OT: "the greatest sports business deal of all time" - UPD: Silnas bros/NBA settle

[ebox99]

http://espn.go.com/nba/story/_/id/9961147/sources-nba-tries-end-costly-aba-deal

The Silna brothers are the former owners of an old ABA franchise known as the Spirits of St. Louis. When the ABA merged with the NBA in 1976, the Silnas agreed to dissolve their team in exchange for a small percentage of the NBA's future broadcast revenue.

Since the deal was reached in 1976, the league has paid the Silnas $300 million in TV royalties. Recently, a judge ruled that the brothers also have rights to Internet revenue.

Click to read more...

 

[Doan Jidion*]

What's to settle? It's free money, and lots of it.

 

[kdb209]

Saw the thread title and thought - has to be Ozzie and Dan still laughing themselves to the bank - yup.

A couple of pieces on the Silna TV deal.

Lengthier NY Times piece on the Silna brothers deal and lawsuit:

No Team, No Ticket Sales, but Plenty of Cash
Former A.B.A. Owners Ozzie and Daniel Silna Earn Millions From N.B.A.

Wow. Just wow.

And here I thought that the Isles' management were the only ones who made such foolish long-term contract commitments. I had no idea that they have been on the receiving side of one since 1982.

Cablevision has to be sitting and stewing over how much they have to fork over for the rights to broadcast Isles games to 18,000 households, and will continue to do so for decades.

That has to be the worst deal in all of televised cable sports.

Worst (or best - depending on your perspective) deal in all televised sports?

Nah - that has to be the deal between the Silna bros and the NBA. They get millions every year for a team that hasn't existed in over 30 years.

http://articles.latimes.com/2006/jul/31/sports/sp-aba31

The TV Deal the NBA Wishes It Had Not Made

By Jonathan Abrams
July 31, 2006 in print edition D-1

Roughly once a month, the NBA cuts 31 checks to NBA teams as revenue from its multibillion-dollar national television contract.

There are only 30 NBA franchises, so who gets the extra check?

The money goes to brothers Ozzie and Dan Silna, co-owners of the long-forgotten ABA team, the Spirits of St. Louis.

Thirty years ago, Ozzie Silna, with attorney Donald Schupak, negotiated a deal that cleared the way for the ABA to merge with the NBA. It ranks as one of the best sports deals in modern times, one that has paid the Silnas about $168 million and continues to pay off.

“I would have loved to have an NBA team,†said Ozzie Silna, 73, a Malibu resident and environmental activist. “But if I look at it retrospectively over what I would have gotten, versus what I’ve received now, then I’m a happy camper.â€

Part of the Silnas’ deal called for them to receive one-seventh of the annual TV revenue from each of the four ABA teams entering the NBA. The deal turned out to be so lucrative that several NBA teams have tried to break it, without success.

“We honor the deal,†said Donnie Walsh, the Indiana Pacers’ chief executive. “I can’t say we haven’t met and tried to settle it. But it’s the greatest deal known to man. What more can you say?â€

The key line in the Silnas’ TV contract that makes NBA executives cringe reads: “The right to receive such revenues shall continue for as long as the NBA or its successors continues in its existence.â€

In other words, the deal lasts as long as the NBA does.

 

[kdb209]

What's to settle? It's free money, and lots of it.

The only reason I could see the Silna bros settling - for a significant lump sum - would be estate planning. Ozzie Silna is 80 and Daniel is 69.

The League's been trying to buy them out for 30+ years.

 

[OthmarAmmann]

The only reason I could see the Silna bros settling - for a significant lump sum - would be estate planning. Ozzie Silna is 80 and Daniel is 69.

The League's been trying to buy them out for 30+ years.

How would settling help their estate? I presume they're not the actual parties to the agreement but a corporate entity is instead. Even then, it's more difficult to value the entity if it has contractual right to future income than a sack of cash when they die.

 

[viper0220]

When Ozzie Silna and Daniel Silna, do the payments to them stop or do their children get it?

