The NBA has finally gotten out of what has to go down as probably one of the worst business deals in the history of professional sports.
The NBA is set to pay two brothers a figure believed to be around $500 million to end a deal that required the league to give Ozzie and Daniel Silna an annual share of the league's television revenue according to Richard Sandomir of The New York Times.
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, thinking about the long term, they negotiated a deal that saw them receive one-seventh of the "visual media" rights for each of the four teams that had survived the merger.
The deal was to last "in perpetuity" or in layman's terms, as long as the NBA was alive.
With the NBA continuing to grow and television revenue it received increasing with each new contract, the brothers were receiving 1.9% of the revenue in recent years, or about $17.7 million annually.
There were also concerns that the amount would go up as the brothers were suing for a share of "visual media" that did not exist in 1976, including online broadcasts, the NBA's own network, and international broadcasts.
According to the report, as part of the settlement, the brothers will still receive some television revenue as part of a deal with the Nets, Nuggets, Pacers and Spurs. There is, however, a buyout clause, which allows the brothers percentages to snapped up for a fee.