Special Issue - The Lawsuit that Saved the Spurs

Te Lawsuit thatSavedtheSpurs

By Steve Peirce

Corpus Christi, Texas, 1953. B.J. “Red” McCombs, then only twenty-five years old, stood before a group of angry creditors, accompanied only by his friend, attorney Bob Sorrell, who had gotten him into this deal. The Corpus Christi Clippers minor league baseball team was on the verge of bankruptcy. The proposed solution was to make a young car salesman with virtually no means the new owner, with only the promise that he would turn the team around and get the creditors paid. “Why should we trust this kid?” one of the creditors asked. “What choice do you have?” responded Sorrell. “Do you know what the market is for used jock straps?” Figuring there was nothing to lose, the creditors agreed to let young

Red take over the team. With a lot of wheeling and dealing over the next couple of years, the team was able to pay all the creditors in full and turn a nice profit as well. McCombs was hooked on the sports business, and for more than thirty years thereafter, he would, off and on, own professional sports teams. From White Bucks to Converse Chucks

The second-biggest charting artist of the late ’50s (behind Elvis) was Pat Boone. Boone loved basketball, and he owned and played for a celebrity Hollywood basketball team. In 1967, the American Basketball Association was formed. Merger with the National Basketball Association was the goal from the beginning. The idea was that you could acquire an ABA franchise for a song, and then have an NBA team after the merger. Pat Boone had songs to

spare, and he became an owner and the president of one of the ABA’s inaugural teams, the Oakland Oaks. Boone went after the brightest young star of the day, Rick Barry. Barry had been the NCAA scoring champion at the University of Miami (’64-’65), the NBA Rookie of the Year (’65-’66) and the NBA scoring champion (’66-’67) for the San Francisco Warriors. The Oaks enticed Barry with a big salary, and they also hired Barry’s college coach and father-in-law, Bruce Hale, as the Oaks’ coach. The Warriors sued, and Barry was enjoined from playing for the ’67-’68 season, but the next year (’68-’69), Barry won the ABA scoring title, and the Oaks won the ABA championship.

Yes, Virginia, There is a Santa Claus

Despite the Oaks’ success on the court, their financial situation was dismal. When the bank threatened foreclosure on a $1.3 million loan to the Oaks, Earl Foreman, a Washington, DC lawyer, stepped in to buy the Oaks. Foreman moved the team to Washington, DC, then to Virginia, where the team would be re-named the Virginia Squires. Barry was to be featured on the

B.J. “Red” McCombs and Larry Macon at McCombs’ office

cover of Sports Illustrated in a Virginia Squires uniform, and Foreman was giddy about the free national publicity. But you can’t judge a magazine by looking at its cover. The article was entitled, “The Reluctant Virginian,” and it contained quotes by Barry unfavorable to the Commonwealth. Frustrated, Foreman traded Barry to the ABA’s New York Nets before the ’70-’71 season. The Squires had lost their first superstar.

In April 1970, NBA great Oscar Robertson and other players filed a class action lawsuit in federal court in New York to prohibit a merger between the ABA and the NBA on antitrust grounds (competition between the two leagues was good for player salaries). For several years, the Oscar Robertson suit would be an impediment to merger.

Charlie Scott was a Rucker Park legend, said to have “invented the crossover.” He was an All-American at University of North Carolina, and an Olympic gold medalist in 1968. Drafted by the Squires, Scott was ABA Rookie of the Year (’70-’71) and scoring champ (’71-’72), setting the ABA single season scoring record at 34.6 points per game. Near the end of that season, Scott jumped to the NBA, another star slipping through Foreman’s hands. But things weren’t so bad for Foreman and the Squires. They had acquired an even better Rucker Park legend, one Julius “Dr. J” Erving, an underclassman from the University of Massachusetts. Dr. J averaged 27.3 points per game as a Squires rookie in the ’71-’72 season.

Somewhere in Michigan, twentyyear-old George Gervin was adrift. He had played only briefly at Eastern Michigan, but was suspended from the team in March of 1972 for punching an opposing player. Then he dropped out of school and went to play for a minor league team, the Pontiac Chaparrals, for $500 per month. Former NBA great Johnny Kerr saw Gervin score fifty points in one of those games and told the Squires about the skinny kid (6’ 7”, 180 lbs.) with the soft shooting touch. Gervin was added to the Squires’ roster as a rookie in the middle of the season, on January 26, 1973. Playing alongside Dr. J, Gervin was nicknamed the “Iceman” by teammate Fatty Taylor for his coolness on the court.

