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NBA out hundreds of millions on legacy deal

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07:18 AM ET 11.12 | As far as deals go, this one ranks pretty high for ROI. The NBA is engaged in settlement talks with Ozzie and Daniel Silna to end a contract that has long been described as "the greatest sports business deal of all time," according to sources close to the situation. No agreement has been reached, but talks are ongoing. The Silna brothers are the former owners of an old ABA franchise known as the Spirits of St. Louis. When the ABA merged with the NBA in 1976, the Silnas agreed to dissolve their team in exchange for a small percentage of the NBA's future broadcast revenue. ... The kicker in the Silnas' deal is that it goes on in perpetuity. Last season, the Silnas, who bought the Carolina Cougars for $1 million in 1973 before moving the club to St. Louis, received a reported $19 million from the NBA.

ESPN.com

David Stern, Getty Images David Stern, Getty Images
November 12, 2013  07:33 AM ET

Let's Make A Deal, Bros.

Comment #2 has been removed
November 12, 2013  07:55 AM ET

Wow! Fantastic. Now that's a deal! If I were representing Ozzie and Daniel Silnas my suggestion would be to not even consider a settlement that is anything less than a price so high the NBA wouldn't likely agree to it. Why should they? They're playing with house money.

Let's see...I can hash out an agreement to take a pay off now, or I can sit on my a** and continue to collect well into the future. Hmm??? What do I do?

November 12, 2013  08:08 AM ET

That's a better deal than Bynam!
Bynam should have held out for more

Comment #5 has been removed
November 12, 2013  08:57 AM ET

Trade owner w/ the Knicks owner?

November 12, 2013  09:16 AM ET
QUOTE(#5):

Time to call Luca brazzi

Might not be a bad idea. Why would the Silna brothers make a deal to cut themselves off.

November 12, 2013  10:30 AM ET

Those guys will not live forever but the right$ may belong to their estate. At almost $20 mil per year in 20-years it will be $400 million paid. They should be offered no less than a $400 mil buyout.

November 12, 2013  10:52 AM ET
QUOTE(#8):

Those guys will not live forever but the right$ may belong to their estate. At almost $20 mil per year in 20-years it will be $400 million paid. They should be offered no less than a $400 mil buyout.

That is the key. It depends upon how the deal is written. If "perpetuity" is only subject to as long as they live and not transferable to their estate and heirs, and they are 90, it would be in their best interest to strike a deal. However if not, and it is transferable, what reason would they have to let the NBA off the hook? It seems that the deal somehow continues on passed their deaths or the NBA would just wait it out.

Comment #10 has been removed
November 12, 2013  01:19 PM ET
QUOTE(#8):

Those guys will not live forever but the right$ may belong to their estate. At almost $20 mil per year in 20-years it will be $400 million paid. They should be offered no less than a $400 mil buyout.

Same thought...if the deal can be passed onto the estate, this deal would require a large up front sum to be equivalent. I am sure the present value can be assessed to define a number that is equivalent to receiving $19M per year for infintiely, plus an applied growth rate of say, 10%. If the amount were $1B, after taxes it would be $550M (trusts, non-profits, etc are not included in this calcuation). At a rate of return of 5% the annual interest would be $27.5M. The need would be to compare that, and how to invest it, to be ahead of staying with the NBA's annual payment and projected growth rate.

There are other considerations, such as a desire to leave lump sums with beneficiaries, or to allocate the incomes to beneficiaries. It seems this decision would be a result of what is offered, and what are the finanial goals of the Silnas

November 12, 2013  04:28 PM ET
QUOTE(#9):

That is the key. It depends upon how the deal is written. If "perpetuity" is only subject to as long as they live and not transferable to their estate and heirs, and they are 90, it would be in their best interest to strike a deal. However if not, and it is transferable, what reason would they have to let the NBA off the hook? It seems that the deal somehow continues on passed their deaths or the NBA would just wait it out.

exactly

i dont know how that does not violate the rule against perpetuities anyway- I do not think it can go past their deaths....but- who knows

 
November 19, 2013  02:59 AM ET

This reminds me of Mike Lynn, the former GM of the Vikings who helped Dallas win 3 Super Bowls with Herschel Walker trade. When the Metrodome was first built, as part of the deal with the Vikings, he (not the team) was to receive 10% of ALL revenue generated by the suites for the ENTIRE year, EVERY year starting in 1982 while the Vikings played in the Metrodome. He quit back in 1990 and still made up to $20million per year in some years.

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