Tuesday, April 29, 2014

Racism, Capitalism, and the NBA

Unless you have been under a rock, you’ve probably heard about the racially offensive (and morally repugnent) comments apparently made by Donald Sterling, owner of the NBA’s Los Angeles Clippers, made about African-Americans, including Magic Johnson.  Just moments ago, the league announced how it would respond.

NBA Commissioner Adam Silver announced that an NBA investigation has concluded that Sterling was the voice reflecting hateful speech, views that are “deeply offensive and harmful.”  (Note that the investigation was done by the Wachtell Lipton firm.)   

Commissioner Silver apologized for Sterling’s comments and vowed action. The result: Effective immediately, Sterling is banned for life from games, practices, facilities, and player personnel decisions, and he is barred from executive meetings.  In addition, the maximum fine of $2.5 million is levied, which will for to charities selected jointly by the NBA and the player’s association.  Silver said he will do everything in his power to help force a sale of the team. 

Silver said, “We stand together in condemning Mr. Sterling’s views. They have no place in the NBA.” Sterling said that a three-fourths vote of owners could force Donald Sterling to sell. He did not know how it would proceed, but Silver said he would encourage owners to force Sterling to sell, and the process will begin immediately. 

Last week, I posted about the need for open debate in the context of Mozilla CEO Brendan Eich’s resignation, and the ability for people to have cordial discussions about different views, even if one thinks the other’s views are wrong.  In that post, I explained my view that rushing to fire people for expressing different political views might be in the power of a company, but that calling for someone’s ouster because they have different views is not productive. 

I still believe that, but I also think the NBA has acted appropriately here, and I hope the owners follow through to oust Sterling. As I explained in my post about Mozilla: 

Certainly, one can imagine a scenario where a CEO’s prior political or organizational giving would create problems for the organization.  For example, an environmental organization may not be comfortable with a CEO who had given money to a group fighting climate legislation. But, in that circumstance, the hiring body, and likely the CEO, would, or at least should, have known that support for climate change initiatives would be expected as part of the job.  Top employees often become the face of the organization, and that comes with job, but if a particular political view is deemed necessary for the job, it would help if the CEO knew it during the interview process. 

Unlike Eich’s situation, Sterling’s apparent statements indicate a level of animus that required a strong response. I am also certain that the NBA would have considered Sterling’s views on race to be a huge problem for the league and the team, at least if displayed publicly.  Despite a long list of Sterling’s past statements, there is little doubt Sterling knew that such statements, at least made publicly, would be damaging.  It's unfortunate that Sterling would decide that it’s the public part of the view that are the concern (and not the views themselves), but that’s a different issue.

Organizations like the NBA work in their own best interest, and the role of the NBA is to promote and perpetuate the NBA and its teams.  In taking (and hopefully sustaining) action against Sterling, they are doing that.  They also happen to be, in my view, responding morally and ethically, as well. (I’ll note that there are legitimate questions about whether the NBA should have acted a long time ago, but for the moment, I’ll stick with “better late than never.”)  If the NBA does not ultimately, and relatively quickly, eliminate Sterling from an ownership role, though the entire league will suffer. Frankly, if the league and its owners don’t follow through, they should suffer. 

The NBA is, in many ways, a snapshot of capitalism.  In the market, where consumers have full information, the market works. Now that Sterling’s views are out in public, I suspect all of the NBA owners understand just what that means.  I rather hope so. 


Business Associations, Corporate Governance, Current Affairs, Ethics, Joshua P. Fershee | Permalink

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