Re: [Celtics' Stuff NBA to ABC/ESPN

[CeltsSteve@AOL.com]

<< They finally dotted the i's and crossed the t's on the new TV deal. This
is significant, in my opinion, because it makes the NBA a presence on ESPN. -
Berry, Mark S" <berrym@BATTELLE.ORG> >>



Mark, 

I just read the article from ESPN.com on the new TV deal (thanks for the
link) and came across this article as well. Might explain why the NBA never
has tried to put a team back in St. Louis all these years. "National
television revenues in perpetuity." Unbelievable!




Spirit of ABA deal lives on for Silna brothers

------------------------------------------------------------------------------
--
By Darren Rovell
ESPN.com

 
If the deal that brought Babe Ruth from Boston to the Bronx for just $125,000
was among the best in sports, so too was the deal negotiated by the Silna
brothers, whose arrangement with the NBA rivals the great bargains in sports
history.

  
'Dr. J' ate up the Spirits of St. Louis when he was with the New Jersey Nets,
but former Spirits owners still cash in at the expense of four former ABA
teams. 
Over the past 25 years, Ozzie and Dan Silna have collected approximately $100
million from the NBA, despite the fact that their former team -- the Spirits
of St. Louis -- never played a single game in the league. 

With the league's latest broadcast deal now finalized, the Silnas are
anticipating the call from the league that comes twice every decade telling
them how much they should expect -- in millions of dollars -- over the life
of the NBA's national television contract.

"It's one of the most incredible deals in the history of the business world,
and it has to be in the top 10, rivaling any deal that has taken place in
Wall Street in the last 25 years," said Roy Boe, the New York Nets owner who
was one of the principals of an agreement to the deal that allowed four ABA
teams to join with the NBA in 1976. "These guys collect that kind of money
from the NBA and all they have to do is sit there ..."

In the summer of 1976, ABA team owner Ozzie Silna and his attorney Donald
Schupak sat in their hotel room in Hyannis, Mass., working late into the
night. As the two framed up their mock legal document on 10 pages of yellow
lined paper, they had no idea that the provisions of the document would
enable them to profit more than most, if not all, NBA teams each season. 

 Cashing in  
 Years  Silna cut  
 1980's  $8 million  
 1990-94  $18.4 million  
 1994-98  $22.4 million  
 1998-02  $50 million  
 20 years  $98.8 million  
 Note: Dollar figures are approximate based on reported value of TV
contracts.  
By the time daylight poked through the blinds the next morning, a slew of
lawyers was milling around the lobby ready to negotiate the details of the
merger. Since only four ABA teams were allowed into the NBA, the other two
teams had to be compensated, per ABA bylaws.

For John Y. Brown, the Kentucky Fried Chicken owner who also owned the
Kentucky Colonels, the negotiation was easy: He accepted a $3 million buyout,
money that he later used to buy the Boston Celtics. But Silna reminded the
others of the deal they had agreed to six months earlier.

In December 1975, 16 games into the season, the Utah Stars folded, leaving
the ABA with seven teams, and the league's remaining owners called a meeting.
That's when Ozzie stood up and told the other owners that no less than six
teams should be taken in a possible merger and that the seventh team should
be paid off in a proper manner.

"The seventh team, I said, should be fully compensated for its players, and
they also should receive a share of television money in perpetuity," said
Silna, who today has a lucrative embroidery business that is the main
supplier of United States Armed Forces uniforms.

"Everybody was in favor of it, and it was written into the league bylaws at
the time. I, of course, had no intention of being that seventh team," he
said. "I had put so much into the players that I thought that Virginia
(Squires) was definitely going to be the team that would be excluded." 

The Silnas bought the Carolina Cougars in 1974 for about $1 million, moved
them to a larger television market and invested in players like Marvin
Barnes, Don Chaney and Moses Malone, with the hope of being accepted into the
NBA.

"It was a disaster, business-wise," said Silna, who had a huge payroll and
only averaged about 3,800 fans during the final season. "The St. Louis Blues
owner promised us 5,000 season tickets, and we only had 600 people sign up."

But Silna became a better businessman without the team. Because the Squires
folded at the end of that 1974-75 season and Brown took the buyout in merger
negotiations a year later, Silna soon became the benefactor of his own idea.
Unanimous support was needed by all ABA team owners for the merger to happen,
Silna had representatives from the other four teams -- the Denver Nuggets,
Indiana Pacers, New York Nets and San Antonio Spurs -- sign the yellow sheet
that day, agreeing to share one-seventh of their national television revenues
in perpetuity with the Silnas.

