As I was checking a sports app on an entirely unrelated matter, I stumbled across an article that strayed well outside traditional sports reporting and landed squarely in the world of Estate Planning for family-owned businesses. The headline immediately caught my attention: “How Buss Family Infighting Drove the $10B Sale of the Lakers.” Naturally, I clicked. What followed was a story filled with intrigue, family conflict, and—at its core—an Estate Plan that failed to function as intended.
To understand how we got here, we need to rewind to 1979, when Dr. Gerald Hatten Buss (“Jerry”) paid $67.5 million to Jack Kent Cooke to purchase the Los Angeles Lakers, the Los Angeles Kings, the Forum arena, and a 13,000-acre California ranch. This is the same Lakers franchise that drafted Magic Johnson and won an NBA Championship in his rookie season. Jerry made it clear from the outset that selling the Lakers was never the goal. He famously said that if he had unlimited funds, he would buy the team all over again. That conviction never wavered even during periods of financial strain, in the face of lucrative purchase offers, and as he confronted his own mortality. According to his children, Jerry viewed both them and the Lakers as his legacy. Unfortunately, his intense focus on keeping the team in the family without fully accounting for governance, control, and human dynamics proved fatal to that vision. Just twelve years after his death, the Buss family no longer holds a majority controlling interest in the Lakers. By any reasonable Estate Planning standard, the legacy failed.
Jerry died on February 18, 2013, at age 80, survived by six children: Johnny (60), Jim (57), Jeanie (55), and Janie (53) from his former wife, Joanna, and Joey (32) and Jesse (29) from his longtime partner, Karen Demel. Through a series of family trusts holding Jerry’s 66% ownership interest, each child effectively inherited an 11% interest in the Lakers. Jerry spent significant time crafting an Estate Plan designed to preserve family ownership. The Trust included standard buy-sell provisions, required the acting Trustees, Johnny, Jim, and Jeanie, to support Jeanie as the controlling owner, and operated as a pooled investment vehicle. This meant that upon a sibling’s death, the interest held by that sibling was redistributed among the survivors in a “last-individual-standing” structure. To his credit, Jerry protected his grandchildren by requiring payment of the value of the deceased sibling’s interest in the team to their children, preserving generational wealth. On paper, the plan was sophisticated. In practice, it was unworkable.
Shortly after Jerry’s death, the siblings met to discuss a possible sale. Although he was serving as Executive Vice-President of Operations and controlled the on-court operations for the Lakers, Jim, joined by Johnny were open to selling. Jeanie, named successor controlling owner and President of the Lakers, was not. Because a sale required four of six votes, the proposal stalled. For several years, all six siblings remained involved in the organization. That fragile truce collapsed in February 2017, when Jeanie fired Jim. Jim responded by joining forces with Johnny in an attempt to remove Jeanie from the Board of Directors by calling an annual shareholder meeting. What they failed, or refused, to acknowledge was that the Trust required them, as Trustees, to support Jeanie’s role as controlling owner. Removing her would have violated both the Trust and the Lakers’ bylaws. Jeanie sought and obtained a Temporary Restraining Order. At that point, the structural flaws in Jerry’s Estate Plan were undeniable.
Eight years later, the end came when Jeanie sold all but 17% of the family’s interest in the Lakers. In the interim, tensions festered, relationships deteriorated, and the team struggled. The Trust’s “last-man-standing” provisions only intensified the conflict, as eventual control would pass to the youngest siblings, fueling the older siblings’ desire to sell. Although ownership percentages were equal, control was not. Jeanie held the reins, while the others remained bound by a Trust that limited their influence and options. That’s a recipe for disaster.
This case offers several critical Estate Planning lessons. First, just because a plan achieves the client’s goal doesn’t mean that plan works. Placing one sibling in control of another almost always invites resentment, litigation, or both. I regularly warn clients against this structure. No matter how close a family appears, putting one child in charge of another’s inheritance is a recipe for conflict. Second, Estate Planning demands honest discussion of worst-case scenarios. I have lost count of how often I heard, “That would never happen,” or “My children get along.” I suspect Jerry believed the same. Family, money, and legacy create a volatile combination, especially when that conflict involves a valuable, closely-held business that employs most of the family. Finally, business succession planning requires a clear-eyed assessment of who truly has the temperament and ability to lead. Estate Planning means relinquishing control and trusting others to execute that vision. Failing to plan for friction guarantees instability.
Jerry Buss made several classic Estate Planning mistakes. He failed to prioritize either business success or family harmony. He underestimated the strengths and weaknesses of his children. Finally, he underestimated the impact of his absence. Together, these missteps unraveled the legacy he worked so hard to protect.
Don’t let this happen to your business or your family. Thoughtful, realistic Estate Planning can make the difference between preserving a legacy and watching it unravel.