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Thread: New York Times : Silna Deal Settlement is near (AFFECTS THE PACERS)

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    Default New York Times : Silna Deal Settlement is near (AFFECTS THE PACERS)

    In fact, as early as today:

    http://www.nytimes.com/2014/01/07/sp...ef=sports&_r=0
    Richard Sandomir
    New York Times
    The N.B.A. has long hoped to be released from its financial obligation to Ozzie and Daniel Silna, brothers who owned the Spirits of St. Louis in the defunct American Basketball Association.

    But it has never been easy. The Spirits were excluded from the 1976 merger of the two leagues. So the Silnas watched unhappily as the New York (now Brooklyn) Nets, the Denver Nuggets, the Indiana Pacers and the San Antonio Spurs were absorbed into the N.B.A. But the Silnas negotiated an astonishing benefit that was critical to the merger: an agreement to be paid one-seventh of the national television revenue that each of the four teams was to receive, as long as the league continued to exist. That amounted to being paid in perpetuity, and so far, the deal has provided the Silnas with about $300 million.

    Their deal is as much a part of A.B.A. history as red, white and blue basketballs, the 3-point line and the big Afros of Julius Erving and Darnell Hillman. It is a lasting memory of how, through luck or prescience, the Silnas and their lawyer, Donald Schupak, capitalized on the league’s growing popularity.

    The N.B.A. has tried to buy them out, including an effort before the financial crash in 2008. Negotiations have picked up in the last six to nine months.

    On Tuesday, the Silnas, the league and the four former A.B.A. teams will announce a conditional deal that will end the Silnas’ golden annuity. Almost.

    The Silnas are to receive a $500 million upfront payment, financed through a private placement of notes by JPMorgan Chase and Merrill Lynch, according to three people with direct knowledge of the agreement. The deal would end the enormous perpetual payments and settle a lawsuit filed in federal court by the Silnas that demanded additional compensation from sources of television revenue that did not exist in 1976, including NBA TV, foreign broadcasting of games and League Pass, the service that lets fans watch out-of-market games.

    Still, the league is not getting rid of the Silnas altogether. They will continue to get some television revenue, some of it from the disputed sources named in their lawsuit, through a new partnership that is to be formed with the Nets, the Pacers, the Nuggets and the Spurs, according to the people with knowledge of the agreement. But at some point, the Silnas can be bought out of their interest in the partnership.

    The Silnas, of course, did not have to settle. They could have continued to make money from the N.B.A., without ever having to invest in players or build an arena. Clearly, their old agreement would have to be honored as long as the N.B.A. continued to exist.

    But there is a reluctance, more by Daniel, 69, than Ozzie, 80, to keep fighting the league, said one of the people who discussed the agreement. Although wealthy people often plan their estates, much of the Silnas’ riches from the N.B.A. is already in family trusts.

    Bob Costas, the NBC sportscaster who called Spirits games, said in a telephone interview, “My guess is that for the N.B.A., the upside is that in the foreseeable future, there will come a time when they will not have to look at this and blanch and it will be in the past.”

    League officials declined to comment because the settlement must be approved by the judge, Loretta A. Preska, who has presided over the case in United States District Court in Manhattan.

    The Silnas’ deal resonates, at least in part, because it appears that they snookered the league, or, more accurately, the Nets, the Pacers, the Nuggets and the Spurs, who dealt directly with the brothers.

    But Michael Goldberg, the A.B.A.’s former general counsel, recalled in a recent interview that the four teams were desperate to get into the N.B.A. and willing to satisfy the Silnas.

    “Schupak said they’d take TV rights in perpetuity as a kind of Hail Mary to get money down the road,” he said. “What was missing was someone saying, ‘Thirty years, 50 years, or until something happens, and it’s over.’ ”


    The Spirits got a sweeter deal than the Kentucky Colonels, who were also not absorbed into the league. John Y. Brown, the Colonels’ owner, got $3 million to fold his team.

