INSIGHT: How Two Brothers Continue To Make Millions Off The NBA/ABA Merger! []

Bloggers note: This is an insightful piece on how 2 successful businessmen looked to the future and the NBA didn’t

It’s 2013. The NBA is a global brand reaping huge revenues and profits. Gone are the days of tape delayed games and possible bankruptcy. Its kind of hard to say the league is struggling.

The latest CBA (Collective Bargaining Agreement) makes sure that revenue and profits for the league, owners and players is shared appropriately.

One small detail that most don’t know about.

The NBA is making two former ABA owners very rich. And they don’t even own a NBA team.

The current crop of NBA  owners are clearly not thrilled. How did this happen? How did two brothers who were very successful in their own right (textiles) make an estimated 300 million from the NBA since 1976? Quite simple. Ozzie & Dan Silna looked forward to the future and the NBA as a business didn’t

For those who are unaware of what the ABA was here is a quick history lesson.

The original ABA was founded in 1967 to compete with the NBA. The ABA distinguished itself from the NBA with a more “street ball” style of play. The game ball was a colorful red, white and blue; There was a  three-point field goal arc not used in the NBA back then; A 30-second shot clock for longer offensive possessions; The creation of the now famous dunk contest; Halftime shows were far more entertaining.

Fans loved the style of the ABA, but the league didn’t have the deep pockets of its well established counter part and in 1976 the NBA absorbed the ABA in a merger.

According to business insider, here is where the NBA made a huge blunder:

When the NBA and ABA merged in 1976, four of the remaining six ABA teams were absorbed by the NBA. The NBA offered the other two teams a $3 million settlement, an amount that was accepted by the owner of the Kentucky Colonels. The owners of the Spirits of St. Louis, brothers Ozzie and Daniel Silna, turned down the offer.

Instead, the Silna brothers negotiated a deal that would pay them one-seventh of the “visual media” rights for each of the other four ABA teams “in perpetuity.”

In other words, for the past 37 years, the brothers and their lawyer (who receives 10% of the proceeds) have received the equivalent of four-sevenths of a share of the NBA’s television contract each year.

The NBA currently receives a combined $930 million in television broadcast revenue each year. With 30 teams in the NBA now, the Silna brothers receive approximately 1.9% of the television revenue, or about $17.7 million each year.

A recent judge’s ruling also granted the Silna brothers a share of all Internet revenue.

According to Broussard, the NBA has tried unsuccessfully to negotiate out of the deal in the past. It is unclear if they will be successful this time, but it is easy to see why they would be eager to settle

Now to be fair, nobody knew the NBA would become the cash cow that it is today. The league was on life support until some guys named Magic and Bird entered the league. When this other guy named Jordan took the league to new heights the revenue streamed in.

Thanks to forward thinking and shrewd negotiations the Silna brothers, who were rumored to have lost millions in the Bernie Madoff ponzi scheme, continue to receive a healthy cheque which in time has likely covered their losses and will keep them & their family wealthy for generations to come

 |  Instagram

Leave a comment

Filed under sports, Uncategorized

Leave a comment

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s