OT: The Most Lucrative Deal in the History of the NBA

[Stevenson]

Great story:

In 1976, NBA was set to absorb the remaining remnants of the ABA. There were six ABA teams left, but the NBA decided to accept only four, leaving the Spirits of St. Louis and the Kentucky Colonels out. The Colonels agreed to a onetime $3.3 million buyout in exchange for disbanding the team. But the owners of the Spirits, brothers Ozzie and Dan Silna, declined.

Instead, they struck a royalty deal that would give them 1/7 of the yearly television revenue of each of the four teams that did get to enter into the NBA: The Denver Nuggets, New Jersey Nets, San Antonio Spurs, and Indiana Pacers.

Forever.

The deal lasts in perpetuity. The language of the deal says that the right “to receive such television revenues shall continue for as long as the NBA or its successors continues in its existence."

The total payments are now approaching a quarter of a billion dollars. To a team that is no longer in existence.

 

[VanillaGorilla]

WTF

 

[oldmangrouch]

As I understand it, the deal also prevents any NBA team from moving to St Louis (or the league from putting an expansion team there) unless the family agrees. In other words, the new owner would have to buy them off.

 

[maxiep]

I read about this deal a few years ago. In fact I clicked on this link fully prepared to bring up the deal the guys that owned the Spirits as the greatest deal in the NBA. Just amazing. Perhaps LeBron really is an agent of David Stern who badly wants to get out of this deal? So, when it comes to contraction, I'll be keeping my eyes on the Nets, Nuggets, Spurs and Pacers.

 

[barfo]

I hadn't heard of that. That's really crazy. Of course no one expected the NBA to blow up like it did, but this is why you don't agree to 'in perpetuity' deals.

Of course, I have myself in the past, so I guess I can't throw too many stones.

barfo

 

[THE HCP]

That's amazing!

 

[Boob-No-More]

Yeah a quarter of a billion dollars is a lot of money, but it's a fraction of the TV revenue from four teams spread out over 35 years.


An even more amazing "deal" was Shawn Kemp who cost the Blazers $100 million in salary and luxury tax for a season and 3/4 of sub-mediocre play (PER = 11.4 - 12.1).

Yeah, I know applesranges. I'm just saying, in today's NBA a quarter billion spread out over 35 years to a team that no longer exists ain't all that much compared to the the amount of money wasted on guaranteed contracts to players who can no longer perform. Hell, between Kemp, DA and Miles, the Blazers paid well over $100 million in salary and luxury tax over the course of a handful of seasons to to players after they were no longer on our roster. The Blazers paid those guys a shit load of money to NOT play after they were cut/bought out/medically waived.

BNM

 

[Mediocre Man]

I read about this deal a few years ago. In fact I clicked on this link fully prepared to bring up the deal the guys that owned the Spirits as the greatest deal in the NBA. Just amazing. Perhaps LeBron really is an agent of David Stern who badly wants to get out of this deal? So, when it comes to contraction, I'll be keeping my eyes on the Nets, Nuggets, Spurs and Pacers.

We must have read it in the same article because I remember this also.

 

[oldguy]

Yeah a quarter of a billion dollars is a lot of money, but it's a fraction of the TV revenue from four teams spread out over 35 years.


An even more amazing "deal" was Shawn Kemp who cost the Blazers $100 million in salary and luxury tax for a season and 3/4 of sub-mediocre play (PER = 11.4 - 12.1).

Yeah, I know applesranges. I'm just saying, in today's NBA a quarter billion spread out over 35 years to a team that no longer exists ain't all that much compared to the the amount of money wasted on guaranteed contracts to players who can no longer perform. Hell, between Kemp, DA and Miles, the Blazers paid well over $100 million in salary and luxury tax over the course of a handful of seasons to to players after they were no longer on our roster. The Blazers paid those guys a shit load of money to NOT play after they were cut/bought out/medically waived.

BNM

Don't forget Stevie Francis.

Go Blazers

 

[Trader Ed]

Ya know.. Mr Allen really is a dope in comparison to the owners of the Spirit

His passion for certain players has cost him a bundle

 

[Sug]

That was my great grandfather, and now I own a NBDL team called the Flint Tropics

 

[jlprk]

The ABA royalties story has been publicized about once every 5 years since the leagues merged. Everyone forgets, then some writer reminds us again.

Shawn Kemp's contract applied against the cap, but he bought it out for around $25M, so Paul Allen came out $25M ahead of how it appears. It was voluntary and Kemp should be thanked for that.

As I understand it, the deal also prevents any NBA team from moving to St Louis (or the league from putting an expansion team there) unless the family agrees. In other words, the new owner would have to buy them off.

Does the contract stipulate that if the old owners agree to anyone putting a team in St. Louis, they sacrifice their royalty deal? If so, they never will, causing St. Louis to never get a team again.

 

[maxiep]

We must have read it in the same article because I remember this also.

IIRC, it was on ESPN or SI. I'm glad Stevenson brought it up because I had forgotten about it.

 

[THE HCP]

Holler!

 

[Stevenson]

I only mentioned it because I am writing something right now and needed an example of a royalty deal and that one somehow whacked my brain. I researched it and it was more interesting than I had known.

The brother make something like $15 million a year on the deal.