    And while the Silnas, who were planning to move the franchise to Utah at the time of the merger, did not bring a roster that included Caldwell Jones and Marvin Barnes into the N.B.A., they got a $2.2 million payment — and all that television money. They never acquired another team and have attended to their investments (some of which went sour during the Bernard L. Madoff Ponzi scheme).

    But their deal, widely called the greatest in sports history, if not in American business, lives on as a remnant of the marriage of the undercapitalized A.B.A. and the N.B.A. in its mid-1970s doldrums, before Magic Johnson, Larry Bird and Michael Jordan.

    “The only way to appreciate this,” Goldberg said, “is to go back in a time capsule to the bidding wars between the leagues; the N.B.A. tiring of them, and saying, ‘Let’s take four teams, but not St. Louis and Kentucky, and we’ll move on.’ ”
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    Default Re: New York Times : Silna Deal Settlement is near (AFFECTS THE PACERS)

    This "new partnership" with the ABA teams should be interesting...

    I am sure all four teams are just tickled to continue partnering with the guys who have been a thorn in their sides for all these years.

    But still, it's great that this buyout is happening.

    I am curious who is footing the bill for this 500 million dollar buyout? The league? The teams? Both?

    This whole thing is intriguing.

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    Default Re: New York Times : Silna Deal Settlement is near (AFFECTS THE PACERS)

    They should have just given them the Pelicans when they were up for sale.

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    Default Re: New York Times : Silna Deal Settlement is near (AFFECTS THE PACERS)

    Quote Originally Posted by Eleazar View Post
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    They should have just given them the Pelicans when they were up for sale.
    They probably tried, at least thought about it. The ABA deal was FAR better.

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    Default Re: New York Times : Silna Deal Settlement is near (AFFECTS THE PACERS)

    Quote Originally Posted by Heisenberg View Post
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    They probably tried, at least thought about it. The ABA deal was FAR better.
    Right, owning a team has expenses. They are getting a cut of the revenue with no risk.

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    Default Re: New York Times : Silna Deal Settlement is near (AFFECTS THE PACERS)

    Quote Originally Posted by Eleazar View Post
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    They should have just given them the Pelicans when they were up for sale.
    Much rather sit back and count the money role in versus actually having to be an owner.

    Hopefully this can be worked out and this stuff can finally end.

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    Default Re: New York Times : Silna Deal Settlement is near (AFFECTS THE PACERS)

    So these old farts will continue to take some of our TV money while doing nothing?

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    Default Re: New York Times : Silna Deal Settlement is near (AFFECTS THE PACERS)

    Quote Originally Posted by PacersHomer View Post
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    So these old farts will continue to take some of our TV money while doing nothing?
    Yes, but not as much as before, and more importantly, there will ultimately be a time where they can be bought out.
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    Default Re: New York Times : Silna Deal Settlement is near (AFFECTS THE PACERS)

    Finally. We will never know what could've happened without the Pacers carrying this extra weight for decades. But at least now we know that it will be gone at some point.

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    Default Re: New York Times : Silna Deal Settlement is near (AFFECTS THE PACERS)

    still if they have made 300 million so far, and that's from the Bird era and on how is 500 million a logical amount to buy them out. I get that they want NBA TV money and other stuff like that so maybe it makes sense.

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    Default Re: New York Times : Silna Deal Settlement is near (AFFECTS THE PACERS)

    Quote Originally Posted by Ragnar View Post
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    still if they have made 300 million so far, and that's from the Bird era and on how is 500 million a logical amount to buy them out. I get that they want NBA TV money and other stuff like that so maybe it makes sense.
    I am not an economics whiz, but I do recall that there are some mathematical models that equate the value of a big lump sum now with a lesser income in the future. The age of the recipients plays a role in how the numbers work out. For these relatively old guys, I think that this much of a lump sum must offset the future potential when considering lawsuit costs and risks of losing challenges to the "new" TV income like online and international viewing.

    It also allows them to direct their cash assets to funds where their heirs will owe a lot less taxes than they would otherwise. So it's not entirely crazy to be bought out of the best deal in the history of capitalism.
    The poster "pacertom" since this forum began (and before!). I changed my name here to "Slick Pinkham" in honor of the imaginary player That Bobby "Slick" Leonard picked late in the 1971 ABA draft (true story!)

