Hornets and OKC fight over money

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This is the Daily Oklahoman story...

By Berry Tramel
The Oklahoman

City contends team owes $3 million, while it claims to owe only $700,000.

Hornets President Paul Mott broached the possibility of legal action against Oklahoma City over the negotiations of the NBA franchise's profits in its first season playing at the Ford Center.

However, Michael Thompson, the Hornets' director of corporate communication, said the reference to "resorting to the courts" means an agreed-upon arbitration process involving certified public accountants, not a civil suit.

The Hornets and the city disagree over how much money is owed by the Hornets over the temporary relocation agreement signed last autumn. The Hornets say the city is due about $700,000 profit; the city believes it is owed about $3 million.

In a May 19 letter to City Manager Jim Couch, obtained through an open records request, Mott wrote that he was aware of the discrepancy in the revenues but urged the city to accept the Hornets' proposal.

"Under this approach," Mott wrote, "the City would be spared the effort of documenting its reimbursable expenses, all parties would be spared the time and expense of challenging the other side's numbers and under a worst case basis, resorting to the courts to resolve any differences in contract interpretation."

Mott did not return phone calls to The Oklahoman. Some city officials expressed disappointment over the tone of the letter. However, Oklahoma City mayor Mick Cornett said he took it as just part of negotiations.

"I think it's the natural evolution of a deal," Cornett said. "It doesn't necessarily help that it's been made public."

The Hornets submitted their numbers this week. The city has 30 days to review the proposal.

The Hornets and the city agree over the total revenues, which were $40.21 million. They do disagree over how many games should be factored into the equation. The Hornets say 38, including two exhibition games and a Jan. 18 against Memphis, which was rescheduled from Baton Rouge, La., five days before tipoff. Oklahoma City says 35, which was the number of scheduled regular-season games.

The relocation agreement has ambiguity about how to count the number of games. The Hornets ended up playing regular-season home games at four venues: 36 at the Ford Center, three in the New Orleans Arena and one each at Baton Rouge and Norman.

"The season got so crazy, playing in different venues," Cornett said.

Thompson said the Hornets' temporary relocation agreement with the city includes a provision to arbitrate disputed items: a three- person panel of accountants. One would be designated by the city, one designated by the Hornets and one designated by the first two accountants.

"None of us wants to go that route," Thompson said. "It is expensive and time-consuming. There's a right way to do this, and then there's a long way.

"It's not a threat, just a reminder. We've been working on things all year. We've had a good relationship with the city, the state and the partners. Everybody's making money."

Cornett said the city can't blindly accept the Hornets' numbers.

"We deal with public dollars," Cornett said. "In this case, we're dealing with state dollars as well and private dollars."

The relocation agreement included guarantees from the city, the state and Oklahoma Professional Sports, LLC, a group of Oklahoma City businessmen seeking to bring a major-league franchise to the Ford Center. Those three entities will share the surplus profit.

"We've got some moral obligation to make sure the numbers are right," Cornett said. "And technically, if we accepted less than we were owed, we'd be legally liable to the state and our private partners."

Cornett said he did not believe the disagreement was an end to the Hornets/OKC honeymoon..

In Mott's letter, he extolled the success of the season and the spotlight it brought to Oklahoma City.

Cornett pointed out that the squabble is over profits, not deficits.

"The deal went unbelievably well for both sides," Cornett said. "Think of the animosity if the deal had not gone well. I assume there won't be any hard feelings. But it has to play itself out."