MarketInsight | The Greatest Sports Deal of All Time
The American Basketball Association or ABA operated for about a decade in the 1960s and ‘70s. The new league offered exciting new rules designed to attract fans; the red, white, and blue ball, the three-pointer, and the slam dunk were distinctive features of the old ABA. The league also offered jobs to players who had not yet finished college. The older NBA did not do this, requiring that its players be four years out of high school before they could join.
The ABA created a “hardship rule” that allowed teams to sign younger players and one of those players was Julius Erving, popularly known as Dr. J. The ABA was also known for paying big contracts to star players. Local legend Artis Gilmore, who led Jacksonville University to NCAA finals in 1970, was one. The 7-foot 4-inch center signed with the Kentucky Colonels in 1971 for $2.5 million.
As the ‘70s dragged on, the NBA increasingly coveted some of the ABA players, especially Dr. J and it became increasingly obvious that the two leagues would merge. The Silna brothers, Ozzie and Daniel, had made a fortune manufacturing polyester, which was very popular at the time. They wanted an NBA franchise, but none were for sale, so they fixed on the idea of buying an ABA team and having that team merged into the NBA.
They bought the Carolina Cougars in 1974 and then moved the team to St. Louis. They renamed the team the Spirits of St. Louis, a reference to Charles Lindbergh’s plane, which he used for his famous solo crossing of the Atlantic in 1927. In 1976, the two leagues merged, but the Spirits were left out. Only four of the remaining seven teams, the Indiana Pacers, the NY Nets, the San Antonio Spurs, and the Denver Nuggets, were allowed to make the leap to the NBA. The Virginia Squires folded outright, and the Kentucky Colonels’ owners were paid $3.3 million to go away.
The Silna brothers held out, turning down an offer of $5 million. They eventually settled on a deal that would go down in the annals of sports history. The former Spirits owners would be paid one-seventh of the TV revenues from each of the four teams that made the NBA leap in perpetuity. That would ultimately add up to 2 percent of the NBA’s TV revenues. The first year’s check was for $521,749. Checks kept arriving every year and kept going up. The annual payments rose to $4 million and then to over $17 million over the next several decades. Finally, in 2014, the Silnas agreed to forego a portion of their future TV revenue in exchange for half a billion dollars.
The story has become a sports legend that has nothing to do with winning games. The Silna brothers’ deal is one of the most lucrative in history, netting the pair around a billion dollars. The story deserves a happy ending, but does not get one. Apparently, the Silnas invested a large quantity of money with Bernie Madoff, the legendary Ponzi-schemer and crook. How much money the brothers lost in the scam is unclear, but the government was seeking to recover $24 million of fake profits that Madoff distributed to the brothers as part of his nefarious scheme.
Scott A. Grant is a local author, historian, columnist, and speaker. He is president of Standfast Asset Management in Ponte Vedra Beach. He welcomes your comments or questions at firstname.lastname@example.org.