As the ABA entered its ninth season the league was in big trouble, as nearly all teams were struggling financially. Even the NBA was not doing well at the time, though it was regarded as the bigger and better league as both the Denver Nuggets and New York Nets were looking to leave the ABA and join the NBA.

After five seasons in Memphis, with three different nicknames, fans were unable to reach a goal of 4,000 tickets sold leaving the team to be sold to a group of investors in Baltimore. However, there was trouble from the start as ABA Commissioner Dave DeBusschere ruled the team was undercapitalized and began negotiations to move the team back to Memphis.

However, the investors from Memphis dropped their bid, as Baltimore made a down payment of $250,000. The new team was announced as the Baltimore Hustlers.

However, league officials were unhappy and disapproved and encouraged team owners to choose another nickname. The club owners obliged and the Baltimore Claws were born.

With ticket sales struggling, the Claws looked to bring a big name to Baltimore, and made a deal with the defending champion Kentucky Colonels to land All-Star Dan Issel for Tom Owens and $500,000. However, the Claws were unable to come up with the cash to send to Kentucky to complete the deal.

The league would intervene and the Claws would send Issel to the Denver Nuggets for Dave Roebisch to obtain the $500,000 to complete the first deal. The inability to get the $500,000 for the trade was a signal that there was big trouble in Baltimore.

As the preseason began the Claws coached by Joe Mulaney were barely functioning as their uniforms were the same Sounds red and white uniforms with a green patch saying Claws sewn on them. Even worse banks began to foreclose on the team, leading Commissioner DeBusschere to give the team an ultimatum to deposit $500,000 with the league as a "performance bond" within four days to cover expenses or be shut down.

Less than a week before the start of the season, the Claws knowing they could not raise the money to reach the league's goals decided to fold, leaving the ABA with nine teams. All the Claws players would go into a dispersal draft as several players were allowed to take equipment and furniture from the team office in lieu of payment.

Meanwhile, the Claws offices at the Baltimore Civic Center were locked as the team did not pay any of its bills.