Political Incorrectness And Retaliatory Takings


While most of my clients are free marketers, they may not immediately see any mutuality between Dan Snyder, the majority owner of the Washington Redskins and Donald Sterling, the apparent owner of the LA Clippers, but unfortunately, I do. Allow me to explain.
Both men, of course, are owners of professional sports teams, and both are facing a potential loss of property rights for infractions of political correctness. Specifically, on about April 25, 2014, the website, TMZ, released a taped conversation between Sterling and his mistress, Vanessa Stiviano, to the effect that Sterling was upset that Stiviano was associating with black people and that he preferred that she not accompany them to the Clipper’s games. This dialogue, even though substantiated, made little or no sense to those of us with no racial or ethnic axes to grind, but the release of these “racist” remarks created a firestorm of protests, condemnations, fines and calls for sponsors to sever ties with the Clippers.
On or about April 29, 2014, the NBA decreed that Sterling be banned from the league for life, levied a $2.5 million fine on Sterling , prohibited him from attending NBA games and practices, ordered him to refrain from conducting team business and pronounced that they would attempt to force the sale of the Clippers. On May 9, 2014, the NBA named Richard Parsons the interim CEO of the team. While an actual sale of team may, or may not, occur, it is clear that Donald Sterling is at risk of being unwillingly deprived of a significant asset.
As the path to divestment unfolds, little sympathy for Donald Sterling materialized if only because it became apparent that he stands to reap a financial bonanza in the event that he ultimately sells or relinquishes ownership of the team. Recently, it was announced that Steve Balmer, former Microsoft CEO has offered and agreed to purchase the Clippers for $2 billion. But nevertheless, Donald Sterling is resisting and could still be deprived of an asset, not because of any statutory wrongdoing, but because of a consensus.
On or about June 18, 2014, the Trademark Trial and Appeal Board cancelled the federal registrations of six Washington Redskins trademarks because the name was found to be disparaging to Native Americans. While the registrations remain in effect pending appeals, it is important to note that the registrations are clearly at risk of being lost, and the cancellation of the federal registrations would represent a significant financial loss to the Redskins’ management. While trademarks and trademark rights exist independently of federal registrations, federal registrations impart extremely beneficial procedural presumptions should it become necessary to assert trademark rights. In other words, without the presumption of registration, the Redskins will have a more difficult time asserting and enforcing their trademark rights.
So, in both instances, we see the possible loss of a property right, not because of a statutory or regulatory infraction, but because of something deemed offensive. Offensive behavior may not defy, but it certainly resists, a definition we can all agree on. Would it not be better, even preferable, to allow Donald Sterling’s comments and Dan Snyder’s choice of a mascot be judged by market forces? In that way, a consensus, if legitimate, would have an immediate economic impact on actions deemed possibly beyond the pale and the behavior of those promoting the alleged offenses could either be continued or curtailed at the property owner’s choice. Contrast the consensus of the free market to the dramas playing, or to be played, out in Los Angeles and Washington, D.C., and I’ve made my point.

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