1. Lawyers
learn from
engineers,
contractors
Project management
techniques gain steam
in the legal world
By Christine Simmons
christine.simmons@molawyersmedia.com
Contractors and engineers in the U.S.
have been using the principles of project
management for decades. Only in the past
couple of years has it become a buzz phrase
in the legal industry.
Lawyers can now get certified in the prac-
tice — a method of planning and organiz-
ing a major project. And an organization
dedicated to it for all industries, the Project
Management Institute, started a group just
last September for legal professionals.
Some lawyers think project manage-
ment is just another term for what lawyers
were doing already.
But others and consultants say it’s a new
approach for the legal world that more and
more corporate clients are demanding to
manage their legal costs since the reces-
sion hit.
Any lawyer will give you his or her own
definition of project management. But it
generally means outlining the steps of a
project, whether it’s major litigation or a
big transaction, and defining the scope and
cost of a project with a client upfront and
monitoring those commitments through-
out the matter.
Consider this example from Boston-
based legal consultant Jim Hassett: A law-
yer wants to win a request for a proposal
on a real estate deal. It’s a fixed-price pay-
ment, and he needs to come up with the
lowest possible price that will allow him to
offer quality work for a reasonable profit.
Using project management principles,
he can break the transaction into a set of
steps, set a budget for each and then iden-
tify tactics to reduce their cost but still
meet the client’s needs. It’s a work model
similar to that in the manufacturing in-
dustry, Hassett said.
Hassett, who has written extensively on
the subject, says project management also
means assigning the right people to the right
tasks within a project; estimating and con-
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Slam dunkHow a contract deal in 1976 turned the Spirits of St. Louis
into the most profitable franchise in sports history Page 12
Settled
A 13-year legal battle over a
wrongful conviction ends with
a $15.5 million settlement.
n Page 7

2. 12 August 1, 2011 | M i s s o u r i L aw y e r s We e k ly
By Richard Jackoway
richard.jackoway@molawyersmedia.com
Thirty-five years ago, what would be-
come one of the greatest sports deals in
history didn’t seem so remarkable.
Sports Illustrated made no note of it.
Neither did the hometown St. Louis Post-
Dispatch. Most people thought the issue
had been decided a month before, in June
1976. That’s when the National Basketball
Associationownerssettledanantitrustsuit
with its players and agreed to merge with
the American Basketball Association.
All that was left, as a Sports Illustrated
columnist wrote at the time, were a few
loose ends and counter-signatures.
Two of those counter-signatures, how-
ever, were from Ozzie and Dan Silna, then
the owners of the Spirits of St. Louis. They
and their attorney, Donald Schupak, want-
ed more than the $3 million the NBA was
offering.
So far, the contract they negotiated has
netted the Silnas and Schupak, who was a
part-owner of the team, upwards of $280
million, based on published reports of the
TV contract values.
And because the agreement is in per-
petuity, about the only thing to keep the
Silnas from getting their next check is if
the NBA stops playing basketball, which
actually might happen this fall, since the
league is in the second month of a lockout.
The NBA and players, however, are due to
resume negotiations today.
It’s just the latest twist in the saga of the
Spirits’ contract, which has spawned law-
suits, countersuits and settlement offers,
and even played a role in the largest Ponzi
scheme of all time.
And the litigation isn’t over. If the newest
lawsuit between the Silnas and the league
goes for the brothers, one of the greatest
contracts ever may get even more lucrative.
No winners
As with many complex negotiations, no
one came away happy when the contract
was signed in the summer of 1976.
Certainly the Silna brothers weren’t cel-
ebrating.
Noneoftheprincipalswhonegotiatedthe
Spirits’ deal have talked to the media about
the Spirits deal since 2006, when the Los
Angeles Times tracked down Ozzie Silna
at his Malibu home and he insisted that at
the time, at least, the brothers were stunned
that they weren’t going to be NBA owners.
The Silnas made their millions off of
the new, hot material of the day — poly-
ester. When they sold their manufacturing
business, they took some of their prof-
its and bought an American Basketball
Association team with the hope and ex-
pectation that the league would merge
with the National Basketball Association.
They wanted to be NBA owners, but the
NBA didn’t want the Spirits of St. Louis,
which had a history of poor attendance.
The league wanted four other teams and
just wanted the Silnas to go away.
The owners of the Kentucky Colonels
had already done so. They cashed their $3
million check and went home. But through
attorney Schupak, the Silnas were pressing
for more.
They had leverage. When the ABA had
formed, each team signed onto the ABA
constitution. Under its provisions, the
New Jersey Nets, Indianapolis Pacers, San
Antonio Spurs and Denver Nuggets could
not defect from the ABA without forfeiting
their arena leases and player contracts to
the ABA. As the remaining representatives
of the league, the Silnas would have to sign
off on any changes to the constitution.
And as noted in a later lawsuit, “without
those leases and contracts, the expansion
teams were valueless to the NBA.”
Needing to get a deal done and with
the 1976-77 season approaching, the NBA
agreed to the Silnas’ terms.
They got paid for the contracts of their
players who were taken into the NBA.
Accounting varies, but it made the Silnas’
lump sum between $2.3 million and $3 mil-
lion.Buttheywantedmore.Specifically,they
wanted a one-seventh of the “visual broad-
cast” rights for the four former ABA teams.
In 1976, when the NBA finals weren’t
even shown on prime time, such revenues
didn’t amount to much, estimated at about
$300,000 a year. But since the merger the
leaguehasgrowninstature,andTVcontract
after TV contract has reaped more money.
Thatone-seventhshareofone-seventhof
the teams is now worth about $20 million
a year to the Silnas, who have no payroll,
no arena expenses, nothing but profit.