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    Default Re: New York Times : Silna Deal Settlement is near (AFFECTS THE PACERS)

    Quote Originally Posted by Ragnar View Post
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    still if they have made 300 million so far, and that's from the Bird era and on how is 500 million a logical amount to buy them out. I get that they want NBA TV money and other stuff like that so maybe it makes sense.
    The league's TV deal is up after 15/16, I think. The number'll skyrocket, I imagine that's when the true buyout becomes negotiable.

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    Default Re: New York Times : Silna Deal Settlement is near (AFFECTS THE PACERS)

    Quote Originally Posted by Slick Pinkham View Post
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    I am not an economics whiz, but I do recall that there are some mathematical models that equate the value of a big lump sum now with a lesser income in the future. The age of the recipients plays a role in how the numbers work out. For these relatively old guys, I think that this much of a lump sum must offset the future potential when considering lawsuit costs and risks of losing challenges to the "new" TV income like online and international viewing.

    It also allows them to direct their cash assets to funds where their heirs will owe a lot less taxes than they would otherwise. So it's not entirely crazy to be bought out of the best deal in the history of capitalism.
    They also have a right to part of internet revenue, based on a recent court decision. I'd think international TV money is included too, but I'm not sure about that one.

    It does seem lowish but I guess like you say, the human dimension and age is a big part to this. Besides, the article says they are still going to get extra money each year for some period, and details aren't disclosed, so who knows. For all we know, it might be a billion or more in the long run.

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    Default Re: New York Times : Silna Deal Settlement is near (AFFECTS THE PACERS)

    I'm still kinda shocked this is heading towards a buyout. I didn't think there was ever going to be a good enough reason to do that from their POV.

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    Default Re: New York Times : Silna Deal Settlement is near (AFFECTS THE PACERS)

    Aw, let'em keep the deal if they want. It's not like NBA players, management and owners are struggling to feed their families. Also, no problem putting butts in seats now.

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    Default Re: New York Times : Silna Deal Settlement is near (AFFECTS THE PACERS)

    Quote Originally Posted by BlueNGold View Post
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    Aw, let'em keep the deal if they want. It's not like NBA players, management and owners are struggling to feed their families. Also, no problem putting butts in seats now.
    That doesn't stop certain people here for painting them as villains and claiming they're keeping the Pacers from competing....

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    Default Re: New York Times : Silna Deal Settlement is near (AFFECTS THE PACERS)

    Quote Originally Posted by Hicks View Post
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    I'm still kinda shocked this is heading towards a buyout. I didn't think there was ever going to be a good enough reason to do that from their POV.
    What finally gave the NBA leverage was digital media, which obviously was never included in the bargain. The Silnas also don't get paid for international TV revenue, hence their lawsuit. While the NBA's broadcast revenue is increasing, basic TV could be obsolete in the distant future. The deals gives the Silnas a massive buyout payment (equivalent of another 25 years at the current rate), plus they still get a smaller but broader annual revenue stream for the foreseeable future. And if the NBA wants to but them out completely later on they can, but the Silnas will get yet another massive buyout payment This is a good deal for both parties.
    Last edited by Kstat; 01-07-2014 at 05:43 PM.

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    Default Re: New York Times : Silna Deal Settlement is near (AFFECTS THE PACERS)

    Quote Originally Posted by Kstat View Post
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    That doesn't stop certain people here for painting them as villains and claiming they're keeping the Pacers from competing....
    Yes, more advertising dollars wouldn't change a thing. It wouldn't change the fact the best players can just "team up" in the location of their choice, effectively destroying real competition.

