Conor Reilly

Sport Law
Research Paper

The Greatest Business Move in Sports History

Perhaps the greatest business deal ever agreed upon in sports, and maybe the world itself,
is pretty much blind to the public eye. It was agreed upon thirty seven years ago, and its value
increases with every year, for one of the parties that is. Imagine earning 255 million dollars
doing absolutely nothing, because that is the description of Ozzie and Dan Silna. The Silna
brothers were co-owners of the American Basketball Association (ABA) franchise, the Spirits of
St. Louis, who have not played since 1976. After signing a contract guaranteeing them a share of
four current NBA teams T.V. revenue for the rest of their lives, the Silnas feel they are owed
hundreds of millions dollars more by the National Basketball Association (NBA), and they are
willing to fight for it.
Originally earning their money from their New Jersey textile company and the polyester
fad of the 1970s, Ozzie and Dan Silna came to own the Spirits of St. Louis by first purchasing
the Carolina Cougars (originally the Houston Mavericks), and then moving the franchise to St.
Louis (Abrams, 2006). Their reasoning for St. Louis was that it was the largest city in America
without a professional basketball team to show for it. They became members of the ABA, the
jumpstart basketball league that challenged the NBA from 1967 to 1976. Parallel to many of the
other ABA owners at the time, the Silna brothers ultimate goal was to own an NBA franchise.
Their initial attempt was unsuccessful, trying to purchase the NBAs Detroit Pistons, so they

settled for the ABA team (Pells, 2006). The Silnas wanted to start anew, cleaning house of
basically the entire Carolina franchise; only one player survived the move from Carolina to St.
Louis. They nicknamed the team the Spirits, after the plane Charles Lindbergh flew across the
Atlantic Ocean. Although the ABA was not as popular as the NBA, it still had its own appeal
and managed to steal fans away from the latter league. It is still recognized today for the red,
white, and blue striped ball that just attracts the eyes (Abrams, p.1).
Other innovations at the time that the NBA eventually adopted were the three-point line,
the slam dunk competition, and its fast paced style (Sandomir, 2012). In its initial year, the
Spirits of St. Louis finished with a disappointing record that was under .500, but still managed to
make the playoffs. They upset the defending champions (who went on to win the next years
title), the New York Nets, a powerhouse ABA franchise that featured the leagues most talented
player, Julius Erving, famously nicknamed Dr. J. A young Bob Costas, the broadcaster for the
Spirits, described it as if they had won a championship. The Spirits would lose in the next round
of the playoffs, and miss the playoffs the following year (Pluto 1990). However, the merger with
the NBA was set after the 1976 season, so the Silnas were not distraught. Their dreams were
about to come true, but the NBA had different plans.
Heading into the merger process, the Silnas were under the impression that they would
have a chance to become a part of the NBA. Unfortunately, the NBA had other plans. They
would only be absorbing four of the ABA franchises into the League: the New York Nets,
Indiana Pacers, Denver Nuggets, and San Antonio Spurs (Pells, 2006). These four teams showed
that they were able to put winning teams onto the court and attract fans to the stadiums. At the
end of the 1975-76 ABA season, there were only six teams that survived, the teams just
mentioned, along with the Spirits of St. Louis and the Kentucky Colonels.

From the commencement of negotiations, it was clear that the owner of the Kentucky
Colonels, John Y. Brown, had different intentions than the Silna brothers. He was willing to
accept just a sum lump of cash and move forward, while the Silnas were more interested in
maintaining ties with the league. They wanted to keep a connection with the NBA so when the
window opened to operate a franchise, they could jump at the opportunity. Brown and the
Kentucky Colonels had been bought out for a reported three million dollars, while also selling
star player and future hall of famer Artis Gilmore for 1.1 million dollars to the NBAs Chicago
Bulls (Pluto, 1990). With the determination of staying a part of the NBA, the Silnas presented a
deal that would not only achieve their goal, but make them very rich men in the process.
Unlike Brown, the Silnas were did not entertain the option of being cut out of
professional basketball for a payday. As stated before, their intentions were to stay involved
with the league in some way after they found out the Spirits of St. Louis would not be a part of
the NBA. Along with their lawyer, Donald Schupak, the Silnas solution was to acquire a share
of the T.V. revenue from the ABA teams merging into the NBA. The final contract agreed upon
stated that the Silnas would receive one-seventh of the television money generated annually by
each of the four surviving A.B.A. teams the Nets, the San Antonio Spurs, the Indiana Pacers
and the Denver Nuggets (Sandomir, p.1), along with 2.2 million dollars. But the most amazing
part of the deal was that it was signed for in perpetuity, or for as long as the NBA exists. To
break it down, the Silnas will collect a check for roughly 4/7 of a regular NBA franchises T.V.
revenue every year, forever.
According to Ballentines Law Dictionary, in perpetuity is defined as of endless
duration (Ballentines Law Dictionary, 2010). Each Silna receives 45 percent of the earnings
with Schupak receiving 10 percent of the payment. It is estimated that since the 1976 agreement,

