How to Make Millions By Doing Nothing


(Photo: Bari D)

Fascinating article in today’s Times by Richard Sandomir about how the owners of the old American Basketball Association team the St. Louis Spirit are still being compensated for an agreement forged in 1976, when the Spirit were excluded from joining the NBA. Those owners, Ozzie and Daniel Silna, were given a share — in perpetuity — of future TV revenues:

In 1980-81, the first year the Silnas were eligible to get their share of TV money, they received $521,749, according to court documents filed by the N.B.A. For the 2010-11 season, they received $17,450,000. The N.B.A.’s latest TV deal, with ESPN and TNT, is worth $7.4 billion over eight years. Soon, the Silnas’ total take will hit $300 million. …

Donnie Walsh, the president of the Indiana Pacers, said in 2003 that discussing the Silnas’ deal “puts a dagger in my heart,” reminding him of losing that one-seventh share of TV money each season. On Thursday, he said he preferred not to talk about it.

Nice rent-seeking if you can get it.

Let’s hear your best examples of similar do-nothing paydays …


How about all those fat cats with their golden parachutes: Lots of money for doing nothing any more...


How is this rent seeking? They were compensated by the original contract to merge the leagues, and didn't try to manipulate the political environment for their payoff.

It's more an example of a bad, bad miscalculation on the NBA's part about future television revenues. For the NBA of 1976, this may not have been a gross error; who would have predicted the prominence of TV basketball a decade and a half later?

This is perhaps most similar to the case of Jeanne Calment and Andre-Francois Raffray, where the latter bought her apartment when she was 90 years old, paying her $400/month with the agreement that he'd take over the property when she died. Unfortunately for him, she turned out to be one of the longest lived human beings. "Mr. Raffray died a year ago at 77, after paying Mrs. Calment more than $180,000, better than double the apartment's market value. His family was still paying when she died."



$180,000 / $400/mo = 450 mo = 37.5 years. 37.5 + 90 years = 127.5 years old. The article in question says that she died at 122.


Good catch on the math in the article. On the other hand, there are no details on the original purchase contract. It's very possible he paid some lump sum at the beginning (i.e., she likely wouldn't have sold the apartment with the possibility that she'd die after the first month, and only receive $400 for the property).


I wonder if the NBA couldn't escape this by instead selling media rights or something. The ongoing shift to Internet might also end the deal. Wonder if lawyers on both sides have looked at the language in the original agreement for wiggle room.


This post is mistitled. The Silna's aren't "making" millions, they are reviving millions. The title of this post should have been "How to Get Millions For Doing Nothing".

Clearly the Silna's are not creating any value, they are making no contributions at all. The income is pure graft.

You would think that at a place like Freakonomics you wouldn't conflate what you clearly recognize as rent-seeking with productivity.

I consider misuse of the term "making" money, etc. to be one of the biggest problems in American economic vocabulary, as it immediately blurs the difference between actually creating value and simply appropriating it, and this is especially problematic at a time when rent-seeking accounts for such a significant portion of the incomes of the super-rich...


This state of affairs may be bad for the NBA but it just shows that business entities are not able to tell much about the future. Ozzie and Daniel richly deserve their gains.

Alexei Sadeski

Not rent seeking at all. They've made $300MM over 30+ years. Now tell me how much money they'd have made had the St. Louis Spirit joined the NBA! Probably quite a bit more, and more securely, as TV revenues may fall over the coming decades.

This is not rent seeking in the least - the NBA simply paid an agreed upon price to compensate the Spirit for giving up their franchise.


This isn't so different from the extension of copyright in recent history. A long time ago it was 50 years after the authors death, now its up to 95 years(!!) for some works. . The beneficiary is not necessarily the creator.

There is very active bootlegging of copyright protected content and that includes TV sports events that are streamed illegally on the web thus bypassing the revenue stream of the NBA.

Cases like the Silnas gain make it harder to appeal to fairness in paying for copyright protected content. I am guessing most people who steal content justify it to themselves by saying it only takes away a little from very rich people who have done nothing to earn it. In the case of the Silna's they would be correct.


bank bailouts


I am very surprised that the author described this as "rent seeking." In the case of the Silnas, they had an operating sports franchise and a new league was being formed that would not include them. The owners were given the offer to forego all future revenue they might receive from the operation or sale of that franchise, plus the particular pride of ownership that comes from owning a major sports franchise in exchange for what was effectively their share of future revenue from one channel.

I am interested to know if Donnie Walsh would be willing to change places and sit on the sidelines, watching everyone else play while he just collects an annual check.


By definition it's rent-seeking, but surely unintended since the Silnas weren't instigating the environment requiring such a contract.

Seems more a situation of irony. There are those that F, and those that get F'ed, the NBA thought they were the former, they ended up the latter.


Farm subsidies rent seeking: Buy farm land. Get paid to not plant a seed.

caleb b


I think we all understand the difference between earned income and passive income. That doesn't mean that passive income is immoral, illegitimate, or corrupt. It's simply a contract.

So what if the NBA were a public company and offered the Silnas a certain amount of stock? It's all passive income as a partial owner. I can buy Exxon stock and begin receive a share of the profits without ever contributing any of my own personal effort to the company. I'm not taking anything away from anyone else by doing this. No one gets less pie because I buy XOM.

I am very happy that I live in a society that honors contracts.

BTW: there are alternative ways to enforce a contract without government. They're called guns. I'll assume a society that doesn't honor contracts won't mind if I enforce them myself .

caleb b

From WSJ:

Former NY Met Bobby Bonilla was owed $5.9 million in the final year of his contract (2000). Because the Mets didn't want to pay it and were planning on releasing Bonilla anyway, they struck a deal. Bonilla would get nothing for 11 years, then in 2011 begin receiving annual payments of $1.19 million for 25 years.

Now the article doesn't say why the 2000 Mets thought that the 2011 Mets would be so flush with cash...but I suspect that they put a certain amount of cash aside into a hedge fund, assuming that by the time 2011 arrived, they'd be making more than $1.19 million a year in interest income (essentially writing an annuity). I have a suspicion that this is the case, and that Madoff was running said hedge fund.

Oh the Mets!


How about pharmaceutical companies getting paid for not bringing their drug to market? Tricor is an interesting story, Teva got paid $180M by Abbot to not bring their generic to market. Abbot has kept Tricor from going generic for decades (+24 years?). There are many other Rx examples of companies getting paid to do nothing.