The original ABA was founded in 1967, competing with the well-established National Basketball Association, until the ABA–NBA merger in 1976. According to one of the owners of the Indiana Pacers, its goal was to force a merger with the more established league. Potential investors were told that they could get an ABA team for half of what it cost to get an NBA expansion team at the time. When the merger occurred, ABA officials said their investment would more than double.
Four ABA teams were absorbed into the older league: the New York Nets, Denver Nuggets, Indiana Pacers, and San Antonio Spurs. Two other clubs, the Kentucky Colonels, and the Spirits of St. Louis, were disbanded upon the merger. A third, the Virginia Squires, had folded less than a month earlier, missing out on the opportunities that a merger might have provided.
The ABA distinguished itself from its older counterpart with a more wide-open, flashy style of offensive play, as well as differences in rules—a 30-second shot clock (as opposed to the NBA's 24-second clock, though the ABA did switch to the 24 second shot clock for the 1975–76 season) and use of a three-point field goal arc. Also, the ABA used a colorful red, white and blue ball, instead of the NBA's traditional orange ball. The ABA also had several "regional" franchises, such as the Virginia Squires and Carolina Cougars, that played "home" games in several cities.
The ABA also went after four of the best referees in the NBA: Earl Strom, John Vanak, Norm Drucker and Joe Gushue, getting them to "jump" leagues by offering them far more in money and benefits. In Earl Strom's memoir Calling the Shots, Strom conveys both the heady sense of being courted by a rival league with money to burn—and also the depression that set in the next year when he began refereeing in the ABA, with less prominent players performing in inadequate arenas, in front of very small crowds. Nevertheless, the emergence of the ABA boosted the salaries of referees just as it did the salaries of players.
The freewheeling style of the ABA eventually caught on with fans, but the lack of a national television contract and protracted financial losses would spell doom for the ABA as an independent circuit. In 1976, its last year of existence, the ABA pioneered the now-popular slam dunk contest at its all-star game in Denver.
One of the more significant long-term contributions of the ABA to professional basketball was to tap into markets in the southeast that had been collegiate basketball hotbeds (including North Carolina, Virginia, and Kentucky). The NBA was focused on the urban areas of the Northeast, Midwest and West Coast. At the time, it showed no interest in placing a team south of Washington, D.C.
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