Two brothers Made $800M As Basketball Team Owners, Without Owning An NBA Team
35 years ago, two brothers Ozzie and Daniel Silna and their lawyer, Donald Schupak negotiated what’s been called the greatest sports deal of all time.
On an investment of $1 million they have reaped an estimated $800 million.
In 1974 Ozzie and Daniel Silna, owners of a successful New Jersey textile company, bought an American Basketball Association team known as the Carolina Cougars and immediately moved the franchise to St. Louis, then the largest U.S. television market without professional basketball.
In 1976, the NBA was tired of competing with the ABA (American Basketball Association) and they decided to merge the two leagues together. The NBA and ABA decided to add four franchises from the ABA. These franchises were the Denver Nuggets, Indiana Pacers, San Antonio Spurs, and the New York Nets which ended up as the New Jersey Nets. The other franchise was the Virginia Squires but they ended up folding.
The two other franchises were the Silna Spirits and Kentucky Colonels. The ABA offered each franchise $3 million to fold but the Silna brothers didn’t take the deal and the owner, John Y Brown, of the Kentucky Colonels took the deal.
The Silna brothers negotiated a deal that they would be paid for any Spirits player drafted by NBA teams, an amount that was roughly $2.2 million. The other part of the deal is that the Silna brothers would also get 1/7th share of each of the four former ABA teams NBA “visual media” rights (which amount to 57% of one full share). The interesting part of this is they would get this money in perpetuity.
As the merger moved along, the NBA got no TV money over 3 years. Things progressed slowly after and cash started going to the former ABA teams and they would be getting close to $200,000 annually.
The NBA began to rise in popularity with televisions with the help of iconic players in Larry Bird, Michael Jordan, and Magic Johnson. In 1997 the NBA negotiated a $2.6 billion deal with NBC and Turner and in 2002 the league made a $4.6 billion dollar deal with the ABC/ESPN and TNT. The brothers were collection $20 million per year by 2014.
From 1976 to 2014, the Silnas had an estimated $180 million in NBA TV money.
In 2014, the Silnas stopped receiving payments from the NBA with broadcasting contracts set to be negotiated. The NBA decided to settle with the Silna brothers with a $500 million buyout. This brought their overall take to $800 million.
Reflection: What would you have done if you were the Silna brothers? Would have taken the $3 million being offered to you? With inflation, that is about $16.6 million dollars in today’s dollar. It pays to have a long term mindset when you’re looking at investments. Holding out and letting things play out can pay huge dividends. You have to just ask yourself what your appetite for risk is.