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Report: NBA to announce settlement agreement with Silna brothers over TV revenue

(David Dow/Getty Images) Adam Silver (left) will replace David Stern (right) as NBA commissioner next month. (David Dow/Getty Images)

The NBA is reportedly poised to announce an agreement with Ozzie and Daniel Silna, two brothers who have made a fortune from a contract that has paid them a portion of the league's national television revenue for decades.

The New York Times reports that the deal, expected to be announced Tuesday, could be worth half a billion dollars to the brothers, who owned the ABA's Spirits of St. Louis.

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.

As Sports Illustrated's Kelley King wrote in 2003, the Silna brothers decided in 1976 to accept, in perpetuity, one-seventh of the television revenue generated by the four ABA franchises (the Nets, Nuggets, Pacers and Spurs) that were allowed into the NBA. They opted for this open-ended approach rather than taking a cash buyout when the Spirits were not included in the newly merged league, and that decision has resulted in more than 30 years' worth of free money.

The checks started rolling in during the 1980-81 season and the sums kept growing as the value of the NBA's television rights deals exploded. By 2003, the Silna brothers had received more than $100 million, even though another team excluded in the merger had been bought off with a flat sum of $3.3 million.

"There is nothing to gloat about," Daniel Silna told Sports Illustrated in 2003. "We had hoped to be part of the merger. During our two years with the Spirits, there was a lot of heartache, but also a lot of joy."

ESPN.com reported in November that the Silnas' total take had grown to $300 million and that the league's current contracts with ABC/ESPN and TNT were worth $7.4 billion. Those contracts are set to expire after the 2015-16 season and the next round of deals are expected to be even more lucrative.

NBA commissioner David Stern is expected to retire on Feb. 1 after 30 years on the job and deputy commissioner Adam Silver is set to replace him. The NBA has reportedly tried on multiple occasions to reach a resolution with the Silnas during Stern's tenure.

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