Former St. Louis Spirits owner cashing in

 
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venturalakersfan
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PostPosted: Sat May 27, 2006 1:33 pm    Post subject: Former St. Louis Spirits owner cashing in

I was talking to a friend in St. Louis, and he was telling me a story about the forner owners of the Spirits of St. Louis. There were 7 teams left in the ABA when it was ready to be shut down by the NBA, and the teams got together and decided they would ask for a share of the TV money in return for closing the league down. One team immediately shut down, which left only 6. Four of those teams were added to the NBA (Indy, San Antonio, New Jersey, and Denver).

That left St. Louis and Kentucky as odd men out. Kentucky accepted a 3 mil payout from the league, but the St. Louis owner decided to stick with the original agreement. Since 4 of the original 7 teams entered the NBA, he negotiated a 4/7 of a share of TV money as a payout for as long as the NBA exists. So far, the two brothers who owned the Spirits and their lawyer have received almost 200 mil from the league, with many more years of TV prosperity ahead.
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vanexelent
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PostPosted: Mon May 29, 2006 9:05 pm    Post subject:

It's a great story... From the AP:

Enterprising brothers converted NBA buyout of ABA team into multimillion-dollar windfallBy EDDIE PELLS
THE ASSOCIATED PRESS

MALIBU, Calif. -- "In Spirit, In Perpetuity."

That four-word phrase pretty much says it all for multimillionaire Ozzie Silna, one of the architects of arguably the best sports deal -- and maybe one of the best in the annals of all American business -- ever negotiated.


AP
Ozzie Silna (shooting a 1975 ABA All-Star Game ball), his brother Daniel and their attorney have collected $168 million from the NBA.
Silna isn't renowned like Donald Trump or Bill Gates, or even as well-known as NBA owners Mark Cuban or the Maloof brothers. But any of those magnates would be proud to have their name associated with the coup Silna, his brother Daniel, and their attorney, Donald Schupak, pulled off 30 years ago this summer. So far, they've netted about $168 million from their ownership of a struggling team during the final days of the American Basketball Association.

There's no heavy lifting involved, no fat payroll checks to write. In fact, there's no work to do at all. All they have to do is open the mail.

"You've got to be lucky in a lot of this stuff," Silna said. "But you've got to see the stuff, too. If it's there, and you don't see it, you don't have a chance to get lucky."

Banking on the eventual merger between the ABA and NBA, the Silnas bought the failing ABA franchise in North Carolina for about $1 million and quickly moved it to St. Louis. They founded the Spirits of St. Louis in what was then the biggest American city without a pro basketball team.

After the 1975-76 season -- the ninth year of a costly talent war with the ABA -- the NBA relented and agreed to accept four of the remaining six ABA teams into the league. The Denver Nuggets, Indiana Pacers, New Jersey Nets and San Antonio Spurs made it. The Spirits and Kentucky Colonels did not.

Colonels owner John Y. Brown received a $3 million payoff from the remaining ABA teams. Silna wasn't willing to go away that easily.

As part of a concept he had come up with months earlier, he negotiated to receive four-sevenths of a share of the NBA's annual TV revenue for as long as the NBA was around. At the time, it was worth about $300,000 a year. Today, that deal nets the Silnas and their attorney about $15.6 million a year. Overall, they've collected about $168 million since the merger, an amount that has grown mightily through investments.



An incredible deal? Of course.

"But remember one thing," Silna said. "Had we been admitted into the league, what is the value of those teams today?"

Today, the value is around $300 million, but that's only if the owners are willing to cash out. By owning teams, they deal with expenses -- most notably, payrolls that run from $50 million to $120 million a year -- all of which makes it a chore to net even a few million dollars profit in any given season.

"Every five years, someone calls up with this story and it puts a dagger in my heart," Pacers president Donnie Walsh told the New York Times a few years ago.

Silna, meanwhile, reaps the benefits. He and his brother are set for life, the result of the gift that keeps on giving. The four former ABA teams used to make buyout offers. About 25 years ago, they offered $5 million over eight years. Silna wanted $8 million over five years. No deal was struck. Guess who came out on top in that one?

"I got into basketball not to make the money," Silna said. "I got into basketball for the thrill of owning the team, and to make money at the same time."

Now that he's got the money, the 73-year-old textile magnate doesn't just sit around counting it. He is an active environmentalist in his hometown of Malibu, the small beachside city in Los Angeles County.

Silna downplays the brilliance of the deal he and Schupak dreamed up 30 years ago. In fact, Silna says, the basis for it came months earlier when only seven teams -- the final six and the Virginia Squires -- were left standing in the ABA.

League owners figured a merger was coming soon and thought six teams would be allowed and one would be left out. Silna wanted to be equitable to the owner who was excluded. He assumed it wouldn't be him.

"I told the owners, 'We're all in this together,' " Silna said. "I thought that seventh team deserved the same benefit as the other six. That's how we came up with the one-seventh" figure.

The Squires, however, didn't make it through the next couple of weeks. A few months later, when the negotiations began, Silna and Schupak applied the parameters they'd set up for the Squires to themselves. One-seventh times four -- four teams were admitted to the NBA -- equals four-sevenths, which is the cut the Silnas get each year.

"You try to live by the Golden Rule," Silna said. "Some people say it's the best deal ever done. I just looked at it as a way of being fair."

Not that he hasn't cut a brilliant deal or two. In the early '70s, Silna became one of the first to tinker in a new material. It was called polyester. A huge profit from the sale of that business gave Silna and his brother, both big sports fans, the resources to make a run at a pro basketball team. After failing in an attempt to buy the Detroit Pistons, they decided to take a shot at the ABA.

They accumulated one of the most eclectic and unpredictable talent pools in pro sports -- Marvin Barnes, Moses Malone, Maurice Lucas and even a young play-by-play announcer named Bob Costas. All of that made them a lucrative property when it came time to merge -- not so much for the team they were, but for the individual parts they could produce, each of which would be scavenged by the original NBA teams, who were hungry for the talent.

"They wanted our players," Silna said.

And the Silnas got their money.

While he doesn't believe he pulled off the greatest deal in the history of American sports, Silna does concede to knowing that back in the '70s, the NBA's TV deal was vastly undervalued.

"We saw some room for growth there," he said. "We had no idea it would grow this much."

Thirty years later, Silna remains a fan.

When he can, he watches the playoffs on TV. The NBA's last TV contract with ABC, ESPN and TNT was worth $4.6 billion over six years.



IN THE MONEY

Approximate yearly take for Ozzie and Daniel Silna and their attorney, Donald Schupak, who negotiated a deal for four-sevenths of a share of the NBA's TV revenue when they agreed to disband the Spirits of St. Louis as part of the ABA's merger with the NBA:


1979-82: $469,000


1983-86: $695,000


1987-90: $1.57 million


1991-94: $4.63 million


1995-98: $6.63 million*


1999-2002: $12.53 million*


2003-06: $15.6 million*


Total: $168 million

*The NBA expanded to 29 teams in 1995 and later to 30 teams, but as written in the contract, the Silnas received four-sevenths of a share based on what a share was worth when there were 28 teams.


NOTE: Ozzie and Daniel Silna each receive 45 percent and Schupak the other 10 percent.
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