New Orleans Hornets to play in OKC

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Oklahoma City Council members will vote this morning on the deal, which would give the team an option to renew for another season.

Incentives include a $10 million revenue-shortfall cushion to be covered by the city, the Oklahoma Capital Investment Board and a private partnership, Mayor Mick Cornett and City Manager Jim Couch said.

Cornett said the three groups are mindful of Hurricane Katrina’s devastation of New Orleans, the reason the team can’t play in its home city.

“All emotions are tempered by the manner in which this whole thing unfolded,” Cornett said. “At the same time, I think the message to our citizens is they need to support this team with everything they’ve got.”

The proposed lease would allow the city to profit if the franchise’s revenues exceed $42.5 million. That amount could be less if any games are played in Louisiana.

Cornett and Couch said the Hornets likely will play 36 of their 41 home games at the Ford Center, with the remaining five to be played in Louisiana.

The city, the state and a group of investors, Oklahoma Professional Sports LLC, led by local businessman Clayton I. Bennett, will split a potential $10 million risk, which is triggered if the franchise falls below its $40 million target.

Besides Bennett, who is president of Dorchester Capital, Oklahoma Professional Sports LLC members also are Chesapeake Energy Corp’s co-founders, Chief Executive Officer Aubrey K. McClendon and Chief Operating Officer and President Tom L. Ward; and G. Jeffrey Records Jr., chairman & CEO, MidFirst Bank.

Bennett, who led an unsuccessful 1997 effort to land a National Hockey League expansion team for Oklahoma City, said the NBA’s decision to try out the Ford Center recognizes 15 years of investment by community leaders and residents.

“It’s been a dream for a long, long time,” Bennett said. “I’ve long believed we were on the track of becoming a major-league city. I believe we’re there.”

The team, Bennett said, will come to mean “something very important” to the community and symbolize Oklahoma City’s progress in achieving greatness.

The city will spend $2 million on improvements to the Ford Center, housing for Hornets staff and game day expenses such as security and ushers. Those expenses will be reimbursed if the team exceeds its target by a sufficient amount.

“The tangible dollars to me work,” Cornett said. “There is so much financial impact from an NBA team through tourism and parking, I think it could easily offset any financial exposure we have.”

There are also intangible benefits. Cornett said Oklahoma City will get worldwide exposure because of the NBA.

“It’s that association of equality with New York, Los Angeles, (Salt Lake City,) Utah - these are cities that people aspire to associate with,” Cornett said.

“The NBA itself has such a worldwide impact. When the Rockets are playing your team, (because of Chinese superstar Yao Ming) you almost have a Super Bowl-like audience. Your city is being shown to this audience that is not going to be open to your city under normal circumstances.”

Some of the details still aren’t worked out. Cornett said he has tried to be sensitive to the city of New Orleans and its residents while looking out for his city’s best interest.

“We tried to conduct ourselves in a manner where the NBA would walk away from this experience saying, ‘Man we liked working with those guys.’”

The deal is unique because it is for only one year. Cornett said the city’s financial risk is less than most NBA cities.

“I would imagine that any other NBA city would love to have this deal,” Cornett said. “But we are only having them for one season, and they’re gone.”

However, the deal does include a one-year renewal clause at the Hornets’ option that would guarantee the team the same deal for the 2006-2007 season.

One sensitive issue is what the team will be called.

Cornett said Oklahoma City won’t be noted in the team’s name for any games played in Louisiana. But when the Hornets play in Oklahoma City, they will officially be known as the N.O./Oklahoma City Hornets.

The NBA is expected to announce ticket prices and address other issues, including team uniforms, today.

“I wanted to make sure that we had some affordable tickets so that kids in Oklahoma City could figure out how to get to a game,” Cornett said. “The NBA is leaning in that direction. That’s going to happen.”

State officials have been involved in two areas of the agreement: repealing the sales tax on ticket sales and finding a mechanism to use state money to help share the city of Oklahoma City’s risk if revenues from the Hornets fall short of expectations.

Repealing the sales tax on tickets to Hornets games will require legislative approval, said state Treasurer Scott Meacham, who also serves as secretary of revenue and finance on Gov. Brad Henry’s Cabinet.

Such legislative action wouldn’t require lawmakers to come back in special session, said Meacham, who has been involved in talks with the city about the NBA franchise.

Legislators could pass a bill in next year’s session and make it retroactive to the start of the NBA season, Meacham said. He expected the measure to pass.

Gov. Brad Henry, House Speaker Todd Hiett, R-Kellyville, and Senate President Pro Tempore Mike Morgan, D-Stillwater, “have all been involved with and are all supportive” of the measure, Meacham said.

“This is one of those deals we all are in agreement on and working together on,” Meacham said.

Meacham said the agreement with the Hornets poses a low risk to the city and to the state.

All the Hornets’ employees - including the players - would have to pay state income tax, Meacham said.

“You gain obviously all of that payroll,” he said. “So there’s some pretty big salaries that we would earn state income tax on.”