At the time, NBA television revenues were very small, but thanks to the
marketability of Larry Bird, Magic Johnson and Michael Jordan during the
1980s and '90s, the size of the checks has grown considerably.

The Silnas made an estimated $8 million throughout the 1980s, and as
broadcast rights fees swelled, so did the Silnas' wallets. They received
checks annually totaling approximately $4.6 million from 1990-1994. It
climbed to $5.6 million per year until 1998. The Silnas' share of the NBA's
current four-year, $2.64 billion deal with NBC and Turner, which expires
after this season, nets them $12.5 million a year. The new six-year deal with
ABC/ESPN and AOL Time Warner could net them as much as $22 million annually.

"It's been a wonderful gamble," said Gary Hunter, former CEO of business
operations for the Denver Nuggets during the mid-'90s. "If you tried to name
one team owner in the NBA who was netting $13 million a year, you couldn't,
because none of them do."

 &#8220; That type of money is nothing to sneeze at. In professional sports,
the difference between being profitable or not hinges on a couple million
dollars. &#8221; 
  &#8212; Rod Thorn, New Jersey Nets GM and former Spirits head coach 
If there's any frustration with the Silnas' deal, it comes from the former
ABA teams that to this day have a chunk of their television revenue check
missing. Each team's annual payment has been approximately $3.4 million over
the past four years.

"That type of money is nothing to sneeze at," said Rod Thorn, the New Jersey
Nets' president and general manager who was the Spirits' head coach during
the first half of the team's final season. "In professional sports, the
difference between being profitable or not hinges on a couple million
dollars."

"The part that hurts is that this deal is forever," said Donny Walsh, who has
been president of the Indiana Pacers for the past 16 years. "And 25 other
teams get money that we don't get."

Attempts to buy out the Silnas have been numerous since the inception of the
deal.

The closest the Silnas came to selling might have been in 1982. For the
1981-82 season, each team earned approximately $1 million in national
television revenue. But as the former ABA owners saw an increase of
approximately $300,000 per year coming into their pockets with the new
four-year, $119 million contract, it was becoming apparent that the Silna
deal was not good for their future.

The owners calculated that the Silnas would now make roughly $3.4 million
over the next four years and offered a collective $5 million buyout to be
paid over eight years. But the deal never happened. Ozzie Silna said he'd
only do it for $8 million spread out over five years.

With $8 million from TV revenue already in the Silnas' pocket, another buyout
proposal -- this one for $18 million -- was on the table a decade later. But
the Silnas saw television rights fees skyrocketing across the board and
determined it wouldn't be a good business deal.

"We tried extensively to buy our share out in 1995," Walsh said. "But the
bottom line is that if you've got a deal this good, why would you want to
change it?"

The four teams actually have been sharing more than one-seventh (14.2
percent) of their share of the NBA's TV contract since 1995, when the Toronto
Raptors and the Vancouver Grizzlies joined the league. That's because Ozzie
Silna and Schupak anticipated that expansion would threaten to dilute revenue
and capped the split of their share at 28 teams. So when the checks go out,
Silna said his share is based on a split among a maximum of 28 teams, not the
full 29 teams that now comprise the NBA.

 &#8220; Every time a new ownership group came in, they'd say, 'Wait, what do
you mean we have to pay these guys who don't have a team?' &#8221; 
  &#8212; Gary Hunter, former Denver Nuggets executive 
Between the four teams, legal fees in attempts to get out of the deal have
reportedly cost more than $250,000. 

"We found out that three different law firms over a 10-year period of time
had tried to find some way to get the teams out of it, and none of them could
find a way," said Hunter, the former Nuggets executive who is now the
commissioner of the Continental Basketball Association. "Every time a new
ownership group came in, they'd say, 'Wait, what do you mean we have to pay
these guys who don't have a team?' "

Silna still says that a part of him wishes his team joined the NBA in 1976
and justifies his financial windfall by saying that his St. Louis team could
sell for more than $100 million today. Eighteen teams in the NBA are worth at
least $200 million, and the least valuable team in the NBA is the Charlotte
Hornets, worth $135 million, according to Forbes' most recent franchise
evaluations.

As for hope of future financial relief for the four former ABA teams, it has
been suggested that as the Silnas get older -- Ozzie is 68 and Dan is 57 -- a
buyout could be necessary in order to put a value on their estate.

"The deal's forever," Walsh lamented.