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The NBA is currently in the process of getting out of one of the worst (or best, depending on your point of view) sports deals in history.
In 1976, when the NBA and ABA merged, four teams from the ABA joined the NBA: the San Antonio Spurs, Brooklyn Nets, Indiana Pacers and Denver Nuggets. Two teams did not: the Kentucky Colonels and the Spirit of St. Louis. Colonels' owner John Y. Brown was bought out for $3 million. The Spirit owners, the Silna brothers, decided instead to take a 14% share of the NBA TV contracts indefinitely, in lieu of an immediate payday. They were basically getting the money afforded to an NBA owner, without owning an NBA team. That deal has netted them over $300 million today, and does not even include contracts from NBA TV, League Pass or overseas broadcasts, all of which came about after the 1976 deal.
The Silnas recently filed a lawsuit in federal court to try to get some of that revenue from the more recent TV contracts, and it seems they will, but just not quite how they imagined. Instead, the NBA and the Silnas have reached an agreement to both settle the lawsuit and get the Silnas almost completely out of the NBA pool. The New York Times reports:
On Tuesday, the Silnas, the league and the four former A.B.A. teams will announce a conditional deal that will end the Silnas' golden annuity. Almost.
The Silnas are to receive a $500 million upfront payment, financed through a private placement of notes by JPMorgan Chase and Merrill Lynch, according to three people with direct knowledge of the agreement. The deal would end the enormous perpetual payments and settle a lawsuit filed in federal court by the Silnas that demanded additional compensation from sources of television revenue that did not exist in 1976, including NBA TV, foreign broadcasting of games and League Pass, the service that lets fans watch out-of-market games.
Still, the league is not getting rid of the Silnas altogether. They will continue to get some television revenue, some of it from the disputed sources named in their lawsuit, through a new partnership that is to be formed with the Nets, the Pacers, the Nuggets and the Spurs, according to the people with knowledge of the agreement. But at some point, the Silnas can be bought out of their interest in the partnership.
When all is said and done, this deal will have netted the Silna brothers close to a billion dollars. Now, with that extra money being shored up, could that be a precursor to expansion? There would seemingly be another slice of pie available. Could Chris Hansen, Steve Ballmer, et al. come in and grab it? Let's hope so.