Greatest ever?
To understand how good the Silnas’ deal
was, you have to know a bit about the fi-
nancials of NBA teams, for which there are
few hard numbers. Much of the ongoing
dispute between the players and the league
surrounds how much the teams are worth
and how much they are or aren’t making
each year.
A fairly neutral source, Forbes maga-
zine, took a look and found that the
four expansion teams are worth about
$300 million each (San Antonio some-
what more, Indianapolis slightly less),
and that each loses about $10 million a
year (Indianapolis slightly more and San
Antonio somewhat less).
St. Louis, if it had been taken into the
league, would have joined the ranks of the
fairly small-market teams, which on aver-
age do worse financially. So, the Silnas, in-
stead of pocketing $280 million, would have
faced multimillion-dollar annual losses for
the past 35 years that would offset nearly all
the current worth of the team.
Marquette University law professor and
sports law historian Joseph Hylton agrees
with this analysis.
“My hunch is that the Silnas would have
fallen into the same camp as the Nets and
Pacers and that their early years in the NBA
would have been financially very difficult,”
he wrote in an email. “It is hard to know if
the brothers would have stuck it out until
good times arrived at the end of the 1980s. It
is hard to believe that they could have done
better than they did with the TV deal.”
But as Ozzie Silna told the Associated
Press on the 30th anniversary of the deal,
when you’re a billionaire, money isn’t ev-
erything.
“I got into basketball not to make the
money,” Silna said. “I got into basketball
for the thrill of owning the team, and to
make money at the same time.”
Still, does the deal rank among the
greatest in sports history?
University of Toledo law professor and
economist Geoffrey Rapp thinks so.
“It’s the shrewdest deal ever struck,”
Rapp said. “In terms of input-output, it’s
pretty good.”
Hylton agrees the deal is among the
most lucrative, but he has another vote for
best ever.
“I think the best sports contract in his-
tory was the deal that allowed George
Steinbrenner to buy the New York Yankees
from CBS in 1973 for $8.8 million,” he said.
“However, the Silnas’ deal ranks right up
there along with the multimillion-dollar
contracts signed by various first-round draft
picks which turned out to be total busts.”
What happened?
InhindsighteveryoneagreesthattheNBA
got taken to the cleaners in the summer of
1976, but was this an example of an unfore-
seeable consequence or poor negotiation?
Rapp said “good contract lawyers are
trying to think one step ahead,” but the
Silnas appear to have been the beneficia-
ries of “transactional giddiness” on the
part of the owners, who wanted to com-
plete the long-sought merger.
“That and the fact the propensity for
people to be overly optimistic of how their
own view of the contract is going to turn
out,” Rapp said.
So when Schupak added language that
made the contract terms irrevocable and
unconditional, the owners didn’t object.
Nor did they strike the clause that the “rev-
enues shall continue for as long as the NBA
or its successors continues in its existence.”
The result: When the league has tried
to challenge the contract in court, they’ve
failed every time.
Today, Rapp said, lawyers are more at-
tuned to the issues that yielded the Silnas
such a windfall.
“Lawyers today are thinking one or two
technologies ahead. Then, no one thought
TV revenues would be so important,” he
said.
Hylton agrees with Rapp that more at-
tention would be paid today to broadcast
rights but says the NBA lawyers should
have been more careful.
Slam dunkHow a contract deal in 1976 turned the Spirits of St. Louis into the most profitable franchise in sports history
Spirits of St. Louis’ Marvin Barnes brings the ball in low during the 1975 ABA Eastern Division playoffs in St.
Louis. A sparse crowd in the Checkerdome that night was an example of the poor attendance that led the NBA
not to ask the Spirits to join the league. AP file photo
ON THE COVER
During the 1970s, Ozzie Silna owned the Spirits of
St. Louis basketball team along with his brother, Dan;
attorney Donald Schupak; and a few other limited
partners. When the American Basketball Association
folded, the Silnas and Schupak crafted a contract
that is still paying them handsomely 35 years later.
AP file photo

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“The Silnas’ contract was poorly thought
out, even for the time,” he said. “Because
broadcasting rights and revenue have be-
come so important in the modern sports
world, such rights are not loosely thrown
around and any contract today involv-
ing the assignment of broadcasting rights
or revenue is very carefully scrutinized.
Basically it was a case of bad lawyering in
the early 1970s.”
What next?
Believe it or not, the Silnas’ deal may be
about to get sweeter.
In 2009, the brothers sued the league in
New York state court over failure to pay
European and some domestic cable tele-
vision revenues. After kicking around in
the courts over issues of forum selection,
a federal court in New York is going to
decide whether to award the Silnas addi-
tional “millions of dollars.”
And in a high-profile twist, a new spate
of lawsuits has been filed over how the
Silnas invested their NBA money.
Like many big shots with millions to in-
vest in the early 2000s, the Silnas turned
to the hottest investor of the day — Bernie
Madoff. When Madoff was arrested, ac-
cused of the largest Ponzi scheme in histo-
ry, his client list included the Silnas as in-
dividuals and the Spirits of St. Louis LLC.
Seeing the names, many in the media
blogged about how the Silnas — who had
taken the NBA for millions — had been tak-
en themselves. But that may not quite be the
story. The court-appointed trustee for the
Madoff finances has sued the Silnas to re-
coup $24 million in profits he says the broth-
ers took in from the Madoff investments.
The brothers have countersued, chal-
lenging the accounting and saying they
actually lost money.
If so, it was one of the few times. MO
Ozzie Silna holds an In Spirit – In Perpetuity cap, while below is a copy of the contract that gave the Silna
brothers a right to a portion of the NBA television rights in perpetuity. AP file photos