The word around the league was that Foreman and the Squires were in

financial trouble. Although Dr. J averaged 31.9 points per game in the ’72-’73 season and became the face of the ABA, Foreman sold him to the Nets at the end of that season. But the Squires still had Gervin to start the ’73-’74 season. They had also picked up 6’11”, 240 lb. rookie center, Swen Nater, who had been Bill Walton’s back-up at UCLA.

Here Come the Spurs

Back in Texas, the Dallas Chaparrals had been established in 1967 as an inaugural ABA team. By the end of the ’72-’73 season, the Chaps’ good fortune was that they had a star guard from Stephen F. Austin State named James Silas. Their bad fortune was that nobody wanted to see Silas, or any of the other Chaps, play. In the Chaps’ final season, they beat the first place Carolina Cougars in Dallas 112-110, but paid attendance was only 134 folks. They’d had enough. The Chaps sent their play-byplay announcer and sometimes executive, Terry Stembridge, to find a buyer for the team. Stembridge had heard of Red McCombs, who had been responsible for several Houston Rockets’ games being played in San Antonio the year before. Stembridge (not looking desperate at all) followed McCombs to Duke University, where Red was visiting with his daughter. McCombs felt that the quickest and best way for a city to gain an identity was through pro sports. Plus, the city already had a place to play—the Hemisfair Convention Center Arena, which held about 10,000 people. So Red was in.

The deal to acquire the Chaps was unique. McCombs and his other investors would not buy the team, but would lease it for two years for $800,000 with an option to buy for another $800,000, and any losses over $400,000 were the responsibility of the former Chaps’ owners. McCombs was named president of the team, and he and his friend and fellow investor, Angelo Drossos (as secretary/treasurer), ran the franchise. Thus, the San Antonio Spurs were born, playing their first home game on October 10, 1973, and drawing a respectable 5,879 fans. Terry Stembridge became the Spurs’ play-by-play announcer, always closing out with the catch phrase “there will be another night.” And there always has been.

After the initial excitement wore off, the Spurs’ attendance numbers dipped. The Spurs offered to give the

team back to Dallas, but Dallas didn’t want it. Dallas waived the $800,000 option fee, so the Spurs got the team outright for half-price. With turning back no longer an option, the Spurs had to keep filling the seats. McCombs was able to reach an informal understanding with the local press that the Spurs would be covered in depth, but negative comments kept to a minimum in order to encourage fans to come out to the games. Spurs’ players were sent out to the community recreation centers to promote the team to the city’s youth. With the help of the Baseline Bums, a live band, two-dollar tickets, and an occasional ten-cent beer night, the Hemisfair Arena became known as the noisiest place in professional basketball. And by the way, when that red, white, and blue ball was tossed for the tipoff, the loudspeakers played Al Dean and the All-Stars’ “Cotton-Eyed Joe,” just to remind the opposing teams that they were in South Texas. Was there a better way to spend two dollars and a fistful of dimes?

Still, the Spurs knew that they needed to improve the roster if they were going to make a go of it. Drossos went to work on Earl Foreman. As the story goes, Drossos was having dinner and drinks with Foreman at Dionysus, a Greek restaurant in New York City. Drossos had found out that the Squires were in dire need of cash to meet league assessments and might be willing to sell Nater to the Spurs for $300,000. When Foreman returned from a trip to the bathroom, Drossos handed Foreman a $50,000 check as a down payment for Nater. Foreman’s response was, “No deal. I need $300,000 now.” Drossos asked Foreman if he would do the deal if he could get him $300,000 in fifteen minutes. Foreman agreed. Drossos called the bank and had the $300,000 in fifteen minutes. Nater became a Spur in November 1973, and would be named ABA Rookie of the Year at season’s end. I Did Not Want to Say “the Iceman Cometh” But the Iceman Cometh

The next step was to acquire a high scorer, and the Spurs set their sights on the Iceman, who was averaging around 25 points per game for the Squires. McCombs recalled, “He was so skinny that you could see right through him, but we could see his talent and we knew he was the real deal.”

