Former ABA teams, NBA and Spirits of St. Louis announce conditional settlement
NEW YORK – The current owners of the former American Basketball Association (ABA) teams – the Brooklyn Nets, the Denver Nuggets, the Indiana Pacers and the San Antonio Spurs; the National Basketball Association (NBA); and the Spirits of St. Louis Basketball Club, L.P. (Spirits), former owners of the ABA’s Spirits of St. Louis franchise, announced today that they have entered into a conditional agreement to settle a lawsuit currently pending in federal district court in Manhattan. The parties expect this settlement to become effective and to result in a dismissal of the lawsuit, subject to court approval.
The conditional settlement includes a compromise as to various matters that were the subject of the pending lawsuit, including with respect to certain categories of payments to which the Spirits claim they are entitled under a 1976 settlement agreement that paved the way for the merger of the ABA and NBA.
After the settlement becomes effective, and subject to certain conditions, the former ABA teams and the existing owners of the Spirits expect to become involved in a series of transactions in which the parties will enter into a partnership going forward that will continue to own the television and visual media revenue stream that the Spirits received as compensation for the loss of their ABA franchise in 1976. The contemplated transactions include an equity investment in the Spirits by the former ABA teams, the incurrence of new debt by the Spirits, and a distribution of a portion of the debt proceeds to the existing owners of the Spirits.
If the contemplated transactions occur, the former ABA teams will collectively own a controlling interest of the common equity in the Spirits, and the existing Spirits owners will own the remaining equity.
Rothschild is serving as financial advisor to the Nets, Nuggets, Pacers and Spurs; the Raine Group is serving as financial advisor to the NBA; and SGI Cambium Securities is serving as financial advisor to the Spirits.