In the sports world, we constantly discuss the deals that players or coaches strike with their respective organizations. In some cases, an athlete gets away with legal bank robbery. They’ll make millions of dollars on a deal without having to do much or without being valuable enough to deserve the contract. The NBA has been throwing money around like it’s nothing during these past few years of free agency, so we’ve seen a ton of players get paid way too high for their value.
It’s not a knock on the players. If you can earn more than you are worth, you better get that money where you can. I’d take advantage of it too, given the chance. Especially if I was a college athlete not being paid for my talents years ago. A few examples of great sports contracts come to mind. Derrick Rose struck a deal with Adidas that not only paid him but also his brother & best friend. The Mets pay Bobby Bonilla over $1 million every year & will continue doing so until 2035. The man hasn’t played for the Mets since 1999. These are some great deals, but they’ve got nothing on this one.
The Silna Brothers
Ozzie & Daniel Silna were two brothers who were spectacular businessmen. They earned a fortune together as one of the first & leading polyester manufacturers. Their next plan was to own an NBA team, but unfortunately they were never able to make that dream come into fruition. On the bright side, they were some of the brightest business minds in the world at the time so they were able to make a fortune anyways.
The brothers bought the Carolina Cougars of the ABA in 1974 for just one million dollars & then moved the team to St. Louis, the largest American city without a professional basketball team at the time. The brothers figured the NBA & ABA would eventually merge together to form one league. Obviously, they were 100% correct.
A quick fun fact about the new Spirits of St. Louis franchise is that the all time great sportscaster Bob Costas got his start with the team. If it weren’t for the Silna brothers making that move, who knows where he’d be today?
The NBA-ABA Merger
The NBA was finally ready to merge with the ABA in 1976. There were 7 ABA teams & only 4 of them were making the cut to join the NBA. The four teams who made the cut are the New York Nets (now Brooklyn Nets), Denver Nuggets, Indiana Pacers & San Antonio Spurs. That leaves 3 teams remaining.
The Virginia Squires, one of the 3 ABA teams which didn’t make the cut, went bankrupt right around the time of the merger. The other two teams, the Kentucky Colonels & the Silna brothers’ Spirits of St. Louis, were offered buyouts in order to get the merger deal to go through. The Colonels owners sold out for just $3 million.
Silna brothers had different plans. They had foresight in business.
They seemed to know what this merger would eventually mean for the NBA years later.
The brothers took a shot.. nothing but net.
Ozzie & Daniel Silna sold out for $2 million upfront, but a fortune on the back end. As part of the buyout deal, the brothers would now make money off of the 4 merged ABA teams’ TV broadcast revenues. Every year, the brothers would be paid out 1/7th of the TV broadcast revenues those 4 teams received. Here’s where the brothers really struck gold. The deal was in perpetuity. As long as the NBA exists, the brothers get their yearly cut of TV revenues from their fellow former ABA teams.
On the surface, this seems like a bad deal for the former ABA team owners, who’d now have to give up 1/7th of their broadcasting revenue forever. However, at the time, TV deals weren’t as huge as they are today. The playoffs weren’t even a broadcasted event & the Silna brothers were the final road block to getting the merger done which would make everybody involved more money. I understand why the owners accepted the deal.
NBA’s Rapid Success After Merger
The Silna brothers could not have been more right in this deal. NBA viewership erupted throughout the 80’s & 90’s & became prime time television. With more fans & more viewership, more lucrative TV deals followed. So, the Silna brothers’ pockets got fatter. Early in the deal, the brothers were receiving $300,000 checks every year. By 2014, they were getting about $20 million per year from the NBA… & they didn’t have to do a damn thing for it.
In 38 years, the brothers collected around $300 million from the NBA’s TV deals. The NBA’s media rights deal from 2008-2016 resulted in an average annual value of $930 million. The NBA knew their next deal negotiated would be even more lucrative ($1.4 billion annually from ESPN & $1.2 billion annually from Turner, 2016-2025) as the league was continuing to grow & become more popular by the month. They had to do something.
In 2014, the NBA & Silna brothers agreed to end the everlasting contract, with the brothers receiving a buyout payment of $500 million. This brings their total earnings from the deal to around $800 million. They didn’t have to do anything since the contract was first put in place.
It’ll be tough to find a better deal than that in the sports world.