Mike Storen, the ABA commissioner, was not happy about the dismantling of the Squires. Commissioners are most interested in maintaining the competitive balance in the league, and any more trades might mean that there would not be another night for the Squires. In an early January 1974 league meeting, Storen noticed McCombs and Foreman passing notes to each other. Figuring it was some kind of trade negotiation, Storen informed the two in no uncertain terms that there was a “freeze” on the Squires’ roster. (Well, we’ll just see about that.)

On a late Friday afternoon, on January 11, 1974, a twenty-nine-year-old Cox & Smith associate named Larry Macon was planning his weekend with his wife, Jane, when the phone rang. It was Angelo Drossos. There went the weekend. The conversation went something like this:

Drossos: Draw up a contract for the Spurs to get Gervin from the Squires.

Macon: Okay. For how much?

Drossos: I’m gonna get you a cashier’s check for $200,000 and a blank check. You negotiate however much it is over the $200,000 and pay the balance with the blank check. Get on a plane and meet Foreman tomorrow at the Braniff Club at the Dulles Airport.

Macon: Okay, but do you want to see the contract . . .

Drossos: No. Get it as low as you can, and don’t come back if the deal falls through. And by the way, we might have some trouble on this one.

And so, notwithstanding the freeze on the Iceman, young Larry spent the weekend with Earl Foreman negotiating the sale. With the aid of a cocktail napkin addendum, the contract was signed on January 13, 1974, for $225,000, which was delivered to Foreman via the cashier’s check and the formerly blank check. (Macon did a great negotiating job; Foreman had wanted $500,000 for Gervin.) There was one twist. Virginia was hosting the ABA All-Star Game, so the trade was to be kept a secret from everyone (including Gervin and the Commissioner) until after the game, whereupon Gervin would report to the Spurs.

The ABA All-Star Game was played on January 30. Ironically, the star of the game was the former Squire-turnedSpur, Nater, who scored 29 points and

pulled down 22 boards. By game time, rumors had spread about the Gervin trade. A Virginia reporter said that he had seen the Gervin contract, and another Virginia reporter said that Foreman needed $250,000, and “He got the money, but God knows where he got it.” Storen publicly announced that he would not approve of the deal. Foreman told Gervin that Gervin was not going anywhere. Gervin did not report to San Antonio. Gervin’s agent called the Spurs and said that Gervin didn’t know if he wanted to play for the Spurs. The Spurs dispatched a demand letter that Gervin could not play for anyone but the Spurs.

The Full Court Press

In a minor story, it was reported on January 31 that the ABA filed an antitrust suit in federal court in San Francisco against the NBA seeking over $300 million in actual damages. The suit alleged that, beginning in 1949, the NBA conspired to monopolize professional basketball, that the NBA restricted acquisition of players by the ABA, and that the NBA controlled television coverage.

On Friday, February 1, the Spurs filed suit against Foreman and the Squires in federal court in San Antonio, and the case was assigned to Judge Adrian Spears. The Spurs sued for breach of contract and sought a temporary restraining order to prohibit the Squires from interfering with Gervin’s playing for the Spurs. That same day, in a conference call, Commissioner Storen announced formally that the Gervin deal was not approved, and Storen followed with a telegram stating, “[T]he Virginia Squires retain title to the player.” Storen, as Commissioner, then intervened in the suit. The TRO hearing would be scheduled for February 6. Judge Spears was quoted in the February 5 San Antonio Light as saying that all he knew about the case was what he had “read in the papers.” And there would be plenty to read in the papers.

Gervin on Ice

In the meantime, the Spurs convinced the Iceman that San Antonio would be the best place for him. So the Spurs arranged to have Gervin secretly flown to San Antonio, where he was picked up at the airport by Macon. Unbeknownst to the Squires and the Commissioner, Gervin was hidden in a San Antonio hotel under a false name.

Gervin missed the Squires’ February 5 game in Utah. The papers speculated that Gervin might have grabbed a flight to New York with the intention of jumping to the NBA. Some well-placed misinformation, that.

