11/05/24
July 31, 2006
The Best Deal Ever: Thirty years ago when the ABA merged with the NBA, two of the six teams were not invited to join, but the merger required unanimous approval. The owner of the Kentucky Colonels gave his assent for $3.3 million. But the owners of the St. Louis Spirit - the Silnas brothers - wanted a little something more. They got $3m, plus a share of future TV revenues of the four merging teams. In perpetuity.
In the early years, the Silnas' share amounted to $300,000 per year. And then came the flood of media money, the Magic and Michael eras, and lo, the Silnas are sitting pretty. They've turned down every buyout offer and withstood every attempt by the NBA to break the contract, collecting $168m in the process. The current haul is $15m per year.
posted by dusted to basketball at 04:36 PM - 17 comments
Damn it dusted, beat me to it. Excellent article. I keep imagining The Commish putting a hit out on the Silnas whilst twirling his 'stache (the one he had in the 70s).
posted by lilnemo at 04:51 PM on July 31, 2006
That was awesome. Thanks.
posted by charlatan at 06:05 PM on July 31, 2006
That has to be one of the shrewdest business deals I've ever heard of. Sounds like their children's children's children are set (unless basketball ultimately falls to poker & NASCAR). In 1982, after several years of cashing TV checks, the Silnas came close to accepting a new buyout. The NBA offered them $5 million over eight years, but the Silnas countered with a demand of $8 million over five. The league balked at that number, so the Silnas have kept cashing in. That seems so shortsighted. Was the league really so strapped for cash in the early 80's they didn't think they'd stay afloat paying out that much each year?
posted by cybermac at 06:23 PM on July 31, 2006
The league balked at that number, so the Silnas have kept cashing in. Fool me once, and all that... One of the few (if not only) dark marks on Larry O'Brien's resume as NBA commish. Great post, dusted. Thanks.
posted by Ufez Jones at 06:29 PM on July 31, 2006
Holy cats, what an amazing deal. I love that they weren't thinking they would ever make this much money off of the deal but "just wanted a piece of the action."
posted by Joey Michaels at 06:42 PM on July 31, 2006
In the words of Peter Griffin, "Freakin' schweeeeet." That is just beautiful ... anyone know if either brother is looking to adopt a middle-aged Canadian (finder's fee involved)?
posted by wfrazerjr at 07:58 PM on July 31, 2006
Quick ABA history: When the merger happened John Y. Brown was the owner of the Kentucky Colonels and he had other chicken to fry. KFC joke He took his money...bought the Buffalo Braves...traded the Braves with the owner of the Celtics...so that guy could move a team to California (and no one would let him move the Celtics)...Brown later sold the Celtics for a tidy profit. He seemed to do well by not taking the Colonels to the NBA....just not as well as the Spirit owners. Considering that their team had zero chance of joining the NBA they did spectacularly well.
posted by ?! at 08:15 PM on July 31, 2006
Here's to you, Marvin Barnes, a sports nation turns its lonely eyes to you. For such a short history, the Spirits of St. Louis (with one of the greatest logos ever) had quite a group of players and wacky stories!
posted by ajaffe at 09:43 PM on July 31, 2006
Great story. This is a classic case of the rich (the Silnas)getting richer while contributing nothing back to the game.The poor fan pays escalating prices for tickets, parking, concessions, and memorabilia and these shrewd but greedy Silnas do nothing but exploit the game.Shame on those decision makers who negotiated this one-sided deal with these guys.
posted by judgedread at 09:53 PM on July 31, 2006
who was the idiot from the NBA who agreed to those terms?
posted by mars1 at 10:16 PM on July 31, 2006
Great story. This is a classic case of the rich (the Silnas)getting richer while contributing nothing back to the game.The poor fan pays escalating prices for tickets, parking, concessions, and memorabilia and these shrewd but greedy Silnas do nothing but exploit the game.Shame on those decision makers who negotiated this one-sided deal with these guys. Wuh? The price of tickets, parking, concessions and memorabilia have absolutely nothing to do with the television deal that the Silnas made. Those prices are set by market forces (supply/demand). I'm not sure how the Silnas are "exploiting" a game. It was a contract, signed fairly by both sides. Their "contribution" was agreeing to the NBA/ABA merger, which meant that they'd have to give up their franchise (and any future revenues it might have earned). That seems so shortsighted. Was the league really so strapped for cash in the early 80's they didn't think they'd stay afloat paying out that much each year? Before the arrival of Bird/Magic, the NBA was in bad shape. Think of the NHL (in terms of fan popularity and media attention) before the recent lockout, but worse.
posted by grum@work at 10:44 PM on July 31, 2006
Fan popularity was horrible then for the NBA...games were TAPE DELAYED. The only other sporting events that I remember from the 70's being tape delayed were the World Championships (gymnastics, skiing, and the other Olympic sports) that were on ABC's Wide World of Sports.
posted by chetzoid at 01:04 AM on August 01, 2006
Think about it this way. If the Spirits had been included in the merger, how much money would they have made as owners of an NBA team over the last 30 years? I'd guess it might be something on the order of ten times what they made. Yeah, they made out just fine, but they didn't exactly bankrupt the sport ($168 mil? There are players making that much over their careers, and players make peanuts compared to owners), and as grum and others have said, it probably looked like an iffy deal for the Slinases to make when they signed it in the first place.
posted by chicobangs at 02:16 AM on August 01, 2006
The propsective value of an NBA team is a major point. According to the article, the "cheapest" team in the NBA is still worth $225 million, so even though they have been paid $168 million over the past years, what they could have had was the same money, non-Television revenues from the team, plus, at a minimum, a $225 million asset. Although they didn't have to take the risk that the Spirits might fail, in that light, they did get the short end of the stick.
posted by JDPistol at 03:16 AM on August 01, 2006
If you want to know more about the ABA, then read Loose Balls by Terry Pluto.
posted by ?! at 08:51 AM on August 01, 2006
I really like this site for a quick ABA fix.
posted by mjkredliner at 09:39 AM on August 01, 2006
Via Sports Economist. Sorry for the word-for-word copy, but I couldn't summarize the deal any better. BugMeNot for the LA Times.