Two brothers who sold their sports team 36 years ago made $17.4 million on the deal in the 2010-2011 season, and stand to make millions more in the future.
If this sounds too good to be true, it’s not. Here’s a recounting of this tale by our friend Richard Sandomir in The New York Times last week. It’s all about one really smart clause in a deal, and TV money.
Sandomir writes, "For years, it was an underappreciated wrinkle in the historic deal that merged the established National Basketball Association and the upstart American Basketball Association in 1976. The owners of the Spirits of St. Louis agreed to be paid a small fraction of the NBA’s television money to comfort them for being cut out of joining the older league."
Here’s that really smart clause: The owners of the Spirits, brothers "Ozzie and Daniel Silna, would be paid the money every year in perpetuity, or as long as the NBA existed." the story says.
And here’s the amount of money they agreed to be paid: "[O]ne-seventh of the television money generated annually by each of the four surviving ABA teams — the Nets, the San Antonio Spurs, the Indiana Pacers and the Denver Nuggets," Sandomir writes.
The article adds, "The Spirits became a distant memory, even for people in St. Louis. But the NBA has continued to exist quite nicely, meaning the Silnas’ haul has been substantial: $255 million and counting. But as sweet as the deal has been, the Silnas want more, and they have gone to court to get it.
"In Manhattan federal court on Thursday, lawyers for the Silna brothers and the league argued over whether the men are owed money beyond what they get from the NBA’s national broadcast and cable television contracts. They want to tap into the money the league gets from international broadcasts, NBA TV, the league’s cable network, and other lucrative deals that could not have been imagined in the three network television universe of 1976."
Sandomir also notes, "In 1980-81, the first year the Silnas were eligible to get their share of TV money, they received $521,749, according to court documents filed by the NBA. For the 2010-11 season, they received $17,450,000. The NBA’s latest TV deal, with ESPN and TNT, is worth $7.4 billion over eight years. Soon, the Silnas’ total take will hit $300 million."