On Wednesday, February 6, the TRO hearing was held. J. Burleson “Burley” Smith and Larry Macon represented the Spurs. Fred Clark of Nicholas & Barrera represented the Squires. George Spencer, Sr. represented the Commissioner. Judge Spears granted the TRO, remarking, “I hate to see a man handled like can goods” and, “unfortunately, the one most directly concerned, Mr. Gervin, has not even been made a party to this suit, and it must be disconcerting to him.” McCombs recalled that Judge Spears said that “there is something unconstitutional about prohibiting a man from making a living.” So Gervin got to play for the Spurs, at least for the next ten days. Storen was quoted in the papers as saying, “This is just the first skirmish in a many-battled campaign.” McCombs recalled that Storen told him after the hearing, “No court will uphold this. You just lost your money.”

Meanwhile, Foreman had signed an agreement with some Norfolk businessmen to buy the Squires, but that deal was dependent on Gervin’s staying with the Squires. The Squires’ buyers intended to present the tentative contract for approval to the ABA board of trustees. The papers reported on February 6 that Gervin was in San Antonio to negotiate a Spurs’ contract pending the outcome of the suit. Actually,

the Money Went North

On February 10, San Antonio Ex press sportswriter Dan Cook reported that the “225 Thou Went South,” sur mising that Foreman had already spent the Gervin purchase price. On Febru-

ary 10, Denver played the Spurs under protest, the Denver coach alleging that the Commissioner told him that the Spurs must forfeit all the games that Gervin plays in. This sparked debate about whether the Commissioner had violated the TRO.

“So Boo Me” (The Commissioner Comes to Town)

An evidentiary hearing on the preliminary and permanent injunctions was scheduled for February 15. Storen arrived in San Antonio for the hearing, with McCombs picking him up at the airport. Storen attended the Spurs game on February 14, and 9,000 Spurs fans booed him in unison. To his credit, Storen remarked, “I’d rather be

booed by 9,000 than 900.” Spurs Coach Tom Nissalke, Drossos, and Storen all testified. McCombs recalls of the hearing, “I didn’t think we had a leg to stand on. We knew going into the deal that the Commissioner had not approved, but we went ahead anyway because we wanted Gervin so bad.” (It was later reported that Drossos agreed to a settlement that would have provided for a return of the money, a return of Gervin, and the Spurs getting forward George Carter from the Squires, but the Squires’ new owners vetoed it.) Strangely enough, Foreman did not attend the hearing, and the papers reported that even his lawyers did not know of his whereabouts.

On February 15, Judge Spears issued a preliminary injunction that Gervin could stay with the Spurs temporarily, with the promise that he would make a decision on the permanent injunction request within ten days. Storen remarked after the preliminary injunction ruling, “It’s a shame that a professional basketball league is being run by a judge in San

Antonio.” Drossos, being magnanimous in his temporary victory, said that Storen “has nothing but the best wishes for the continued success of the San Antonio franchise” and that he and Storen “are still friends” and that Storen is “the best commissioner in pro sports, period.”

Foreman’s money problems weren’t getting any better. On February 21, his lawyers, Nicholas & Barrera, filed suit against him in state court for failure to pay their $5,000 retainer. Then the Phoenix Suns sued Foreman for failure to pay $10,000 owed them for an exhibition game.

Although not a party to the suit, the heretofore quiet young Iceman made it known where he wanted to be. In the February 28 San Antonio Light, Gervin blasted Foreman, stating that he had been treated “like a horse for sale.” In the same article, Gervin stated, “The Spurs have good, solid ownership and they run a ball club like it should be run.” But then Gervin gave the Spurs a scare when he unexpectedly missed a March 5 practice to go to Virginia. As it turned out, he just wanted to get his car and terminate the lease on his apartment. Whew!

On Monday, March 4, the ABA board of trustees held a marathon meeting that went through early Tuesday morning. The papers reported that it was rumored that the Gervin deal was discussed, but no one would own up to it.

The Home Court Advantage

On March 6, Judge Spears issued his decision granting the permanent injunction. To begin with, Judge Spears noted that the equities were with the Spurs because the Squires had not tendered back the $225,000 consideration. The ABA by-laws provided that the Commissioner “shall hear and finally decide any dispute” to which a player is a party, and that “all disputes between Member Clubs . . . shall be settled by the Commissioner.” Judge Spears found that there was no dispute between the Spurs and the Squires “until the Commissioner injected himself into the matter by persuading Foreman to refuse to deliver the player to the Spurs.” (The Squires had alleged that the Spurs had breached the contract, but Foreman never showed up to testify about it.)

