NBA settles short-sighted business deal for $500m

The NBA today settled one of the most short-sighted, and certainly ultimately bizarre business deals in sports history.

Back in 1976 when the ABA and NBA merged, four teams got the call up to the NBA, leaving only the Kentucky Colonels and the St Louis Spirits without a place on the musical chairs when the music stopped.

The NBA offered Kentucky and St Louis $3 million to settle and part ways. That was a lot of money in those days. And let’s not forget that at that stage, the NBA was not the hot ticket that it is in more recent times — it was a bit of a struggling also-ran… almost a novelty sport.

So the good owners of Kentucky took the money and ran. Somewhat understandably.

Meanwhile, the owners of the Spirits, brothers Ozzie and Daniel Silna were smarter than that. They had looked into their crystal ball and saw that whole basketball thing really taking off. They negotiated to receive “one-seventh of the visual media rights for each of the other four ABA teams in perpetuity“.

Take note there of two key things:

• visual media: what a wonderful, vaguely all-encompassing, future-proofed term that is. It’s almost as if these guys (and their lawyers) not only saw the future popularity of basketball, but also envisaged the internet and all of its practical applications and the ubiquitous nature with which it would take over our world with the likes of NBA League Pass… 
• in perpetuity: like… forever. That’s huge.

So for the past 37 years, these two dudes have been socking away approximately 2% of the NBA’s television broadcast revenues (depending on how many teams were in the league each year) basically for doing nothing. Well, nothing more than being smart in their speculation.

We’re talking about $17.7m per year currently. (That smart lawyer takes 10% of that too).

And what is more, with that visual media term lurking around, they recently went after a share of the NBA League Pass revenues too.

This was where the NBA said enough is enough, making a concerted effort to settle the deal — which they managed to do for a cool half a billion dollars. Not bad, particularly when you add all of the other cash flows over the past 37 years.

A round of applause for the Silna brothers. Incidentally, this wasn’t all the Silna brothers were famous for. They originally made their fortune through their pioneering efforts in the manufacture of polyester. They then pumped that money into buying a pro hoops team (after failing to buy the Detroit Pistons).

If you’d like to see more on this story, check out the ESPN 30 for 30 documentary called Free Spirits, which featured the many interesting characters on the team, including the likes of Moses Malone, Maurice Lucas, Don Chaney, ML Carr, and the not-so-punctual Marvin Barnes, who hired a private jet (unheard of in those days) to get to the game, so he could have a sleep-in.