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Even if it is damn costly, getting ride of the perpetual part of the accord is priceless.
http://www.nytimes.com/2014/01/07/sp...long-gone.html
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.
Even if it is damn costly, getting ride of the perpetual part of the accord is priceless.
WOW. That's HUGE news for the Spurs. They've been playing the game with less money than the other 26 teams every year.
I still don't understand why the Silnas would do this. Sure, $500M is a ton of money but having a literally endless contract is the stuff of dreams. They probably could have gotten a $500M loan against that value, repaid it with that TV income, and still had some left over.
This is just a guess on my part (so take it with a substantial grain of salt) but reading the story, it sounds like the Silnas were willing to budge a bit because they part of the revenue that they will participate in going forward will likely be a larger pot (to include new media sources like NBATV and so on). My guess is that they took the $500M as the price of agreeing to take a smaller fraction of that pot than they would normally be en led to -- that is, instead of getting a full share (1/7, or a little more than 14%) of all TV revenue from the 4 ABA teams, they will take a reduced share of all MEDIA revenue from those 4 teams (say 5%).
My guess, too, is that the buyout from partnership among the former ABA teams and the Silnas will be substantial and conditional in some way (for instance, the price is incredibly high at the beginning and goes down gradually over time, or something like that).
Assuming that those guesses are at least in the ballpark, the deal would make a lot of sense to me both ways. For the former ABA teams, I'm not sure that this completely solves the problem, but it surely moves the ball a bit towards reducing the obligation to the Silnas; for the Silnas, it gives them a boatload of up front money ($500MM is more than they've reportedly made from their share of the TV deal over its life to date -- NYT reports in this story that they've made about $300MM since 1976) and a continued interest in a gigantic pot of money plus the protection of a buyout.
FYI, last season the Silnas received $19M from the NBA.
Source:
http://espn.go.com/nba/story/_/id/99...ostly-aba-deal
good stuff Bruno. I had read about this a year ago, I never knew the particulars but this is a story that deserves a lot more attention then it will get. the Silnas had it made, just unfortunately it was hurting some good teams. Hard to believe the Spurs were able to do as well with this noose around their neck so hopefully Spurs (and Nuggets, Pacers and Nets) will be free of the contract eventually.
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