When we lived in Malibu, I learned that Ozzie Silna was also a Malibu resident. I knew that Ozzie and his brother, owners of the Spirits of St. Louis ABA team, had pulled off one of the best deals in the history of professional basketball, and the NY Times article below lays out the details. I had the opportunity to chat with Ozzie one time at a Malibu restaurant, and he was congenial and fairly low key about how well things turned out for him.
No Team, No Ticket Sales, but Plenty of Cash
For years, it was an underappreciated wrinkle in the historic deal that merged the established National Basketball Association
and the upstart American Basketball Association in 1976. The owners of the Spirits of St. Louis agreed to be paid a small fraction of the N.B.A.’s television money to comfort them for being cut out of joining the older league.
Their piece amounted to a sliver of the modest amount that CBS was paying the N.B.A. in those days. But if the share was small then, one particular term of the arrangement was attractive: the owners, Ozzie and Daniel Silna, would be paid the money every year in perpetuity, or as long as the N.B.A. existed.
The Spirits became a distant memory, even for people in St. Louis. But the N.B.A. has continued to exist quite nicely, meaning the Silnas’ haul has been substantial: $255 million and counting. But as sweet as the deal has been, the Silnas want more, and they have gone to court to get it.
In Manhattan federal court on Thursday, lawyers for the Silna brothers and the league argued over whether the men are owed money beyond what they get from the N.B.A.’s national broadcast and cable television contracts. They want to tap into the money the league gets from international broadcasts, NBA TV, the league’s cable network, and other lucrative deals that could not have been imagined in the three network television universe of 1976.
If Federal District Judge Loretta A. Preska agrees, the Silna brothers — Ozzie, 79, and living in Malibu, Calif., and Daniel, 68, and living in Saddle River, N.J. — stand to receive millions more, all without having assembled a team or used an arena for more than three decades.
“This issue has been a nuisance as long as I’ve been associated with the league,” said Ed Desser, the former president of NBA Television and new media ventures who now runs his own media consulting firm. “It was never enough to be a serious distraction. It’s one of those accidents of history.”
Four of the A.B.A.’s seven teams merged with the N.B.A. in 1976, but the Virginia Squires were a financial wreck and the Kentucky Colonels were placated with a $3.3 million payment. But if the Spirits couldn’t join the N.B.A., the Silna brothers wanted to share in what the A.B.A. didn’t have: national TV revenue. They settled with one-seventh of the television money generated annually by each of the four surviving A.B.A. teams — the Nets, the San Antonio Spurs, the Indiana Pacers and the Denver Nuggets.
The arrangement began to get public attention as the size of the league’s network TV deals swelled. The four surviving teams have tried to extricate themselves from the arrangement, but have not found a way.
In the early 1980s, the teams discussed buying out the Silnas for $5 million to $6 million but did not pursue it. They offered substantially more in the late 1990s, but the Silnas rejected the offer.
Donnie Walsh, the president of the Indiana Pacers, said in 2003 that discussing the Silnas’ deal “puts a dagger in my heart,” reminding him of losing that one-seventh share of TV money each season. On Thursday, he said he preferred not to talk about it.
In 1980-81, the first year the Silnas were eligible to get their share of TV money, they received $521,749, according to court documents filed by the N.B.A. For the 2010-11 season, they received $17,450,000. The N.B.A.’s latest TV deal, with ESPN and TNT, is worth $7.4 billion over eight years. Soon, the Silnas’ total take will hit $300 million.
The A.B.A. was already seven years old when the Silnas — the owners of a New Jersey textiles business that specialized in making polyester — bought the Carolina Cougars and moved them to St. Louis in 1974. Formed to challenge the N.B.A., the A.B.A. wanted nothing more than to join the N.B.A.
The A.B.A. instigated a salary war. It discarded the traditional orange ball for a red-white-and-blue one. It implemented the 3-point line and juiced up its All-Star Game with a slam dunk contest. Stars like Julius Erving, Connie Hawkins and George Gervin played a freewheeling game that reflected a counterculture sensibility that contrasted with the N.B.A. squares.
Still, one team was owned by the prototypical square, Pat Boone. Yet another had Morton Downey Jr. as its general manager well before he became known as a coarse, chain-smoking talk show host.
Teams left cities as if attached to moving vans. Their names changed regularly. Into this unrest came the Silnas.
“They spent a lot of money to get a good team as quickly as they could,” said Rod Thorn, who was fired as the Spirits’ coach 47 games into the 1975-76 season. “Ozzie was the main guy. They were really involved, big fans and came to a lot of games.”
Michael Goldberg, who was the A.B.A.’s general counsel, recalled the Silnas as passionate owners who took a risk by buying into a shaky, undercapitalized league.
“They fell in love with the idea of owning a team,” he said. “Dan was a little less focused on the team. Ozzie reminded me of a schoolyard player who got picked eighth in the game but still loved it.”
The team’s announcer, fresh from Syracuse University, was Bob Costas. The Spirits were lucky to draw a few thousand fans to home games and once announced a crowd of 848, said Costas, who believed the number was closer to 400. The zenith of the Spirits’ history was defeating the defending champion Nets in the 1975 playoffs before losing to Kentucky in the next round.
“It was like winning a championship,” Costas said. “I remember Ozzie and Danny running through the locker room and into the showers, just like a couple of kids on a frolic.”
Nearly four decades later, the Silnas are recalled for a savvy deal that continues to enrich them. But not all of their business moves have been so lucrative. They were victims of Bernard L. Madoff’s massive fraud. Daniel Silna told Forbes last year
that they lost all that they had invested with Madoff, but would not say how much. In lawsuits against the Silnas, the trustee for the victims of Madoff’s Ponzi scheme
have said that the Silnas, relatives, family trusts and two corporate entities collected $24 million in fictitious profits
After the hearing Thursday, a lawyer for the Silnas declined to comment or allow his clients to be interviewed
Daniel Silna and Donald C. Schupak, the lawyer who negotiated the TV deal with the old A.B.A. teams, had listened to arguments over whether two 36-year-old documents contained language that would let the Silnas collect even more money from TV sources not yet created in 1976.
They showed little emotion as Preska, the judge, sparred with a lawyer for the N.B.A. She gave the league more time to make its case and urged both sides to settle. But her comments seemed to indicate that she was inclined to side with the Silnas, two brothers who might be the savviest owners the N.B.A. never had.