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Tuesday, January 07, 2014

Where sports law meets contracts

In 1976, the NBA and ABA merged, with four ABA teams joining the NBA and two--the Kentucky Colonels and Spirits of St. Louis--being bought out. The Colonels owners took $ 3 million and went away. The Spirits owners--Ozzie and Daniel Silna--took a different approach. They took less cash--about $ 2.2 million--in exchange for getting 1/7 of the television revenue for the four ABA teams that joined in perpetuity. In 1976, that was not a big deal; as late as 1980, the NBA finals were being shown on CBS late at night on tape delay. All that changed when the NBA exploded in the early 1980s. Instead, the league has paid the Silnas more than $ 300 million over the past 30+ years, while regularly trying to get out of the deal. Well, it now appears they are close to a deal that will pay the owners $ 500 million to go away. That's more than $ 800 million where one side has foresight and the other doesn't (or where one side just gets lucky).

There must be a good contracts lesson in here somewhere--about expectations or mistake or something?

Posted by Howard Wasserman on January 7, 2014 at 04:46 PM in Howard Wasserman, Sports | Permalink


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It makes me think of the differences between the Civil and Common law approaches to specific performance. If the NBA had breached in say 1985, under general contract principles they'd have been entitled to expectancy damages. But would a court back then have awarded anything like the then present value of what it has turned out to be?

Posted by: brad | Jan 7, 2014 6:47:50 PM

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