 

[viper0220]

I wish I had this kind of idea, does anyone want to join me? I am starting NAHA(catchy name), the North American Hockey Association to rival the NHL

 

[Mungman]

When Ozzie Silna and Daniel Silna, do the payments to them stop or do their children get it?

I'm assuming it's paid to a corporation, those entities don't die. The shares would be passed on by the shareholders estate upon their expiry.

Sweet deal.

 

[ebox99]

Saw the thread title and thought - has to be Ozzie and Dan still laughing themselves to the bank - yup.

A couple of pieces on the Silna TV deal.

NBA should just give them a free franchise in St. Louis now lol

 

[Riptide]

It would be interesting to know how much money they were talking about back in 76. I somehow suspect that it was peanuts - especially compared to now, and in the future.

 

[mouser]

It would be interesting to know how much money they were talking about back in 76. I somehow suspect that it was peanuts - especially compared to now, and in the future.

The Kentucky Colonels were the other final standing ABA team along with St Louis that didn't go to the NBA. Owned by John Y Brown Jr
http://en.wikipedia.org/wiki/John_Y._Brown,_Jr.


http://www.remembertheaba.com/TeamMaterial/KentuckyMaterial/ColonelsYearly.html

Dispersal Period
17Jun76 Brown reaches a financial agreement with the remaining teams in the ABA and folds his team for $3 million.... According to the terms of the ABA/NBA merger, Kentucky players are placed into a dispersal draft (along with the players from the Spirits of St. Louis).... Chicago selects Gilmore for $1.1 million, Portland selects Lucas for $300,000, Buffalo selects Averitt for $125,000, Indiana selects Wil Jones for $50,000, the New York Nets select Van Breda Kolff for $60,000, and San Antonio selects Dampier for $20,000.... Brown purchases the NBA's Buffalo Braves

So $3m to fold the team. And another $1.655m from the player dispersal draft.

 

[Tom ServoMST3K]

just saw the 30 for 30 on this

Surprised at how accurate Semi-Pro was

 

[Sens Rule]

Kinda like this long term terrible deal for Hydroelectric power from Churchill Falls in Labrador: (from Wikipedia)

he division of profits from the sale of electricity generated at the plant has proven to be a very sensitive political issue in Newfoundland and Labrador, with many considering the share accorded to Hydro-Québec "an immense and unconscionable windfall."[12]
The Government of Newfoundland and Labrador has twice challenged the contract in court, with both challenges failing.[13] Additionally, in 1984 the Supreme Court of Canada ruled that a proposal by Newfoundland to divert water away from the falls was illegal.[11]
According to former Premier Brian Tobin, as Labrador only borders Québec, when an agreement was being negotiated to sell the power generated at Churchill Falls, the power either had to be sold to an entity within Québec or it had to pass through Québec. The government of Québec refused to allow power to be transferred through Québec and would only accept a contract in which the power was sold to Québec.[14] Because of this monopsony situation, Hydro-Québec received very favourable terms on the power sale contract. The contract was negotiated to run for a 65-year timespan, running until the year 2041, and according to former Newfoundland Premier Danny Williams, Hydro-Québec reaps profits from the Upper Churchill contract of approximately $1.7 billion per year, while Newfoundland and Labrador receives $63 million a year.[15]

 

[madhi19]

What's to settle? It's free money, and lots of it.

Yeah there no way in hell if am in these guys shoes that I settle anything.

 

[madhi19]

Kinda like this long term terrible deal for Hydroelectric power from Churchill Falls in Labrador: (from Wikipedia)

he division of profits from the sale of electricity generated at the plant has proven to be a very sensitive political issue in Newfoundland and Labrador, with many considering the share accorded to Hydro-Québec "an immense and unconscionable windfall."[12]
The Government of Newfoundland and Labrador has twice challenged the contract in court, with both challenges failing.[13] Additionally, in 1984 the Supreme Court of Canada ruled that a proposal by Newfoundland to divert water away from the falls was illegal.[11]
According to former Premier Brian Tobin, as Labrador only borders Québec, when an agreement was being negotiated to sell the power generated at Churchill Falls, the power either had to be sold to an entity within Québec or it had to pass through Québec. The government of Québec refused to allow power to be transferred through Québec and would only accept a contract in which the power was sold to Québec.[14] Because of this monopsony situation, Hydro-Québec received very favourable terms on the power sale contract. The contract was negotiated to run for a 65-year timespan, running until the year 2041, and according to former Newfoundland Premier Danny Williams, Hydro-Québec reaps profits from the Upper Churchill contract of approximately $1.7 billion per year, while Newfoundland and Labrador receives $63 million a year.[15]

