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 …


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  1. vonjd says:

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

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  2. cjc says:

    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.”

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    • Nick says:

      $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.

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      • cjc says:

        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).

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    • rationalrevolution says:

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      • cjc says:

        No, rent seeking has a particular technical meaning which this case doesn’t meet at all. If they had manipulated the government to force the NBA to sign this contract, then, yes, then their efforts would be rent seeking. But there’s no indication they did that: the NBA voluntarily signed a contract in which they did not correctly anticipate the future value of TV revenues.

        What they do with the rents they’re receiving from the NBA is their business. They can invest it wisely or stupidly (e.g., they gave a hunk to Bernie Madoff), but this flow of cash is an outcome of the contract voluntarily signed between private entities, without manipulation of the political environment. I would not call them particularly clever; they merely lucked out, like a property owner discovering oil underneath his land, and receiving royalties from Exxon when the latter extracts it.

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      • rationalrevolution says:

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      • Pshrnk says:

        What would their income in that time period have been if it equalled that of the average NBA franchise?

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    • econobiker says:

      Yes, quite likely the most ironic case of reverse mortgage ever…

      I would have loved to been a fly on the wall for what Mr. Raffray said when Ms. Calment turned 100, then 110, then 120.

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  3. Mike says:

    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.

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  4. rationalrevolution says:

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  5. Owinok says:

    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.

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  6. Alexei Sadeski says:

    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.

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  7. Mark says:

    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.

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  8. frankenduf says:

    bank bailouts

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