It’s been called the greatest deal in sports franchise history, and now, it may finally come to an end. The NBA has long hoped to be relieved of a 1976 agreement that gave two brothers one-seventh of the visual media revenues received by four NBA teams. The agreement didn’t seem outrageous in 1976, but in 2014, that agreement has given the brothers over $300 million in media revenue. Finally, the NBA and the two brothers, Daniel and Ozzie Silna, are coming to a settlement to release the NBA from its financial obligation.
As part of the NBA-ABA merger in 1976, the Silna brothers, owners of the Spirits of St. Louis, accepted a share of NBA’s visual media rights in exchange for folding their ABA franchise. The Silna brothers negotiated an astonishing benefit critical to the merger of both leagues; a one-seventh share of the national television revenue that the Brooklyn Nets, Denver Nuggets, Indiana Pacers, and San Antonia Spurs were to receive. The Silna’s were to retain media revenue so long as the NBA continued to exist.
The NBA tried to buy them out before, but only recent negotiations seem to have closed the deal. On Tuesday, January 14, 2014, the league and four former ABA teams will announce a conditional deal that will end the Silnas’ media revenue deal. The brothers are set to receive an upfront payment of $500 million. The deal would end the enormous perpetual payments and settle a federal lawsuit filed by the Silna brothers. The lawsuit demanded additional compensation from sources of television revenue unbeknownst in 1976, including NBA TV, foreign broadcasting, League Pass, and services that let fans watch out-of-market games.
The NBA is not out of the woods yet. Even if the settlement goes through, the brothers will continue to get some television revenue through a new partnership it formed with the Nets, Pacers, Nuggets and the Spurs. However, the new partnership contains a buyout clause that allows the NBA to end that deal at any time.
So why would the Silna’s want to settle when they could potentially have an indefinite annuity of NBA television revenues? Commentators speculate that the brothers are safeguarding their estate since the they lost a large majority of their investments to Bernie Madoff’s Ponzi scheme in 2008.
The settlement first needs to be approved by Judge Loretta A. Preska before it moves forward.
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