CEO Steve Koonin on Tuesday told the Hawks' flagship radio station that he made the decision to discipline Ferry but allowed him to keep his job managing the team. He did not say what the punishment was, but noted that he relied on a law firm's three-month investigation of Ferry and his description of Luol Deng.
Ferry made the inflammatory comments about Deng in a conference call with the Hawks' ownership group in June when the team pursued Deng as a free agent.
A letter from co-owner Michael Gearon Jr. recommends that Ferry resign or be fired. Gearon cites Ferry telling the ownership group that Deng "has a little African in him."
His June 12 letter to co-owner Bruce Levenson said Ferry went on to say, "Not in a bad way, but he's like a guy who would have a nice store out front and sell you counterfeit stuff out of the back."
Added Gearon: "Ferry completed the racial slur by describing the player (and impliedly all persons of African descent) as a two-faced liar and cheat."
Deng, 29, was born in what is now South Sudan. His father moved his family to Egypt and then England. The 10-year NBA veteran is now a British citizen and played for England in the 2012 Olympics.
Deng, like Ferry, also played at Duke.
Koonin said Atlanta law firm Alston and Bird went through 24,000 documents, conducted 19 interviews and read "every email Danny Ferry has ever sent as general manager of the Atlanta Hawks." Koonin said no other negative information on Ferry was found in the probe.
"I took their advice and far exceeded their advice," Koonin said of the undisclosed punishment he imposed on Ferry.
Hawks spokesman Garin Narain said the investigation of Ferry's comments uncovered a racially inflammatory email written two years ago by Levenson. That discovery led to Levenson's announcement Sunday that he will sell his controlling share of the team.
Despite Gearon's desire to remove Ferry, Koonin is standing by him.
"I understand that emotion," Koonin said of Gearon's recommendation. "I certainly understand that emotion. I know people who have said that to me. But if we sentence people based on what everybody wanted, we wouldn't have a justice system.
"I listened to what (the law firm) said because they had done the work ... so that's a decision I'm willing to live with."
Gearon warned Levenson he believed Ferry's comments "could be fatal to the franchise" if made public.
Gearon said he and the other co-owners "were appalled that anyone would make such a racist slur under any circumstance, much less the GM of an NBA franchise on a major conference call."
Gearon declined to comment when contacted by The Associated Press on Tuesday and Deng's agent, Ron Shade, did not respond to an interview request.
Ferry apologized Tuesday but said he was only repeating what he had heard about Deng.
"In regards to the insensitive remarks that were used during our due diligence process, I was repeating comments that were gathered from numerous sources during background conversations and scouting about different players," Ferry said in a statement released by the team.
"I repeated those comments during a telephone conversation reviewing the draft and free agency process. Those words do not reflect my views, or words that I would use to describe an individual and I certainly regret it. I apologize to those I offended and to Luol, who I reached out to Monday morning."
Koonin has agreed to meet with Atlanta civil rights leaders on Wednesday. The Rev. Markel Hutchins said Monday he asked for the meeting to discuss what he believes is a racist attitude throughout the organization.
In his letter to Levenson, Gearon compared Ferry's remarks to much-publicized racist comments which forced Donald Sterling to sell the Clippers.
"We believe these comments by Ferry were far worse than Sterling's because they were not from a private personal conversation -- they were in a business environment on a business matter in front of a dozen or more people," Gearon wrote. "If Ferry would make such a slur in a semi-public forum, we can only imagine what he has said in smaller groups or to individuals."
Ferry was named the Hawks' general manager in 2012 following two years as vice president of basketball operations for the San Antonio Spurs. He was general manager for the Cleveland Cavaliers from 2005-2010 and helped build the team that advanced to the 2007 NBA Finals.
There was renewed optimism about the direction of the team after Ferry hired coach Mike Budenholzer from San Antonio in 2013.
Now, the turmoil threatens to derail all their efforts.
New ownership must be found and despite the support of Koonin, Ferry's ability to survive the crisis is unknown.
In his letter of apology, Ferry pledged he would learn from the incident.
"I am committed to learning from this and deeply regret this situation," Ferry said. "I fully understand we have work to do in order to help us create a better organization; one that our players and fans will be proud of, on and off the court, and that is where my focus is moving forward."
Future Of Ferry With Hawks
ESPN.com senior NBA writer Marc Stein discusses the future of Hawks GM Danny Ferry after he was disciplined by team CEO Steve Koonin.
Levenson Situation Unexpected
ESPN NBA reporter Brian Windhorst breaks down the chain of events leading to owner Bruce Levenson's decision to sell the Hawks.