Witness: Sterling needs Clippers sale to pay debts

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Witness: Sterling needs Clippers sale to pay debts
Shelly Sterling is congratulated outside the courthouse in Los Angeles on July 28, 2014 after a ruling was made in the case between her and her husband Donald over the sale of the NBA's Los Angeles Clippers basketball team. A California judge gave the go-ahead to the $2 billion sale of the Los Angeles Clippers to former Microsoft chief executive Steve Ballmer, ruling that embattled owner Donald Sterling could not block the move. AFP PHOTO/Frederic J. BROWN (Photo credit should read FREDERIC J. BROWN/AFP/Getty Images)
Shelly Sterling steps to the podium to respond to questions from the media outside the courthouse in Los Angeles on July 28, 2014 after a ruling was made in the case between her and her husband Donald over the sale of the NBA's Los Angeles Clippers basketball team. A California judge gave the go-ahead to the $2 billion sale of the Los Angeles Clippers to former Microsoft chief executive Steve Ballmer, ruling that embattled owner Donald Sterling could not block the move. AFP PHOTO/Frederic J. BROWN (Photo credit should read FREDERIC J. BROWN/AFP/Getty Images)
Shelly Sterling reacts while facing the media outside the courthouse in Los Angeles on July 28, 2014 after a ruling was made in the case between her and her husband Donald over the sale of the NBA's Los Angeles Clippers basketball team. A California judge gave the go-ahead to the $2 billion sale of the Los Angeles Clippers to former Microsoft chief executive Steve Ballmer, ruling that embattled owner Donald Sterling could not block the move. AFP PHOTO/Frederic J. BROWN (Photo credit should read FREDERIC J. BROWN/AFP/Getty Images)
Shelly Sterling reacts while facing the media outside the courthouse in Los Angeles on July 28, 2014 after a ruling was made in the case between her and her husband Donald over the sale of the NBA's Los Angeles Clippers basketball team. A California judge gave the go-ahead to the $2 billion sale of the Los Angeles Clippers to former Microsoft chief executive Steve Ballmer, ruling that embattled owner Donald Sterling could not block the move. AFP PHOTO/Frederic J. BROWN (Photo credit should read FREDERIC J. BROWN/AFP/Getty Images)
Shelly Sterling reacts to questions while meeting with the media outside the courthouse in Los Angeles on July 28, 2014 after a ruling was made in the case between her and her husband Donald over the sale of the NBA's Los Angeles Clippers basketball team. A California judge on Monday gave the go-ahead to the $2 billion sale of the Los Angeles Clippers to former Microsoft chief executive Steve Ballmer, ruling that embattled owner Donald Sterling could not block the move. AFP PHOTO/Frederic J. BROWN (Photo credit should read FREDERIC J. BROWN/AFP/Getty Images)
With her attorney Pierce O'Donnell, right, Shelly Sterling, center, talks to reporters after a judge ruled in her favor and against her estranged husband, Los Angeles Clippers owner Donald Sterling, in his attempt to block the $2 billion sale of the NBA basketball team, outside Los Angeles Superior Court, Monday, July 28, 2014. (AP Photo/Nick Ut)
LOS ANGELES, CA - MAY 30: Steve Ballmer (L) and Eric Garcetti attend Game Six of the Western Conference Final during the 2014 Stanley Cup Playoffs at Staples Center on May 30, 2014 in Los Angeles, California. (Photo by Noel Vasquez/GC Images)
Los Angeles Clippers owner Donald Sterling, right, and his wife Rochelle watch the Clippers play the Detroit Pistons during the second half of an NBA basketball game, Friday, Nov. 12, 2010, in Los Angeles. The Pistons won 113-107.(AP Photo/Mark J. Terrill)
Los Angeles Clippers Interim CEO Dick Parsons speaks at a press conference on May 12, 2014 at Staples Center in Los Angeles. Clippers owner Donald Sterling has offered his first public apology for racist remarks that saw him banned for life from the NBA. AFP PHOTO / ROBYN BECK (Photo credit should read ROBYN BECK/AFP/Getty Images)
Shelly Sterling, the estranged wife of Los Angeles Clippers owner Donald Sterling, arrives at a Los Angeles courthouse with her attorney Pierce O' Donnell, Monday, July 7, 2014. With the potentially record-breaking $2 billion sale of the Clippers hanging in the balance, a trial beginning Monday will focus on Shelly Sterling had the authority under terms of a family trust to unilaterally negotiate the deal. (AP Photo/Nick Ut)
Shelly Sterling, the estranged wife of Los Angeles Clippers owner Donald Sterling, arrives at a Los Angeles courthouse with her attorney Pierce O' Donnell, Monday, July 7, 2014. With the potentially record-breaking $2 billion sale of the Clippers hanging in the balance, a trial beginning Monday will focus on Shelly Sterling had the authority under terms of a family trust to unilaterally negotiate the deal. (AP Photo/Nick Ut)
LOS ANGELES, CA - MAY 7: Donald Sterling, owner of the Los Angeles Clippers, left and his wife Shelly pose for a photograph before his team played the Memphis Grizzlies in Game Four of the Western Conference Quarterfinals during the 2012 NBA Playoffs at Staples Center on May 7, 2012 in Los Angeles, California. NOTE TO USER: User expressly acknowledges and agrees that, by downloading and/or using this Photograph, user is consenting to the terms and conditions of the Getty Images License Agreement. Mandatory Copyright Notice: Copyright 2012 NBAE (Photo by Andrew D. Bernstein/NBAE via Getty Images)
Former Microsoft CEO Steve Ballmer takes in a Clippers playoff game with NBA commissioner Adam Silver in May. Ballmer has reportedly agreed to purchase the Clippers for $2 billion, according to the Los Angeles Times.
