Oklahoma City accepts $3.8 million offer from Hornets
Wednesday, October 4th 2006, 5:40 am
By: News On 6
OKLAHOMA CITY (AP) Oklahoma City accepted a $3.8 million settlement offer Tuesday to cover its expenses from the New Orleans Hornets' temporary relocation and its share of the team's revenues from a successful first season in the city.
The offer, approved unanimously by the mayor and the City Council, was included in an amendment to the team's temporary relocation agreement and also includes terms for the team's second season in Oklahoma City and an option for a third season considered to be a contingency plan for the team in case it cannot return to New Orleans as planned in 2007-08.
The total settlement includes $2.6 million to reimburse the city for expenses including temporary housing and office space for the team. The remaining $1.2 million includes the city's share of the team's estimated $40.2 million in revenue.
The city's share of the profits will be $589,000, while the Oklahoma Capital Investment Board will receive $251,000 and Oklahoma Professional Sports LLC, a group led by new Seattle SuperSonics owner Clay Bennett, will receive $414,000. The three groups combined to share a $10 million guarantee that would have been paid to the Hornets if the team didn't meet its revenue goals. With the Hornets making money, the city and its investment partners received a cut.
``I'm still shaking my head at our good fortune,'' Mayor Mick Cornett said. ``The team did so well and was supported so strongly that we're actually sharing in the profits. That would have been hard to imagine a year ago.''
The new agreement also arranges for improvements to be made to areas of the Ford Center including both teams' locker rooms, video boards and a players' lounge. Additional X-ray equipment and defibrillators are also among new additions planned for the Ford Center.
``Those are things that I guess every other NBA team would have demanded or may have been required ... but because of the circumstances of last year it wasn't required. And because it was considered a one-year deal, it wasn't deemed necessary,'' Cornett said.
``Now as we look at ourselves as supplying a permanent NBA status on this city, I think it's OK to go ahead and start making some of these capital investments.''
Cornett said the city would put away its share of the profits to be used on further arena improvements down the road. The Ford Center and the Cox Convention Center across the street are already getting $6.6 million in improvements as the city prepares to host the Big 12 basketball tournaments in March.
``We expect to have a permanent NBA team at some point, and there are going to be capital needs at the Ford Center,'' Cornett said. ``I believe it's a situation of when. When we transition to a permanent NBA city from a temporary NBA city, there will be capital needs at the Ford Center that we will need to address.''
After selling out half of their 36 games in Oklahoma City last season, the Hornets are set to play another 35 home games in the city this season. The remaining six, including the team's home opener, will be played in New Orleans.
Season ticket sales in Oklahoma City already have exceeded last year's total of about 11,500.
``Sharing revenue with our partners at the city is the only fitting way to celebrate the end of this historic season,'' Hornets owner George Shinn said in a statement released by the city. ``During a time of crisis, we found open arms in Oklahoma City, and the Hornets hope to show the wonderful fans our appreciation with an even more exciting and successful 2006-07 season.''
The settlement was a result of months of negotiations after the city rejected the Hornets' initial offer of $3.2 million. The two parties had differed on the team's local revenue and the threshold at which the team would have to share its profits. The Hornets included two preseason games and a January 18th game against Memphis that was moved to Oklahoma City from Baton Rouge, Louisiana, less than two weeks in advance but had a higher benchmark. The city excluded those games from its revenue calculations, resulting in a lower benchmark.
The amended agreement sets a $40 million benchmark for next season, which will be adjusted with the Hornets' expenses for gameday use of the Ford Center. If the Hornets exceed that total, they will share half of their profits with the city. However, the city and its partners will no longer fund the revenue guarantee.
The new agreement states that the Hornets could not relocate to another city other than New Orleans for 2007-08 ``unless otherwise directed by the NBA.''