Don’t worry LakHer fans, this is not a political blog post. Instead, I will be covering something much less tumultuous: the legal battle between the Buss siblings. This week ESPN dropped an article detailing the drama around the Lakers’ ownership. Before you read any further, I highly recommend you go and read this article.
Last month it appeared that Jimmy retaliated against his firing by trying and stage a coup with his brother Johnny. In the moment, I was completely terrified. I was still celebrating Jeanie firing his ass, and then it appeared he was going to throw her out and take over control of the Lakers. I was not OK with that. In my darkest hour I was telling people that I would no longer be a Lakers fan if Jimmy won. I was prepared to shut down the blog and stop watching Lakers basketball. It was a dark time.
Ultimately, Jeanie emerged victorious. She maintained control and got Jimmy to resign from the board of trustees and replaced him with her ally. I sat there trying to figure out what the hell just happened. I read articles trying to dissect this trust, but most of these articles were focused on the sibling infighting. I didn’t care how much Jeanie and Jimmy hated each other. I cared about the legal issues/consequences of this fight. My interests were in the future of Lakers basketball and management. After the ESPN article came out, I consulted with my brother and official LakHer Blog legal correspondent, AW. He provided enough context that I think I now understand what happened, and hopefully can explain it to all of you.
Legal Battle Breakdown
Let’s first discuss the main issue at the heart of this legal battle: the trust (OK, so it turns out it isn’t a single trust but four nearly identical trusts which work together to form a sort of mega-trust, but for ease of reference I am going to refer to the four trusts in the post as a single trust). The organizational documents of the trust are not public, so all information previously known about the trust has been hearsay. Thanks to this drama, we now know a little bit more about how the Buss trust is set up, because certain information about the trust was included in certain publicly filed documents. According to Janie Buss, Dr. Buss set up the trust for his 6 children to go to the “last man standing.” Essentially, all 6 kids split the 66% of the Lakers, but as each child dies off, the rest of the siblings absorb the remaining share. Eventually there will be 1 child remaining and they will have all 66% of the Lakers ownership owned by the trust. This means that, at least theoretically, the trust immensely benefits the youngest child Joey, but is detrimental to the older siblings (Johnny and Jimmy).
When I first heard about this set up, I immediately thought of the princes in the movie Stardust. Just like in the movie, I believe this set up incentivizes siblings to murder each other.
The future for the Buss siblings. (Screen grab from the movie Stardust)
There are a lot of pros and cons for setting up a trust like this, and I will focus on the impact for the Lakers later on in this blog. For now, let’s discuss why Jimmy and Johnny “tried” to overthrow Jeanie.
While the trust has 6 beneficiaries (all the Buss children) it has 3 trustees (Jeanie, Jimmy and Johnny), who actually administer and run the trust. Here is where things get a little soap opera like. According to various sources cited in the ESPN article linked to above, Jimmy and Johnny wanted Jeanie to agree to amend the trust. In particular, it is thought that they wanted to be able to access more cash from the trust than they are currently entitled to – Johnny so he could have a larger legacy for his children and Jimmy so he could pay for his expensive real-estate habit. We know it is possible for the trust to be amended if all three trustees agree to amend it, because the trust has been amended using this procedure several times already. However, it appears that Jeanie didn’t agree to these amendments. So, Jimmy and Johnny aggressively played a weak hand. While the trust requires the consensus of all 3 trustees to amend it, it only requires a majority to take most other actions. So Jimmy and Johnny used their combined majority vote to do something that most experts (and now a judge) agree is forbidden by the terms of the trust – they removed Jeanie from the board of directors of the Lakers, which would have prevented her from acting as the “controlling owner” of the Lakers. This was a calculated move, and it left Jeanie with 2 choices:
- Negotiate with her siblings and agree to some form of restructuring of the trust; or
- Take them to court and air the family dirty laundry
Jeanie took the badass approach and went with option number 2. She filed an action in court to prevent her brothers from removing her from the board of directors, and the judge quickly agreed and ordered the brothers to comply. She then went one step further, flexing her muscles and had her lawyer threaten to look into Jimmy’s finances. He is (allegedly) broke, and being “financially insolvent” can get you removed from the board of trustees. It worked. He resigned from the board, and she replaced him with her ally Janey. It was a boss move.
Future of the Lakers
After AW explained all of this to me, my first question was this: does that mean this is all over? The answer is a bit complicated.
In the short term, this fight is over. Janie is “Team Jeanie” so Johnny is outnumbered in staging any sort of coup. He needs either Janie or Jeanie to help him do anything. This appears to be unlikely. This means for the next 30-40 years (knock wood), the team will remain in Jeanie’s control. The issue now comes back to that “last man standing” trust. I told you we would be coming back to it.
Eventually Jeanie will die, (either of natural causes or murderous rage from a disgruntled sibling) and the shares will go to the last Buss standing. In all likelihood, that will be Joey. This means that unless Jeanie and her siblings restructure the trust in the future, the Lakers will be in the hands of Joey, and then his children. That scares me a bit. I do not want another incompetent Buss running my beloved Lakers. Jeanie has proven to be a badass and to put the team before her personal relationships. I am willing to role with her for a bit to see what she can do with this new team. I have less faith in Joey and his children.
This revelation terrified me, so I went back and read my very first blog post from 3 ½ years ago. I wrote that blog to give my brother hope for the Lakers. I discussed why I was hopeful for the future despite all the issues they were facing. I was pretty spot on with a lot of the issues. However, I got one thing very wrong: the Jimmy and Jeanie duo. I talked about putting family first and having a united front. I also called Jeanie a “glorified groupie.” I would like to take this moment to apologize to Jeanie for that comment. Her actions took some steal ovaries, and I am impressed. She put this organization before her relationship with her brother, and that is something I will not forget. Her brother definitely deserves what he got, but I cannot imagine how hard it must have been to go to war with him like that. Now that Jeanie has cleaned house and put in a new team, I think she will do great. I believe she will ensure the future of the Lakers and not make the mistake of allowing this team to fall into the wrong hands again (despite her father’s wishes). I can honestly say, I am more hopeful than ever.
I know there have been a lot of developments I haven’t covered in the last two months. I need to discuss Kobe’s last game, the draft, and free agency. I promise that those blogs are coming, but first I need to discuss the trending topic of the day: Nick Young almost blowing his hand off.
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