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What Was the Most Profitable Contractual Loophole in History?


What was the biggest contractual loophole in history?

Steve Berman:

Ozzie and Daniel Silna owned a basketball team called the St. Louis Spirits, in the old American Basketball Association (ABA). You remember, they used to play with the red, white, and blue balls instead of the orange ones everyone else uses.

When the NBA and ABA merged in 1976, four teams were invited to be part of the NBA: the New York (now Brooklyn) Nets, Denver Nuggets, Indiana Pacers, and San Antonio Spurs. That left out two teams, the Spirits and the Kentucky Colonels. The Colonels' owners negotiated a $3 million buyout, and the Silnas accepted a $2.2 million payout, with a 2 percent share of TV revenues from the other four ABA teams.

The catch: The TV revenues were in perpetuity. As in forever.

When basketball wasn't on TV, nobody ever thought a 2 percent share of four teams would amount to much. Then in the '80s and '90s the NBA became white hot, and every year the Silnas would get tens of millions. By 2014, over $300 million had been paid.

How did this happen? From "Best sports deal ever? How the Silnas outsmarted the NBA," by Jon Wertheim in Sports Illustrated:

All first-year law students worth their highlighters know the danger of contracts without termination periods. The NBA's outside counsel—including a young lawyer, David Stern—saw this and tried to indemnify the league from disputes that might arise from the contract.

[The Silna's attorney Donald] Schupak countered with a masterstroke: He inserted an intentionally broad definition of broadcast revenues, a clause that could one day make the contract applicable to distribution channels unimaginable in 1976. "I was blunt during these discussions," Schupak wrote in a 2012 legal declaration. "Rather than narrow the definition of TV revenues, I insisted instead that we add a new sentence [to] emphasize that this was a broad definition that could not be evaded or made obsolete."

When League Pass and foreign broadcast rights entered the picture, the Silnas sued for their share, and the league finally had to deal with the issue once and for all.

The Silnas got $500 million, plus a continuing share of media revenue from a partnership with the Nets, Nuggets, and Spurs.

In the end, a team that was worth maybe $3 million tops netted over $1 billion to its owners, who are still being paid to do absolutely nothing.

This post originally appeared on Quora. Click here to view.

Banner images via Getty.

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Big Questions
Why Is Holly a Symbol of Christmas?
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Santa Claus. A big ol’ red-and-white stocking hung by the fire. Nativity scenes. Most classic Christmas imagery is pretty self-explanatory. Then there’s the holly, genus Ilex, which found its way onto holiday cards through a more circuitous route. 

Christmas is kind of the new kid on the block as far as holly symbolism is concerned. The hardy plant’s ability to stay vibrant through the winter made it a natural choice for pre-Christian winter festivals. The Roman feast of Saturnalia, celebrated at the darkest time of the year, celebrated the god of agriculture, creation, and time, and the transition into sunshine and spring. Roman citizens festooned their houses with garlands of evergreens and tied cheery holly clippings to the gifts they exchanged.

The Celtic peoples of ancient Gaul saw great magic in the holly’s bright "berries" (technically drupes) and shiny leaves. They wore holly wreaths and sprigs to many sacred rites and festivals and viewed it as a form of protection from evil spirits. 

Christianity’s spread through what is now Europe was slow and complicated. It was hardly a one-shot, all-or-nothing takeover; few people are eager to give up their way of life. Instead, missionaries in many areas had more luck blending their messages with existing local traditions and beliefs. Holly and decorated trees were used symbolically by new Christians, just as they’d been used in their pagan days.

Today, some people associate the holly bush not with the story of Jesus’s birth but with his death, comparing the plant’s prickly leaves to a crown of thorns and the berries to drops of blood. 

But most people just enjoy it because it’s cheerful, picturesque, and riotously alive at a time when the rest of the world seems to be still and asleep.

NOTE: Holly is as poisonous as it is pretty. Please keep it away from your kids and pets.

Have you got a Big Question you'd like us to answer? If so, let us know by emailing us at bigquestions@mentalfloss.com.

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What Are the 12 Days of Christmas?
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Everyone knows to expect a partridge in a pear tree from your true love on the first day of Christmas ... But when is the first day of Christmas?

You'd think that the 12 days of Christmas would lead up to the big day—that's how countdowns work, as any year-end list would illustrate—but in Western Christianity, "Christmas" actually begins on December 25th and ends on January 5th. According to liturgy, the 12 days signify the time in between the birth of Christ and the night before Epiphany, which is the day the Magi visited bearing gifts. This is also called "Twelfth Night." (Epiphany is marked in most Western Christian traditions as happening on January 6th, and in some countries, the 12 days begin on December 26th.)

As for the ubiquitous song, it is said to be French in origin and was first printed in England in 1780. Rumors spread that it was a coded guide for Catholics who had to study their faith in secret in 16th-century England when Catholicism was against the law. According to the Christian Resource Institute, the legend is that "The 'true love' mentioned in the song is not an earthly suitor, but refers to God Himself. The 'me' who receives the presents refers to every baptized person who is part of the Christian Faith. Each of the 'days' represents some aspect of the Christian Faith that was important for children to learn."

In debunking that story, Snopes excerpted a 1998 email that lists what each object in the song supposedly symbolizes:

2 Turtle Doves = the Old and New Testaments
3 French Hens = Faith, Hope and Charity, the Theological Virtues
4 Calling Birds = the Four Gospels and/or the Four Evangelists
5 Golden Rings = the first Five Books of the Old Testament, the "Pentateuch", which gives the history of man's fall from grace.
6 Geese A-laying = the six days of creation
7 Swans A-swimming = the seven gifts of the Holy Spirit, the seven sacraments
8 Maids A-milking = the eight beatitudes
9 Ladies Dancing = the nine Fruits of the Holy Spirit
10 Lords A-leaping = the ten commandments
11 Pipers Piping = the eleven faithful apostles
12 Drummers Drumming = the twelve points of doctrine in the Apostle's Creed

There is pretty much no historical evidence pointing to the song's secret history, although the arguments for the legend are compelling. In all likelihood, the song's "code" was invented retroactively.

Hidden meaning or not, one thing is definitely certain: You have "The Twelve Days of Christmas" stuck in your head right now.

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