Arch Stanton Guest Post: Episode 23 in Today I Learned – the Spirits of St Louis

unnamed

Readers, it’s time I come clean. Many of these ‘today I learned’ posts are things I saw in various corners of the internet or in a book that seemed interesting and worth of additional research, at which point I at them to a list of potentially interesting subjects. When I feel compelled and I am in the proper mental and/or emotional space to begin MY PROCESS, I will pluck a topic and write. This current topic has been one of my favorite historical tidbits for quiet a while now, and I have been waiting for the right moment to share it. I understand my integrity has been tarnished by this revelation, and it has been a mighty weight on my soul for months now, for what is the internet if not a forum for honesty among anonymous sources?

THE SPIRITS OF ST LOUIS! They were a basketball team in the American Basketball Association (ABA), a high-flying pro league that rivaled the NBA while stalling out in the 60’s and 70’s despite offering flashy dunks and ball handling skills next to the comparatively bland NBA. You may be familiar with the ABA because Will Ferrell made a movie about it, but it was in that part of his career where his shtick was overplayed and most people skipped it. The NBA was also floundering financially in the 1970s, but not nearly as much as the ABA, and sought to gain some of the more prosperous teams and more crowd-alluring players. By the summer of 1976, only seven ABA teams survived, and the NBA made their move to incorporate some of the flailing teams – the Brooklyn Nets, Denver Nuggets, Indiana Pacers and San Antonio Spurs were all incorporated into the NBA. The Virginia Squires, already in the early stages of bankruptcy, received nothing from the NBA: sucks to suck dudes, as you will soon see. The Kentucky Colonels (yes, there was a basketball team named after KFC) took a $3.3 million buyout, no insignificant amount in 1976.

The Spirits of St Louis were in a unfortunate position – they had no marketable players to auction the rights off to and had no value to the NBA as a franchise, but they did have guile. SO much guile. Owners and brothers Ozzie and Daniel Silna negotiated their buyout with the NBA a bit differently than the Kentucky Colonels. Instead of taking the upfront cash entirely in cash, they settled for 1/7 of the future television money that the now-NBA bound franchise would collect “for as long as the NBA or its successors continues in its existence” (they still took $2.2 million in cash). The NBA did some back-of-a-bar-napkin math, came up with some fantastically infinitesimally small estimate for what these television splits would be at the time, and managed to rush to close the deal before the Silnas brothers realized how much they were leaving on the table.

You see where this is going.

At the time, the NBA had no television deal. Who wanted to watch basketball on TV? This was still in the infancy of the league, only a decade away from an era when barnstorming – going to town-to-town where a “pro” team would play whatever team the locals could cobble together. Think the Harlem Globetrotters but less entertaining and DEFINITELY not black – could you imagine a team of black guys schooling the shit out of a bunch of sister-fuckers in whatever backwater they happened to get stuck playing in?

Fast-forward a few years: the NBA is one of the most popular leagues in America, with a lucrative television deal. Given the fact most of America only wants to watch Michael Jordan and the Bulls in addition to the Celtics and Lakers, the owners of the other, shittier teams strong armed the fun, popular teams into what is now called revenue sharing: every dollar earned by teams or the league not specifically generated by in-stadium concessions is split evenly among all teams. Let’s do a bit of math: there are 30 NBA teams, four of which had origins in the ABA (so two-fifteenths), and the Silnas brothers had a contract stipulating they were entitled to one-seventh of that. This equates to roughly 2% of the NBA’s total revenue from television contracts.

The first year, the Silnas brothers received a check for $521,749.00; the Kentucky Colonels’ owner chuckled heartily to himself while sipping bourbon and thinking about which of his horses he was going to stud out (note – I have no idea what a wealthy man in the 70’s in Kentucky would do in his free time). In the 90’s, estimates suggest the Silnas brothers collected $4.4 million PER YEAR. In 2007, the NBA, pissed at getting grifted thirty-plus years ago in a moment of poor judgment, sought to buyout the Silnas brothers’ interest from this contract for $5 million a year over the next year while on the cusp of what was to be a record-setting television deal by a professional league in America. The Silnas brothers knew what they had, and went back to diving into their Scrooge-McDuck-piles-of-cash the NBA was contractually locked into sending them annually. The Silnas brother collected roughly $14.5 million for the next eight years.

In 2014, the NBA lawyered way the fuck up to take on this unassailable contract that was burning the everloving shit out of them – WHICH OF YOU ASSHOLES LET THEM PUT “IN PERPETUITY” IN THE CONTRACT. The Silnas brothers had collected roughly $300 million from the NBA by this time DESPITE NOT HAVING A TEAM THAT EVER PLAYED IN THE NBA. The NBA knew the only way out was throw more cash at the problem – they offered a lump sum payment of $500 million in exchange for a greatly reduced annual fee.

The brothers collected roughly $800 million over 38 years despite not doing shit. Literally, no work at all besides a splash of foresight netted each brother $360 million (their attorney was set to get 10% of all proceeds of the deal as well – he was raising the roof, or whatever the appropriate dance move was used for celebrating in 1976 for his luck). Because all good things must come to an end, the Silnas brothers invested heavily with Bernie Madoff in the mid-2000s, and lost a large chunk of their money. Psyche! They pulled out and got all their money plus gains before the bottom fell out of the Madoff operation (later it would be determined they were improperly paid and had to contribute $24 million back to other victims). I’m sure there was more than one NBA owner happy to see these two come back to earth from their sparkling high castle in, uhh, St Louis.

