The Greatest Deal in Sports is referenced in Sidebar 4C in Chapter 4 (see page 96). Darren Rovell, CNBC sports business reporter, discussed payments made to Silna brothers Ozzie and Dan in his June 28, 2007 blog post. That deal came to an end in 2014 when the brothers sold most of their equity to the NBA in 2014 for reportedly $500MM. Determine what combinations of discount rates and growth rates would get to $500MM in financial value for the Silnas shares (assume those shares account for 1/7 of four NBA team's television revenue as per the Rovell blog post) with the NBAs new TV dealLinks to an external site., which begins in 20162017 and pays the NBA $2.67 billion per year through the 20242025 season. The NBAs television deal running from the 2008-2009 season through the 2015-2016 season paid the family $18.9 million annually. Choose the valuation date to be one year before the new deal begins (e.g., 2015).

Question: Use the above information and the following parameters to calculate the NPV of the contract. The valuation date is January 1, 2009. Assume that the Silnas received their first payment on January 1, 2009, and that the payments will continue annually thereafter. Assume that the Silnas are taxed at 35% for their income on this deal. Assume that their payments from this NBA deal will grow at 2% per year in perpetuity after the final year of this contract. Assume a discount rate of 8%. Create a table that shows the results you found and gives a brief description of your steps, assumptions, and so forth. What would the value be if the discount rate were 10% and the CF growth rate were 4%?

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