the Silnas have gathered over 255 million dollars. Let that sink in: 255 million dollars. Walking
to and from their mailbox is the only work they actually did to collect that money, if they have
not paid somebody to handle that task already.
Although today it might be considered one of the biggest steals in sports history, at the
time, nobody, including the Silnas, could foresee the potential in the contract. Back in the
1970s, the T.V. deal that the NBA had with CBS was not very lucrative. The largest event of
the year for professional basketball, the NBA Finals, was tape delayed. It was not until the
1980s that the T.V. aspect of professional basketball really took off. The league focused mainly
on its two stars, Larry Bird of the Boston Celtics on the east coast, and Magic Johnson of the Los
Angeles Lakers on the west coast.
As time progressed, the amount of money put out of the rights to broadcast NBA
basketball grew exponentially. The current NBA T.V. deal with ESPN and Turner Sports is
priced at 7.4 billion dollars over eight years, about a sixty-two percent increase from the previous
deal, which was 4.6 billion dollars (Martzke, 2002). Some analysts believe the price can double
when the current deal expires at the end of the 2015-16 season. The Silnas first annual paycheck
was for $521,749, according to court documents filed by the NBA, in 1981, and has now turned
into about $17.5 million a year. Within a few years, their totals will reach $300 million, which
will grind the gears of the Pacers, Nuggets, Spurs, and Nets organizations even more
(Sandomir, 2012).
These franchises have been doing everything in their power to try and get rid of this
everlasting deal. There have been several attempts to buy out the Silnas, all being unsuccessful
obviously. In 1982, after realizing the potential loss after only a couple seasons, the four

merging teams struck a proposal of five million dollars over eight years to buy out of the
contract. However, when the Silnas countered with a proposal of eight million dollars over five
years, the teams backed off (Abrams, 2006). After several other attempts later in the 1980s and
90s and increasing T.V. revenue, it became clear that there was no chance at buying out the
former Spirits owners. Team executives sulk about this deal every time they endorse a check to
the Silnas and Schupak, such as Donnie Walsh of the Pacers, stating that handing over the money
puts a dagger in my heart (Pells, p1.). It must not feel very good after logging numerous hours
and hard work, to relinquish that amount of money to a team that hasnt existed in thirty-seven
years. Gary Hunter, formerly of the Denver Nuggets, describes the agreement, I think nearly
every single attorney and sports executive from those four franchises has taken a look at the deal
to see if they can break it. I've yet to talk to anybody who can say it can be broken. Every year,
when it came down to take a look at the budgeting process, we would all just shake our heads"
(Abrams, p.1). Unfortunately for the current owners and executives of the four mergers, it might
not end there.
Dan and Ozzie Silna are currently suing the NBA for millions of dollars that they feel are
owed to them. On top of the T.V. revenue that they receive, they believe that the league should
reimburse them for international broadcasting, the leagues own network station NBA TV,
internet streaming, and other T.V. business expansions that no one could have predicted back in
1976. The case has been postponed to give the NBA more time research the case and strengthen
its side, but Richard Sandomir reports that Judge Loretta Preska is leaning towards the Silnas,
and urges the two sides to settle (Sandomir, 2012). If the court rules in the Silnas favor, the
brothers, although growing old (80 and 69), could total over 500 million dollars through the

duration of their lives. Although recently, the Silnas were involved in the Bernie Madoff Ponzi
scheme, but they will not say how much investment they have lost.
I found it very interesting that in class, you said that there are never contracts labeled in
perpetuity, but this agreement disproves that. One would think that if there was ever a deal to be
in perpetuity of this scale, it would not be given away by a professional sports organization that
now generates revenue in the billions. So what are the legacies of the Silnas; business geniuses,
or greedy men holding a grudge for thirty-seven years? I guess it depends on who you ask?

Citations
Abrams, J. (2006, 07 31). The tv deal the NBA wishes it had not made. The Los Angeles Times.
Retrieved from http://articles.latimes.com/2006/jul/31/sports/sp-aba31
Martzke, R. (2002, 01 22). NBA finalizes tv deals: Goodbye NBC. . Retrieved from
http://usatoday30.usatoday.com/money/media/2002-01-22-nba.htm
Pells, E. (2006, 05 26). Enterprising brothers converted NBA buyout of aba team into
multimillion-dollar windfall. Seattle Pi. Retrieved from
http://www.seattlepi.com/news/article/Enterprising-brothers-converted-NBA-buyout-ofABA-1204630.php
Pluto, T. (1990). Loose balls: The short, wild life of the american basketball association . New
York: Simon and Schuster
Sandomir, R. (2012, 09 12). No team, no ticket sales, but plenty of cash. New York Times.
Retrieved from http://www.nytimes.com/2012/09/07/sports/basketball/former-abaowners-ozzie-and-daniel-silna-earn-millions-fromnba.html?pagewanted=1&_r=1&adxnnlx=1381941956-XHK0EPYlKnY967fYD Qmw
Ballentines Law Dictionary, 3rd Edition (2010). Retrieved from
http://libproxy.cortland.edu:2309/hottopics/lnacademic/?