My favorite sports business story involves two brothers turning $1 million into $800 million as basketball team owners without ever owning an NBA team.
It's a masterclass in leverage, long-term thinking, and the power of equity and ownership.
Here's the crazy story 👇
It's a masterclass in leverage, long-term thinking, and the power of equity and ownership.
Here's the crazy story 👇
1) The story starts with Ozzie & Daniel Silna.
The two brothers were born in New Jersey after their parents immigrated from Latvia in the 1930s.
They worked at their dad's small textile business, but when he sold the company, they started manufacturing polyester in the 1960s.
The two brothers were born in New Jersey after their parents immigrated from Latvia in the 1930s.
They worked at their dad's small textile business, but when he sold the company, they started manufacturing polyester in the 1960s.
2) As polyester sales skyrocketed throughout the 1960s, Ozzie & Daniel Silna's business grew.
So they used $1 million in profit to buy the ABA’s failing Carolina Cougars in 1974.
They then moved the team to Saint Louis and rebranded as the Saint Louis Spirits.
So they used $1 million in profit to buy the ABA’s failing Carolina Cougars in 1974.
They then moved the team to Saint Louis and rebranded as the Saint Louis Spirits.
3) But the NBA got tired of competing for players and fans and agreed to merge with the ABA 2 years later.
But there was a catch.
The NBA only wanted 4 of the 7 ABA teams:
• New York Nets
• Denver Nuggets
• Indiana Pacers
• San Antonio Spurs
The other 3 were out of luck.
But there was a catch.
The NBA only wanted 4 of the 7 ABA teams:
• New York Nets
• Denver Nuggets
• Indiana Pacers
• San Antonio Spurs
The other 3 were out of luck.
4) One of the 3 teams, the Virginia Squires, went bankrupt before the merger & a deal wasn't required.
The other 2 teams, the Kentucky Colonels & the Saint Louis Spirits, were offered a $3 million buyout by the NBA to disband.
The Colonels accepted...
But the Silna's said no.
The other 2 teams, the Kentucky Colonels & the Saint Louis Spirits, were offered a $3 million buyout by the NBA to disband.
The Colonels accepted...
But the Silna's said no.
5) Despite looking at a 200% profit in just two years, the Silna brothers thought they could get more.
They knew they had leverage as the last team left.
So they kept negotiating with the NBA and eventually landed the best deal in sports business history.
They knew they had leverage as the last team left.
So they kept negotiating with the NBA and eventually landed the best deal in sports business history.
6) The Silna brothers negotiated a deal that included $2 million in cash upfront.
But it also included a revenue-sharing agreement, guaranteeing them 1/7th of all TV money received by the 4 ABA teams that joined the NBA.
Even better?
The contract was in perpetuity.
But it also included a revenue-sharing agreement, guaranteeing them 1/7th of all TV money received by the 4 ABA teams that joined the NBA.
Even better?
The contract was in perpetuity.
7) The Silna brothers collected $200k annual checks at the beginning.
But as the NBA grew in popularity, so did the annual payments, with the Silna brothers collecting $20 million in 2014 alone.
1980: $200k
2014: $20 million
From 1976 to 2014, they were paid $300 million.
But as the NBA grew in popularity, so did the annual payments, with the Silna brothers collecting $20 million in 2014 alone.
1980: $200k
2014: $20 million
From 1976 to 2014, they were paid $300 million.
8) Why did the annual payments stop after 2014?
Because the NBA went to renew its TV deals & decided it was finally time to settle with the Silna brothers.
The result?
The brothers walked away with a $500 million buyout, bringing their overall earnings to about $800 million.
Because the NBA went to renew its TV deals & decided it was finally time to settle with the Silna brothers.
The result?
The brothers walked away with a $500 million buyout, bringing their overall earnings to about $800 million.
9) But this might be the craziest part of the whole deal:
Donald Schupak served as their lawyer on the deal and was able to negotiate himself a 10% cut.
So, he made roughly $80 million from one client based on one negotiation from more than 45 years ago.
That's wild 🤯
Donald Schupak served as their lawyer on the deal and was able to negotiate himself a 10% cut.
So, he made roughly $80 million from one client based on one negotiation from more than 45 years ago.
That's wild 🤯
10) I love this story for one simple reason:
The Silna brothers (& their lawyer) didn't blink when presented with a good deal.
Instead, they understood the importance of ownership, had the ability to think long-term & held out for a GREAT deal.
That ended up being worth $800M.
The Silna brothers (& their lawyer) didn't blink when presented with a good deal.
Instead, they understood the importance of ownership, had the ability to think long-term & held out for a GREAT deal.
That ended up being worth $800M.
P.S. If you enjoy learning about the business and money behind sports, follow me (@JoePompliano) for more sports business content.
I also write a 3x weekly newsletter to over 120,000 people — subscribe through the link in my bio.
I also write a 3x weekly newsletter to over 120,000 people — subscribe through the link in my bio.
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