Advertisements

Song of the Day (9/24/2018)

You know who I really respect? American-born English speakers who can also speak elementary Spanish, and insist on doing so in a public venue whenever possible. Such courage. Such grace!

Today’s song of the day is Against the Wind by Bob Seger. Enjoy it!

Today’s word of the day is “kurtosis.” It’s the sharpness of the peak of a frequency distribution curve and often relates to risk analysis concerning securities and black swan events. AKA “tail risk.” Although, I’m certain that “tail risk” has a different meaning for women at Jeff Gundlach’s TCW. The moment he starts talking about “liquidity” or “picking bottoms,” head for the exit door, because he’ll most certainly be grabbing at yours.

Now, here are some cars I’ve seen about town:

GTA’s Lazlo is now driving for Lyft!

Reminded me of the Reliant Robin bit on Top Gear.

¡This Amigo is one bad hombre!

OMG! Asians are Disadvantaged at Harvard?!?

Stop the presses. SHUT DOWN THE MACHIIIIIIINES!!!!

What the fuck just happened and how is this now news? Fortunately, your author and Individual Liberties Justice Warrior is here to clear the air. Let me explain something very fucking clearly for you SJWs. Put down your pastel-colored knitted scarves and shake off your fair trade hemp sandals because this is going to be jarring:

AFFIRMATIVE ACTION IN THE WORKPLACE AND ON CAMPUS IS EFFECTIVELY A ZERO SUM GAME. Wooooooooooo-aahhh! Shocking, right? All these Asians and SJWs are now up in arms about this news from the DOJ. I ask you: WHAT ABOUT AFFIRMATIVE ACTION?!? For years, decades, scores, Harvard, Goldman Sachs, and every other institution of any merit has disadvantaged white people for the benefit of non-white people. SHOCKING! But now that non-whites are being institutionally disadvantaged, well, it’s time to throw a massive shit fit and “take it to the streets.”

Jesus, guys. I don’t really care if you support affirmative action or not. But these SJWs warriors can’t pick winner and losers out of some self-ascribed moral high ground. The hypocrisy is disgusting. Amazing that people aren’t making the parallel between this DOJ story and affirmative action.

Sorry to bum you guys out. Here’s some jingoism that’ll put the tingle back in your jones:

‘Merica, motherfuckers. Sorry for the rant. I feel this immense urge to break my dick on the backs of these hypocrites. (SPOILER ALERT: your author is male)

What can I say? As the world’s first ILJW, I believe in rugged individualism. That’s why I voted for Faith Spotted Eagle. I really identified with her foreign policy platform and bold economic plan.

Let’s put the merit back in meritocracy, folks.

Stop the Fucking Presses…

WE MISSED SOMETHING BIG:

And if that isn’t enough to put papers in hands, then you’ve got to appreciate this helpful insight:

I’m coining it right here and right now: snowflake journalism. Enjoy it before it gets popular…

HEY GUYS! Want to know the sort of innovative projects that your tax dollars are supporting?

The Ohio Department of Trans-Deportation, woah, “Freudian slip” (I hear these go for $50 down on the seedy TS side of town), Transportation has decided that smartphone-wielding consumers can use an app that provides a GPS/map with all sorts of neat functionality like identifying traffic, estimating delay times, and re-routing. Um. Ohio. PIIIIIISSST. Come here a second.

THE LARGEST TECH COMPANIES IN THE WORLD HAVE BEEN DOING THIS SINCE BEFORE LEBRON PUT YOUR DICK-SNEEZE, SHIT-UGLY STATE BORDERS ON THE MAP. I’d threaten to send in The Donald to drain your swamp but we’d just end up with another Kentucky/Tennessee.

Finally, I was passing through Columbia City last week and saw their beautiful water tower:

Impressive, right? Feeling hungry? Feeling like a burger and fries? Maybe a Diet Coke? Maybe it’s because the city ripped off White Castle’s logo:

Cross- and Intra-Asset Correlations are Plummeting…

Volatility is skyrocketing. VIX…soar, like Eagle. The 30 year bull market in fixed income is coming to an abrupt end. Trade wars on a global scale are looming. Currencies and hard assets are getting thrashed. The 10 year bull market in equities has already baked in a massive tax cut and is running out of steam. Recession on the horizon. Prospects are bleak. Correlations are down.

It’s becoming a stock picker’s market…

Daddy’s gotta go to work.

In other news…God!:

Great bumper sticker. Wonderful. It NEVER gets old.

This post is brought to you by:

Even if your Kumho has a lot of mileage, you’ll still feel comfortable letting your family ride that rubber.

Want Jeff Gundlach to Invest?

Want Jeff Gundlach to actively invest in your business but can’t seem to grab his attention?

It’s easy! Befriend a business reporter. Plant a headline similar to the below:

Mr. Gundlach’s assistant has forwarded you a calendar invitation and Mr. Gundlach’s private plane is now rapidly approaching your location. Zuckerberg is out? Bezos is in? Gundlach will get this train (mind the pun) back on the tracks…and he’s DEFINITELY not taking a passive role.