clippers.

One would hope that, if in 2014 or beyond, an MLB owner treated his or her employees the way Schott did, or expressed such vile views, the MLB commissioner would act as swiftly and as forcefully as Adam Silver did.