Jeanie Buss and her five siblings appear headed for litigation over the pending sale of the Los Angeles Lakers.
A twist has emerged in the pending $12.5 billion sale of Mark Walter’s majority interest in the Los Angeles Lakers to Joshua Kushner and Bob Iger, as minority but controlling owner Jeanie Buss has no intention of selling her family’s stake or relinquishing her leadership role.
It’s a twist that could spark litigation unless the parties can reach a resolution outside of court.
As CNBC reported on Monday, Buss’ attorney, Adam F. Streisand, wrote a letter to attorneys representing the other five Buss siblings, Jim, Johnny, Janie, Joey and Jesse, saying Buss will not agree to sell her and her siblings’ 17.8% ownership stake to Kushner and Iger.
As described by Streisand, this isn’t a situation where five siblings could simply outvote the lone dissenter. Instead, the family trust agreement allegedly indicates that no sale of the 17.8% stake can occur without approval by the three co‑trustees, Jeanie, Janie and Joey Buss. Streisand also wrote that both the trust and a court order require the co‑trustees to ensure that they maintain a minimum 15% stake “to ensure that Jeanie Buss may remain controlling owner.”
Streisand’s letter asserts that any vote of the five other Buss siblings “would be and is void ab initio,” which is Latin for “void from the beginning.” Streisand also refers to a Los Angeles Superior Court order from 2017 stating that the co‑trustees are obligated to “ensure” that Jeanie Buss is the controlling owner, and that obligation continues unless a new court order indicates otherwise.
The reference to controlling owner is important. A controlling owner, who typically serves as the franchise’s governor, is the person recognized by the league as responsible for voting on league matters and is the primary contact between the league and the franchise. NBA rules require that controlling owners have at least 15% equity in the team.
Even though Buss is one of six siblings sharing a 17.8% stake, she has been the controlling owner of the Lakers for more than a decade. The siblings’ father, Jerry Buss, controlled the team from 1979 until his death in 2013. Jeanie Buss then became the Lakers’ governor and controlling owner representative, and after a legal dispute with her brothers Jim and Johnny, she secured a court order in 2017 affirming her leadership role.
Through an agreement with Walter, Buss remained the team’s governor even after Walter acquired the Buss family’s controlling stake last year. According to ESPN, the agreement calls for Buss to remain as controlling owner until 2030.
There are two ownership issues at play with Buss. The first is whether her siblings can execute a sale of the 17.8% stake without her consent. The second is whether she can maintain her role as controlling owner with Kushner and Iger as majority owners.
Although these topics are legally distinct, they’re substantively connected.
Buss blocking a sale and remaining as controlling owner could undermine goals of Kushner and Iger, who might want a different controlling owner. While Walter agreed to Buss remaining in that role, remember that he was buying a majority stake from the Buss family and might have needed to go along with that arrangement to make that transaction possible.
In contrast, Kushner and Iger are obtaining a majority stake, reportedly about 65%, through Walter, whereas the Buss family’s interest is merely a minority stake. Acquiring the Buss family’s stake would also eliminate any possibility that Buss could independently satisfy the NBA’s 15% ownership requirement for a controlling owner.
Like other families who own sports franchises, the Buss family turned to a trust as the instrument to oversee different family members’ management of the team. As Sportico detailed in its succession series, families with sports franchises often turn to trust agreements for estate tax purposes and to construct an orderly arrangement for control and succession. Leagues want franchises to have predictable and reliable succession plans for when a controlling owner dies or becomes incapacitated. Those plans can lower the prospect of family member disagreements turning into high-profile legal battles where sensitive league materials could become visible to journalists and fans.
Even with succession planning, there’s no shortage of legal disputes involving family members vying for control of family‑owned pro teams. The language of family trusts can be interpreted differently by siblings and their attorneys.
Across town in 2014, the Los Angeles Clippers endured a legal battle between Donald Sterling and his wife, Shelly Sterling, over control of the family trust that owned the franchise. The NBA had banned Donald Sterling in the aftermath of his racist comments, but removing Sterling as an owner would have required a multistep process outlined in the league constitution. Shelly Sterling effectively expedited the removal of her husband by taking him to court. She argued he was incapacitated, meaning unable to discharge his duties and obligations under the trust, and won, leading to the sale of the team to Steve Ballmer.
Last year, Sheel Kamal Seidler, the widow of Peter Seidler, sued two other Seidler brothers, Bob and Matt, in a Texas probate court over, among other things, which family member should be the “control person,” the MLB equivalent of a controlling owner. The dispute led to a settlement, and the Padres were recentlysold to private equity billionaire José E. Feliciano and his wife, Kwanza Jones.
For the Buss siblings, it remains to be seen how they interpret the language of the trust. It appears they want to cash out on their stakes in the franchise, and they could potentially seek a court order to remove their sister as a co‑trustee, such as by arguing the trust permits a vote to that effect or permits a removal under certain circumstances. Trusts can also contain language that allows for reconfiguration in the event of conflicts of interest and other circumstances that touch on fiduciary duties. Whether the siblings could offer a viable argument is unknown, but the fact that they could try is the more salient point given that it could complicate the sale.
The durability of Walter’s agreement with Buss for her to remain as controlling owner until 2030 could also spark debate. One key question is whether that agreement contains language on the circumstance of Walter selling his interest prior to 2030. It stands to reason the parties would have drafted language addressing that possibility.
Another question is whether the sale agreement requires Kushner and Iger to honor governance arrangements Walter negotiated with Buss. Her role with the team has been well-known and presumably was part of deliberations between Walter, Kushner and Buss.
Lurking in the background is the NBA Board of Governors. Ownership transfers in the NBA require a supermajority of at least three‑quarters (23) of the 30 NBA teams’ governors, and at some point this fall, the governors could vote on the Lakers sale.
As Sportico explained, the sale occurring after the one-year anniversary of Walter buying the team last October could save him about $425 million through the preferential treatment of long-term capital gains. The NBA will likely want a resolution on the Lakers’ ownership situation as the league deliberates the prospective sales.