The Lawyer Behind the "Sports Deal of the Century"
Forty years ago lawyer Donald Schupak ushered in what's been called the "sports deal of the century." It's still paying off.
In August '76, Donald repped the owners of the now-defunct American Basketball Association team the Spirits of St. Louis. The ABA and NBA were merging, and the NBA only wanted to take four of the ABA's seven teams (Denver Nuggets, Indiana Pacers, NY Nets and San Antonio Spurs). Donald refused a buyout and created a deal with the NBA that's still generating money for the team's former owners today—on behalf of a team that hasn't existed in four decades.
Through prescience about the future value of media deals, Donald negotiated that owners Ozzie and Daniel Silnas would receive a lump-sum payout of around $2.2M and a one-seventh share of all four acquired ABA teams' NBA media rights—in perpetuity.
The deal has been reported to have generated more than $300M. Donald spoke this week at TedX Broadway.
"My partners and I felt unbelievably aggrieved to have been left out [of the ABA-NBA merger] after suffering the losses we did in supporting a fledgling league and a growing franchise and tried very hard to get into the league, and were excluded."
They figured that if they couldn't be full partners, they'd be partners to the future of media. "I saw the future of media as being fantastic," says Donald, "and did an analysis of what that might mean economically over the course of the next 20 years." He did a present value calculation of the income stream he foresaw and determined it was worth multiples of the buyout they were being offered.
When the team wasn't included in the combination, Donald sued to enjoin it. The court tended to agree, he says. As a result, the deal "for an extinct franchise, an extinct league," still lives, and they've been partners for the NBA media revenues for the last 40 years.
Donald doesn't often speak about his deal but took the opportunity in order to share his passion for improving inner-city public education, including his founding of Leadership and Public Service High School.
He joked that his education work was unlikely: his high school principal sent his parents a letter saying he was the single worst student the principal had in his entire educational career.
Donald authored a new educational model for inner-city students, based around small schools that put learning into context so teachers and students could be "inspired to learn and understand why they were doing it." He brought in Syracuse's Maxwell School of Citizenship and Public Affairs as a partner.
The high school has graduated 5,000 students, most college-bound. The model's been replicated by many, including charter schools, he says.
The common thread between the Spirits deal and his public service work is an ethos he sums up as the Four Cs: creativity, confidence, commitment and completion. Apply your creativity to your life, craft and public service, he says. The rewards are tremendous and the needs are even greater.
