Pacers and Pro Sports and NBA and Sports Business

Ex-ABA team seeks more from old TV-rights deal with Pacers

November 22, 2011

The Spirits of St. Louis, a short-lived American Basketball Association team that has made more than $230 million from a 1976 settlement with the National Basketball Association, reopened the lawsuit to claim additional television revenue from the league earned by four teams, including the Indiana Pacers.

The Spirits of St. Louis Basketball Club LP asked a federal judge in Manhattan this month to reopen the antitrust suit originally filed in 1970 by NBA players to block a proposed merger between the two professional basketball leagues. The case led to free agency for NBA players and paved the way for four ABA teams to merge into the NBA.

The Spirits, which were excluded from the merger and forced out of business as a result, agreed in 1976 to release their legal claims in a settlement that guaranteed team owners one-seventh of the television revenue earned by the four teams, now the Pacers, New Jersey Nets, San Antonio Spurs and Denver Nuggets.

The deal has cost the Pacers $4 million to $5 million annually in recent years. The arrangement has no expiration, although the Pacers and NBA have tried to negotiate a settlement.

“Since the agreement was approved, the NBA’s international popularity has grown dramatically,” the Spirits said in papers filed in Manhattan federal court this month. “The Spirits have not shared in that growth, despite their clear contractual right to do so.”

Ozzie and Dan Silna, the Spirits’ former owners, have made more than $237 million from the deal, Forbes estimated earlier this year. Another ABA team shut out of the 1976 merger, the Kentucky Colonels, settled for a one-time payment of $3 million.

The Silnas invested some of their money with convicted con man Bernard Madoff, according to court records. They’ve been sued by Irving Picard, the court-appointed trustee liquidating Madoff’s former firm. Picard is seeking the return of millions of dollars he claims the Silnas took in profits from their Madoff accounts.

Madoff, 73, is serving a 150-year federal prison sentence after pleading guilty to running the biggest Ponzi scheme in history.

Michael Carroll, who represents the Spirits, declined comment on the litigation. Jeff Mishkin, a lawyer for the NBA, also declined to comment. Nets spokesman Barry Baum, Nuggets spokesman Tim Gelt and Pacers spokesman David Benner didn’t immediately return messages seeking comment on the Spirits claim. Spurs spokeswoman Stacey Mitch had no immediate comment.

The Spirits claim the four former ABA teams have failed to pay revenue from international NBA broadcasts and cable television broadcasts outside the teams’ local areas. The teams also owe the Spirits money from games televised on NBA TV and through NBA League Pass, a premium service that gives access to most of the league’s games, the Spirits said in court papers.

“The expansion teams have violated the consent judgment, repeatedly and in several respects,” the Spirits said.

U.S. District Judge Loretta Preska, chief judge of the Manhattan-based federal court, agreed Nov. 7 to review the long-dormant case. The original case was presided over by U.S. District Judge Robert Carter, who is now retired.

The Spirits played in the 1974-’75 and 1975-’76 seasons, according to remembertheaba.com. The ABA, which existed from 1967 to 1976, was known for red, white and blue basketballs, the three-point shot and players with large afro hairdos, according to the site.

The 1970 antitrust suit was filed on behalf of all NBA players by their union representatives, many of whom, including Oscar Robertson, Wes Unseld and Bill Bradley, are now in the Basketball Hall of Fame. Bradley, who played for the New York Knicks, also served as a U.S. senator from New Jersey.

The NBA’s current season, which had been scheduled to start Nov. 1, is suspended while the league and players try to reach a new labor agreement. NBA players on Nov. 14 dissolved their union to file antitrust suits against the league.

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