Too effing bad you sign the damn contract you live with it. Newfoundland could have just bought it juices from Quebec, not build the dam and made a way better deal.

 

[cutchemist42]

OT-Worst deal in sports history coming to a close (NBA & Silna's)

http://deadspin.com/nba-to-pay-500-million-to-get-out-of-the-worst-deal-ev-1496519535

 

[Hasbro]

Loose Balls by Terry Pluto is a history of the ABA and a hilarious read. The fact that such a **** show like the Spirits turned into such a goldmine is indicative of the humor provided by the league.

OT: but the Colonels were actually a viable franchise and probably in better shape than some NBA teams. However the Bulls wanted Artis Gilmore off their squad.

 

[tarheelhockey]

Interesting point made in the reader comments:

Q: Why would the Silnas ever take a buyout? They're guaranteed to make tens of millions per year in 'free' cash payments.

A: The Silnas only have the rights to broadcast income. That excludes online streams, Netflix, etc. They have just filed a lawsuit to expand the definition of 'broadcast' to include new media, and this buyout offer was the NBA's response. If the Silnas lose that lawsuit and sports viewing continues to move into new-media territory, they could be out of luck in the long term. The $500M up front is more enticing even if invested very conservatively.

 

[Jtown]

i'm surprised they got bought out. That contract would go on forever, doesn't make much sense.

 

[kaiser matias]

Worth noting:

The Silnas will retain an unknown but smaller share of TV revenues, but the NBA will have a future option to buy them out.

 

[Stonewall]

Similar to what Alec Guinness (Obi Wan Kenobi) did.

http://en.wikipedia.org/wiki/Alec_Guinness

"He was one of the few cast members who believed that the film would be a box office hit; he negotiated a deal for 2% of the gross royalties paid to the director, George Lucas, who received one fifth of the box office takings."

 

[No Fun Shogun]

Well, both of the brothers are getting on in years and they might be at the point where they figure that dividing a lump sum amongst their heirs would be less hassle than divvying up the deal they have with the NBA (not to mention that there might be some legal loopholes when it comes to changing payees and division of payments that they think the NBA could have some leverage on), even when you figure that estate taxes will take a chunk out of that.

 

[kdb209]

NYTimes piece on the Silnas/NBA settlement:

http://www.nytimes.com/2014/01/07/s...y-come-for-an-aba-team-that-is-long-gone.html

Forbes' piece:

http://www.forbes.com/sites/montebu...-end-to-the-greatest-sports-deal-of-all-time/

 

[Jumptheshark]

Similar to what Alec Guinness (Obi Wan Kenobi) did.

http://en.wikipedia.org/wiki/Alec_Guinness

"He was one of the few cast members who believed that the film would be a box office hit; he negotiated a deal for 2% of the gross royalties paid to the director, George Lucas, who received one fifth of the box office takings."

without taking this sideways-- Guiness got two % Gross because Lucas could not afford to pay Guinnesses usual rate and Guinness (according the legend here in the UK) got nagged by Sir John Guilgud who told Guinness he was taking himself to seriously and because of where they were shooting he should treat it like a vacation. Guinness had little faith in the movie and after reading the original draft convinced Lucas to kill Obi one off.

 

[rj]

just saw the 30 for 30 on this

Surprised at how accurate Semi-Pro was

a couple Indy-area broadcasters lamented that movie (Pacers were originally ABA), saying there were so many better stories from the league the movie could've lampooned