Jan 7, 2014, 1:59 PM EDT
It’s one of the great legends of the ABA:
When the NBA and ABA merged in 1976 four teams came in the league — the Nets, Pacers, Spurs and Nuggets — while the Spirits of St. Louis were left out (sort of like the Flint Michigan Tropics). The owners of the Spirit, Ozzie and Daniel Silna, wanted some compensation for missing out and they worked out a deal with the league to get one-seventh of the national television revenue that each of the four teams coming in was to get — in perpetuity. Forever.
Back in 1976 the sum was laughably small, but in the years since the NBA’s broadcast rights exploded and the Silnas got a piece of it every year, an estimated $300 million in the nearly 40 years since the merger. As you might imagine, the NBA has tried to get out from that agreement but to no avail, in fact a judge recently ruled that the Silnas should get a slice of international and league pass broadband rights, too.
However, finally the two sides have worked out a buyout, reports the New York Times.
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.
Why the Silnas chose to settle is the interesting question — while they had to fight the league for years and pay a lot of attorneys a lot of money, which deal was like a huge, never-ending annuity. The Times answered that as well.
But there is a reluctance, more by Daniel, 69, than Ozzie, 80, to keep fighting the league, said one of the people who discussed the agreement.
What does this mean to you the fan? Nada. It really means long term more money in the owners’ pockets.
And my guess is the Silna families will be able to live pretty darn comfortably on that sum for a few years.
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