LOS ANGELES, CA - OCTOBER 27: David Geffen attends the Los Angeles Lakers vs Los Angeles Clippers game on October 27, 2009 in Los Angeles, California. (Photo by Noel Vasquez/Getty Images)
OAKLAND, CA - APRIL 24: Oracle CEO Larry Ellison watches the Los Angeles Clippers face the Golden State Warriors in Game Three of the Western Conference Quarterfinals during the 2014 NBA Playoffs at Oracle Arena on April 24, 2014 in Oakland, California. NOTE TO USER: User expressly acknowledges and agrees that, by downloading and/or using this Photograph, user is consenting to the terms and conditions of Getty Images License Agreement. Mandatory Copyright Notice: Copyright 2014 NBAE (Photo by Rocky Widner/NBAE via Getty Images)
Los Angeles Clippers owner Donald Sterling, upper right, watches the Golden State Warriors play the Clippers during the first half of an NBA basketball game, Saturday, April 10, 2010, in Los Angeles. (AP Photo/Mark J. Terrill)
A Los Angeles Clippers fan holds up a t-shirt cursing the team's owner Donald Sterling durring game 6 against the Oklahoma City Thunder on May 15, 2014 at Staples Center in Los Angeles, California, in their NBA playoffs round two series in which the Thunder defeated the Clippers 104-98 to win the series by four games to two. AFP PHOTO/Frederic J. BROWN (Photo credit should read FREDERIC J. BROWN/AFP/Getty Images)
LOS ANGELES, CA - MAY 15: Rochelle Sterling attends an NBA playoff game between the Oklahoma City Thunder and the Los Angeles Clippers at Staples Center on May 15, 2014 in Los Angeles, California. (Photo by Noel Vasquez/GC Images)
LOS ANGELES, CA - MAY 15: Rochelle Sterling (L) and Pierce O'Donnell attend an NBA playoff game between the Oklahoma City Thunder and the Los Angeles Clippers at Staples Center on May 15, 2014 in Los Angeles, California. (Photo by Noel Vasquez/GC Images)
OAKLAND, CA - APRIL 27: Shelly Sterling (C), the wife of Donald Sterling owner of the Los Angeles Clippers, watches the Clippers against the Golden State Warriors in Game Four of the Western Conference Quarterfinals during the 2014 NBA Playoffs at ORACLE Arena on April 27, 2014 in Oakland, California. The players wore theirs warm up this way in protest of owner Donald Sterling's racially insensitive remarks. NOTE TO USER: User expressly acknowledges and agrees that, by downloading and or using this photograph, User is consenting to the terms and conditions of the Getty Images License Agreement. (Photo by Thearon W. Henderson/Getty Images)
LOS ANGELES, CA - APRIL 29: Rochelle Sterling attends an NBA playoff game between the Golden State Warriors and the Los Angeles Clippers at Staples Center on April 29, 2014 in Los Angeles, California. (Photo by Noel Vasquez/GC Images)
Shelly Sterling (R), wife of embattled owner of Los Angeles Clippers, Donald Sterling, watches Game 3 of the Clippers second round NBA playoff series against the Oklahoma City Thunder on May 9, 2014 at Staples Center in Los Angeles, California. AFP PHOTO/Frederic J. BROWN (Photo credit should read FREDERIC J. BROWN/AFP/Getty Images)
NBA Commissioner Adam Silver speaks to the media regarding the investigation involving Los Angeles Clippers owner Donald Sterling on April 29, 2014 at the New York Hilton Midtown in New York City.
NBA Commissioner Adam Silver addresses the media about the investigation involving Los Angeles Clippers owner Donald Sterling and accusations that he made racist remarks to a girlfriend. Sterling, a billionaire, will be banned for life in the NBA. Sterling has a controversial history in racially charged Los Angles with previous accusations of racism tempered by philanthropic work in inner city neighborhoods.
Los Angeles Mayor Eric Garcetti, Sacramento Mayor Kevin Johnson and former Los Angeles Lakers player Norm Nixon addresses the media during the press conference in response to the NBA's decision to ban Clippers owner Donald Sterling for life.
Former Los Angeles Lakers player A. C. Green and Kareem Abdul-Jabbar address the media during the press conference in response to the NBA's decision on Donald Sterling.
NBA Commissioner Adam Silver speaks to the media regarding the investigation involving Los Angeles Clippers owner Donald Sterling.
Director and actor Spike Lee watches as NBA Commissioner Adam Silver addresses the media about the investigation involving Los Angeles Clippers owner Donald Sterling.
Spike Lee attends the press conference as NBA Commissioner Adam Silver discusses punishment for Los Angeles Clippers owner Donald Sterling.
The Clippers wear their warmup jerseys inside-out prior to Game 3 of their playoff series against the Warriors in protest of owner Donald Sterling.
DALLAS, TX - APRIL 28: Members of the Dallas Mavericks and the San Antonio Spurs wear black socks in protest of comments made by Los Angeles Clippers owner Donald Sterling in Game Four of the Western Conference Quarterfinals.
Earvin 'Magic' Johnson Jr speaks at a press conference on student scholarships in Indiana on April 28, 2014 in Gary, Indiana. The NBA Hall of Famer held the press conference to promote a benefit to raise money for student scholarships in Gary. During the press conference Johnson also answered questions in regard to comments made by Los Angeles Clippers Owner Donald Sterling.
Los Angeles Clippers owner Donald Sterling attends the NBA playoff game between the Clippers and the Golden State Warriors, April 21, 2014 at Staples Center in Los Angeles, California.
In this Oct. 17, 2010 file photo, Los Angeles Clippers team owner Donald Sterling watches his team play in Los Angeles.
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BY LINDA DEUTSCH
AP SPECIAL CORRESPONDENT