The by-laws further empowered the Commissioner to cancel or termi-

The Manu Ginobili bobble head collectible McCombs keeps on his office desk

nate any contract, after notice and a hearing. Judge Spears found that only informal discussions were held, for the most part, on the run, between hotels and hallways, and that could not be considered a full and fair hearing. Finally, Judge Spears noted that the by-laws allowed that the Commissioner could reassign a player to another member club, provided that such a decision was approved and ratified by a vote of at least three-fourths of the member clubs, leaving open the possibility that the Commissioner could still try to undo the Gervin deal. (This perhaps had already been attempted in the March 4 marathon meeting, but in any event, it was not attempted again.) Macon recalled, “There were only ten teams in the league, and the subject team got to vote, too. Drossos had at least two other teams that would always vote with him, so it would have been impossible for Storen to get the three-fourths vote he needed.” No appeal was taken from the order. McCombs recalled that, after the ruling, Storen, figuring he’d been home-towned, told him, “I’ll never be in a courthouse against you in San Antonio again.”

There Goes Ten-Cent Beer Night

The Oscar Robertson suit continued to plod along. The ABA antitrust suit against the NBA in San Francisco was stayed pending the Robertson suit, but it was still out there. The ABA played its last season (’75-’76), and the merger with the NBA was finalized in the summer of 1976. The merger settlement was approved by the federal court in the Robertson suit (because it was a class action). McCombs recalled of the merger talks that “the NBA hated us, because we had taken their players and their referees. But the key to the merger was that NBA Commissioner Larry O’Brien convinced them that there was real liability in the San Francisco antitrust suit, maybe over $20 million.” The NBA only took four ABA teams: the New York Nets, the Indiana Pacers, the Denver Nuggets, and, of course, the Spurs. One of the supposed losers was the ABA’s Spirits of St. Louis, which was denied admission to the NBA. As a throw-in, the Spirits were given a percentage interest in television revenues from each of the four former ABA teams in perpetuity. Reportedly, the Spirits have received over $300 mil-

lion in payments over the years and claim to be owed much more, with the payments never to stop as long as the NBA exists. This is the subject of the ESPN documentary “Free Spirits,” and it is said to be the greatest deal in the history of sports. In November 2011, the 1970 Robertson suit was re-opened to litigate the Spirits’ claims for the television revenues. In February 2014, the Spirits settled the television revenue dispute with the NBA and its former ABA teams.

The Sine Qua Non of the Spurs

Drossos once said “George Gervin was to the Spurs as Babe Ruth was to the Yankees.” The Iceman won four scoring titles and, along with former Squires Rick Barry and Julius Erving, was inducted into the Basketball Hall of Fame. Some say that, without Gervin, the Spurs might not have made it into the NBA. It’s not too hard to envision an alternate history where Judge Spears rules against the Spurs, the Squires keep Gervin, new Squires ownership takes over, the Squires get into the NBA, and the Spurs are left out, but get a deal like the Spirits got. I don’t know how the Spurs’ investors would feel about that, but as a Spurs’ fan, I’m sure glad it didn’t happen.

Steve A. Peirce practices business bankruptcy law at Norton Rose Fulbright US LLP. He can be reached at steve.peirce@ nortonrosefulbright.com or 210-270-7179. He profusely thanks Red McCombs and Larry Macon for talking Spurs history with him for this article. Larry Brown and Doug Moe were also Virginia Squires, and both became Spurs coaches. In the first NBA season after the merger, ten of the twenty-four all-stars were former ABA players. The Spurs hold an NBA record 15 straight 50win seasons. As of March 2, 2015, the Spurs had the highest total winning percentage (.614) of any franchise in NBA history. Angelo Drossos, also without whom we might not have the Spurs, passed away on January 9, 1997. In the movie Semi-Pro, the Will Ferrell character (Jackie Moon) is a singer-turned-ABA-playercoach-owner, and Terry Stembridge’s catchphrase “there will be another night” is used in the movie. To the author’s knowledge, no ABA player was ever traded for a washing machine.