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Forever lasted 37 years for the owners of the ABA’s Spirits of St. Louis
Posted By Evan Weiner On January 8, 2014 @ 8:50 AM In Insider - Sports: Media and Money,Insider Main,NBA,Sports Media | No Comments
Perpetuity isn’t as long as it used to be, at least in the business known as the National Basketball Association. According to reports, the National Basketball Association and the owners of the long departed American Basketball Association’s Spirits of St. Louis have reached an agreement that will end television payments to the Silna brothers. The two New Jersey brothers were given a piece of the National Basketball Association’s television contract in 1976 in perpetuity as a parting gift when the Silnas or the NBA or both decided not to move forward in an enlarged National Basketball Association for the 1976-77 season.
The National Basketball Association took four ABA franchises, the Denver Nuggets, the Indiana Pacers, the New York Nets and the San Antonio Spurs and left behind the Kentucky Colonels, Silna’s St. Louis team and the Virginia Squires. The Squires ownership decided to leave without any compensation. But the Silnas and John Y. Brown, the Colonels owner, wanted something for leaving the league.
Brown got three million dollars as a parting gift but he wasn’t done with pro basketball. He used that money to buy into the Buffalo Braves franchise.
The Silnas walked away from the NBA with probably the greatest North American sports agreement ever. They traded the franchise in exchange for one-seventh of the television revenues of the four ABA survivors.
The NBA and the teams will give the Silnas about a half billion dollars to reduce future payments. The Silnas are still part of the TV agreement but this could be the first step that will allow them to exit the league. For 37 and a half years, the Silnas have owned a paper franchise and made money.
The 1976 ABA-NBA merger had been six years in the making. In 1972 and 1973 Congress took up legislation that would have allowed an NBA-ABA merger but the effort to get an ABA-NBA on the floor failed. The NBA brought in former Kennedy White House staff Lawrence O’Brien, the ultimate Washington insider, as Commissioner with the hope of getting merger legislation passed.
The June 17th, 1976 ABA-NBA merger, absorption or expansion, take your pick of what term aptly described the business deal nearly killed off the New York Nets and Indiana Pacers. The NBA owners really stuck it to the new NBA teams in Uniondale, N. Y., Indianapolis, Denver and San Antonio.
The Nets franchise was in the NBA but Nets owner Roy Boe’s financial problems threatened to sink not only his basketball franchise but his National Hockey League’s New York Islanders. In addition to paying a $ 3 million fee to join the league, Roy Boe had to give the New York Knicks a 10-year annual $480,000 fee for “invading” the New York territory. The financially strapped Boe sold Erving’s contract to the Philadelphia 76ers to make ends meet.
Boe’s team was building a nucleus of players that would eventually produce four consecutive Stanley Cup victories. Boe would move the Nets to New York after the 1976-77 season and sell the Nets in 1978 to a group of New Jersey businessmen. Boe also lost control of the Islanders in 1978.
“I remember being told that our team was being folded in New Jersey,” said Loughery. “But three or four hours later we after I was told about it, we found out we were back in business again. This was tough times.”
The Indiana Pacers franchise also hit rough financial times following the merger. The franchise owners were struggling in the final year of the ABA and all of a sudden not only had to pay the $3.2 million NBA entry fee but pay off the owners of the Kentucky Colonels and Spirits of St. Louis who were not invited to join the NBA. Indiana, along with the Nets, Denver and San Antonio would not get national TV monies until the 1980-81 season. The franchise needed a $100,000 cash infusion to make it through the first NBA and then held a telethon on the Fourth of July to sell season tickets. Had the team not sold 8,000 by July 31, 1977, the franchise was going to be put up for sale to the highest bidder whether it was someone who wanted to keep the team in Indianapolis or someone who wanted to move the franchise.
The telethon worked as the team hit the 8,000 season tickets sold mark but it was a temporary fix. The team was mediocre and struggling financially.
The NBA, not the ABA, was responsible for the gift to Silna according to Dave DeBusschere who was the ABA Commissioner in 1976.
DeBusschere was the ABA representative at the table with NBA negotiators.
“They did, it wasn’t me, I was just the negotiator trying to work the deals out,” said DeBusschere. “That was one of the stipulations. Rather than being paid out in lump sum money, they said we will take a percentage of television revenue in perpetuity and it proved out to be a bonanza.”
The Silnas have cashed checks worth hundreds of millions of dollars since 1976. The deal was originally limited to national TV money in the United States. The Silnas went to court and sued the NBA trying to get money from other video sources. In exchange for the money, the Silnas dropped the lawsuit. The Spirits of St. Louis franchise has been dormant since 1976 but the team continues to win big—financially.
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