The franchise was founded in early 1996 by a group of investors led by Philadelphia native Paul Lipschutz. The first coach was Mike Gatley. In their inaugural season, the team won the Northern Division title with a 22–7 record and reached the league finals, after defeating Connecticut Skyhawks in the quarterfinals and the Tampa Bay Windjammers in the semifinals; the Seagulls lost to the Florida Sharks in the USBL finals, 115–118. Former McDonald's All-American and Syracuse guard Michael Lloyd won the USBL Rookie of the Year award, and three players were named to all-league teams (Greg Grant to the All-USBL First Team and Mark Strickland and Ron Anderson to the Second Team).
