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The NBA is buying its way out of the losing end of ‘the greatest sports business deal of all time’

Kelly Dwyer
Ball Don't Lie

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Marvin Barnes glides to the goal (Getty Images)

When it was first reported in November that the NBA was attempting to end its terrible deal with former owners of the ABA’s St. Louis Spirits, we wondered why those ex-owners would even consider a deal with the league.

After all, the Silna brothers — who secured a fraction of the NBA’s television rights in perpetuity after effectively being bought out of merging their team with the NBA in 1976 — were being handed millions upon millions of dollars every year because of their prescience. Because the two negotiated to take in more than 14 percent of the television broadcast payouts afforded to the San Antonio Spurs, Brooklyn Nets, Denver Nuggets and Indiana Pacers (all former ABA teams) as a payout for folding their franchise, the brothers were allowed to rake in endless cash without having to field a team or fund an arena.

Apparently, that’s all coming to an end. Not without the NBA having to pay a rather hefty fee first, though. From Richard Sandomir at the New York Times:

On Tuesday, the Silnas, the league and the four former A.B.A. teams will announce a conditional deal that will end the Silnas’ golden annuity. Almost.

The Silnas are to receive a $500 million upfront payment, financed through a private placement of notes by JPMorgan Chase and Merrill Lynch, according to three people with direct knowledge of the agreement. The deal would end the enormous perpetual payments and settle a lawsuit filed in federal court by the Silnas that demanded additional compensation from sources of television revenue that did not exist in 1976, including NBA TV, foreign broadcasting of games and League Pass, the service that lets fans watch out-of-market games.

Still, the league is not getting rid of the Silnas altogether. They will continue to get some television revenue, some of it from the disputed sources named in their lawsuit, through a new partnership that is to be formed with the Nets, the Pacers, the Nuggets and the Spurs, according to the people with knowledge of the agreement. But at some point, the Silnas can be bought out of their interest in the partnership.

Sandomir also reminded of the fact that the owner of the other ABA team that didn’t get into the NBA, former Kentucky Colonels (and eventual Buffalo Braves and Boston Celtics owner) John Y. Brown, a fried chicken magnate, was bought out for “only” $3 million in 1976. The Silna brothers, meanwhile, went on to earn more than $300 million from their deal. And that’s before the proposed buyout.

Why take the big cut now? Well, apparently, there are 500 million reasons why, on top of the fact that the brothers effectively won their lawsuit regarding the NBA TV and League Pass rights. Televised NBA games are worth more than ever, and the brothers are cashing in at the exact right time, even though rights for NBA games (as the home television experience evolves into something better and better for fans by the season) could stills skyrocket in cost as the years move along.

This is in sharp contrast to where the league was at locally and especially nationally in 1976.

It took five years after the Silnas’ deal for the NBA’s showcase event — not even called “the NBA Finals” at that point — to be televised in prime time. The next season’s championship-deciding game would be broadcast at mid-afternoon on CBS, with the station reminding its impatient viewers that the Kemper Open was to come on following the Portland Trail Blazers' championship triumph, and subsequent championship games played in the evening during the following years were broadcast overnight on tape delay.

It took the basketball boom of the 1980s and the rise of cable television to initiate rising costs. A massive rise in global popularity and the ability to watch a Pacers game in Bangor, Maine, or San Pedro, Calif., via League Pass added to this pile of dough, as the Silnas continually took advantage. Ozzie and Daniel’s deal has often been called “the greatest sports deal of all time,” but Sandomir wonders if it should really be termed the greatest “in American business.” With the Louisiana Purchase technically a government swindle, that’s one worth considering.

Either way, lunch is on Daniel and Ozzie:

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Kelly Dwyer is an editor for Ball Don't Lie on Yahoo Sports. Have a tip? Email him at KDonhoops@yahoo.com or follow him on Twitter!

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