This one takes us back to the land of bell bottoms, super afros and bad disco. Back when there was a rival basketball league called the ABA (American Basketball League), the NBA wanted a merger. Badly. The upstart league was garnering revenue, attention and provoking bidding wars that the senior league did not want. One of the owners, two brothers who owned the San Antonio Spurs, held out against the merger and eventually secured a sweet yearly deal paying them annuities — wait for it — FOREVER. Now they or their successors want to expand the scope of the deal to include revenue streams from new media.
This provokes a whole host of questions. How was the agreement drawn up? How can it encompass a revenue stream not existent at the time? How can an expanding league cap its liability and end this old sore? The answer is as old as time – throw money at the problem. In the words of an old friend of mine, ”sometimes throwing money at a problem solves a problem.”
And there we have it. As counselors at law, sometimes we have to tell our clients that a bad deal simply does not get better over time. Pay your money and get out of it. While there are exceptions in the deal, here, the NBA has demonstrated a sensible solution that, in this circumstance, solves a very old legal problem.