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    Default Re: New York Times : Silna Deal Settlement is near (AFFECTS THE PACERS)

    Quote Originally Posted by Kstat View Post
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    What finally gave the NBA leverage was digital media, which obviously was never included in the bargain. The Silnas also don't get paid for international TV revenue, hence their lawsuit. While the NBA's broadcast revenue is increasing, basic TV could be obsolete in the distant future. The deals gives the Silnas a massive buyout payment (equivalent of another 25 years at the current rate), plus they still get a smaller but broader annual revenue stream for the foreseeable future. And if the NBA wants to but them out completely later on they can, but the Silnas will get yet another massive buyout payment This is a good deal for both parties.
    I think the NBA is going to head towards a major broadband deal w/ Google or somebody to air a lot of the games when the deal is up. They still may have DirecTV and the other cable deals, but they'll be more expensive I bet. I currently have DirectTV which gives the broadband version for free, which I basically gave the account to my brother so he can watch games on his computer, and now on TV w/ a Roku.
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    Default Re: New York Times : Silna Deal Settlement is near (AFFECTS THE PACERS)

    Quote Originally Posted by Kstat View Post
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    That doesn't stop certain people here for painting them as villains and claiming they're keeping the Pacers from competing....
    Well, the Simons (ok, Herb now) are greedy little sh! Ts who never gave anything to Indianapolis for $8-$10M per year. What is the Pacers' share of that agreement? Oh, yeah...

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    Default Re: New York Times : Silna Deal Settlement is near (AFFECTS THE PACERS)

    Quote Originally Posted by PacersHomer View Post
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    So these old farts will continue to take some of our TV money while doing nothing?
    The tv money they bargained for in good faith after sacrificing their franchise? Yes, yes they will.

    Btw, they "did" do something. They consented to disbanding their team, thus allowing more stable teams like the Pacers to proceed to the nba. Their actions 38 years ago is a reason why the Indiana pacers still exist.

    It isn't your money, though. You do not owe them a penny.
    Last edited by Kstat; 01-08-2014 at 09:44 AM.

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    Default Re: New York Times : Silna Deal Settlement is near (AFFECTS THE PACERS)

    Quote Originally Posted by BillS View Post
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    Well, the Simons (ok, Herb now) are greedy little sh! Ts who never gave anything to Indianapolis for $8-$10M per year. What is the Pacers' share of that agreement? Oh, yeah...

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    The pacers share of that agreement? Other than allowing them a better chance to exist past 1976, you mean?

    It wasn't about being the team everyone loved, it was about beating the teams everyone else loved.

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    Default Re: New York Times : Silna Deal Settlement is near (AFFECTS THE PACERS)

    Quote Originally Posted by Kstat View Post
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    The pacers share of that agreement? Other than allowing them a better chance to exist past 1976, you mean?
    Point, but you misunderstood me. It was a bitter response in reference to the way the Simons are painted as villains for taking money from the city of Indianapolis that is probably about what they forfeit as their share of the TV revenue that goes to the Silnas agreement. Since the Simons didn't buy the team until 1983, they aren't responsible for the agreement (though it was a known cost of doing business).
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    Default Re: New York Times : Silna Deal Settlement is near (AFFECTS THE PACERS)

    Wow. Nothing like renewing a perpetual contract with an additional "signing bonus" up front and even more potential future earnings for them with likely a huge guaranteed buyout to top it all off!

    $500 million up front (not too far from double what they have already received) and still getting some of the TV money (who knows how much?) through a partnership with every remaining franchise from the ABA (possibly through some kind of ownership share?) and some type of future buyout clause for who knows how much?

    The poor Silnas.

    Hopefully they at least took the NBA and their own new "partners" (very vague - perhaps an ownership share in those franchises through which they will get some of the TV money as well as a share of any appreciation in value of those franchises going forward?) - the entire remnants of the ABA - to dinner and a movie prior to "negotiating" them again. I wonder if the ownership of the franchises are still standing in their respective showers with the water running cold, unable to look at their reflections in their bathroom mirrors?

    At least Prokhorov is involved. If the deal goes south for him, he likely has guys he can rely on to "negotiate" the Silnas.

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    Default Re: New York Times : Silna Deal Settlement is near (AFFECTS THE PACERS)

    Honestly it reads as though the Silnas got an even better deal. It sounds like the league insulated itself from them for future technological developments, but still left the 4 ABA teams on the hook.
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