In 1974, two brothers made an investment that will turn out to be the greatest sports deal of all time. Donnie Walsh, the former Pacers and Knicks President of Basketball Operations, went so far as to call it “the greatest deal known to man.”
Let me put it like this - GameStop stock would have to overshoot the Moon and exit the galaxy to compare to this. If you were brilliant and got in on GME at $4, you would have to exit somewhere around $3200 per share to compare to this deal.
Ozzie and Daniel Silna made their money in textile, being pioneers of polyester. Fans of basketball, the Silna brothers decided to invest some of their earnings and cough up a cool million for the Carolina Cougars of the ABA. Upon purchasing the team, they immediately moved it to St. Louis, the largest TV market without a basketball team at the time.
The franchise started great in St.Louis. Led by an amazing rookie, Marvin Barnes, the Spirits made the ABA playoffs in the 1974-1975 season, losing in the second round. The next season, the team added a 6’10” rebounding and a point-scoring machine named Moses Malone. The foundation of a championship team was in place.
But it all ended abruptly when the NBA decided they didn't feel like competing with the ABA anymore and agreed to a merger. Out of the seven ABA teams, four would join the NBA - the San Antonio Spurs, Indiana Pacers, Denver Nuggets, and the New Jersey Nets. The Virginia Squires folded before a deal was made, so that left two teams. The St.Louis Spirits and the Kentucky Colonels.
They were both offered $3 million to fold. The Colonels ownership agreed, but the Silnas weren't satisfied with making $2 million in two years. Let me remind you $2 million in 1976 was huge, particularly for an ABA team. What happened next is the greatest deal in sports history.
“When we reached the agreement, NBA playoff games were shown on tape delay after the 11 o’clock news. We had no concept that it would grow into what it is today. We had hopes, but…”
Daniel Silna, Forbes
The Silnas would receive about $2.2 million for any Spirits players drafted by NBA teams. On top of that, the Silnas would also get a 1/7th share of each of the four former ABA teams’ NBA “visual media” rights. Translated, the Silnas would get 14.28% of the Spurs, Pacers, Nuggets, and Nets TV money each - and here's the best part - in perpetuity!
We all got acquainted with the size and impact of TV deals when the last one enabled Kevin Durant to join the Warriors and created one of the strongest teams in NBA history. They weren't always that lucrative. At first, the Silnas got approximately $200.000 a year. Never the less, if you combine the $2.2 million they got for former Spirits players drafted to the NBA, just five years of $200.000 would turn out more profitable than the offer they passed on. They earned so much more.
First, it was Magic and Bird, and then Michael Jordan, who launched the NBA's popularity from the fourth national sport to second in the United States. LeBron James and his generation took it to another level, making the NBA a truly global product.
In '97, the NBA negotiated a $2.6 billion deal with NBC and Turner. In '02, the league made a $4.6 billion deal with ABC/ESPN and TNT. By '07, the Silnas had earned an estimated $180 million in NBA TV money. That year, the NBA extended its broadcast deals for another eight years for roughly $930 million annually. By 2014, the estimate was that the Silnas brothers made $300 million.
In 2014 the NBA was on the verge of a new, unprecedented TV deal (the one that brought Durant to the Warriors). Not wanting to share any more money with the Silnas brothers, the NBA bought out the contract for a cool $500 million. Adding that to the estimated $300 million they made since 1976, the math is simple. A million dollars invested in 1974 returned $800 million in 2014.
Truly, the greatest deal in sports history.