LOS ANGELES (AP) -- The chief financial officer of Donald Sterling's properties said Monday that the billionaire may be forced to sell a large portion of his real estate empire to cover $500 million in loans if he persists in refusing to sell the Los Angeles Clippers for $2 billion.

Darren Schield, who oversees the finances of The Sterling Family Trust, testified Monday that three banks are ready to recall their loans to Sterling because of his decision to dissolve the trust. His move was designed to rescind his signed agreement for the sale of the Clippers, a team he bought for $12 million.

Schield said if Sterling has to dump $500 million worth of apartment buildings he could destabilize the Los Angeles real estate market.

Sterling attorney Maxwell Blecher suggested that Sterling could take the company public in order to raise funds.

But Shelly Sterling's lawyer, Pierce O'Donnell asked if it would be easy to go public "with Donald Sterling's reputation."

Schield responded: "There's huge reputation issues. I don't know if anyone would want to go into partnership with him."

The NBA banned Donald Sterling for life for making racist statements after the release of recorded conversations. Sterling has denied he is a racist from the witness stand.

Schield testified in the probate trial that if Sterling's loans go into default and he needs to refinance, banks would be reluctant to give him that much money at the low rate he has now.

"I know the bank looks at this as a higher credit risk with all this going on," he said. "The rate would go up considerably."

Sterling, the volatile owner of the team, agreed to the sale but then dissolved the family trust in an effort to stop it.

Schield, testifying at the trial that will decide the future of a $2 billion deal to sell the Clippers to former Microsoft CEO Steve Ballmer, said he warned Sterling not to revoke the trust last month.

"I told him a revocation of the trust would be a breach of the loan covenants and would result in defaults," Schield said.

He said he also discussed it with Sterling's lawyer, Bobby Samini.

"I told him this revocation would open up a Pandora's box and trigger defaults," Schield said.

"Does the company have $500 million to pay off the loans?" asked O'Donnell.

"We do not," Schield answered.

Asked what the recourse would be, he said, "We would have to start selling real estate. If we have to sell $500 million in apartment buildings, it would have an impact on the Los Angeles real estate market. "

Donald Sterling's lawyers who had said they planned to call six witnesses Monday produced none of them and court was recessed early.

Shelly Sterling, Donald Sterling's wife who had been listed as a witness, was in court but was not called to the stand. She was scheduled to return Tuesday.

Her lawyers said their witnesses on Tuesday will include Richard Parsons, CEO of the Clippers. Outside court, Balmer's lawyer, Adam Streisand, said he believes the judge will rule in favor of Shelly Sterling.

"Do I think the trust will be reinstated after that?" he said. "You bet it will."

If the sale doesn't go through by Sept. 15, the NBA can seize the team and sell it at auction, Streisand said.

Donald Sterling has vowed he'll never sell the team. He claims he is the victim of illegally recorded conversations that invaded his privacy.
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