Sure they can.
In a criminal case, the prosecution cannot use evidence which was illegally seized by government agents, but it can use evidence illegally seized by private parties. In anything other than a criminal case (civil lawsuit, private arbitration, even a governmental proceeding like a license-revocation hearing), all illegally-obtained evidence is admissible.
(d) Except as proof in an action or prosecution for violation of this section, no evidence obtained as a result of eavesdropping upon or recording a confidential communication in violation of this section shall be admissible in any judicial, administrative, legislative, or other proceeding.I agree, that doesn't preclude the NBA from using illegally obtained evidence, plus, the witness's testimony is available even if the recording isn't. So, what about imposing a penalty in excess of the $2.5 million fine? I don't have a clue about the fine print of the owners/NBA contract, but I doubt owners would sign on to a contract giving the NBA the right to exclude them from their own property for life.
I still don't have much of a clue about the fine print, but I think Silver is out on a limb, as a matter of contract law. I dunno if Sterling is inclined to sue, probably depends on how much money he is offered to just go away.
That "Secret" NBA Constitution Is Now Online
Do you think a prosecutor will take the slam dunk case against his hooker girlfriend? Hahahah. I sure doubt it. Sterling's turn in the two weeks of hate box.
Not that I thought the NBA had any sense of decency, nothing but a bunch of sleazy, corrupt opportunists. Hope they enjoy their time in our sleazy, corrupt courts!