State agency plays backup for Hornets
by Brian Brus
The Journal Record
October 28, 2005
When private investors and public officials promised to support the Hornets basketball team if game revenues failed to reach a certain level, the state deferred its portion of responsibility to an agency designed for such tasks.
The Oklahoma Capital Investment Board once again is a multimillion-dollar player in an economic development project, this time helping cover a potential $3.3 million spread on Oklahoma City's first National Basketball Association season.
"This is a unique opportunity for Oklahoma," Gov. Brad Henry said. "I am very pleased OCIB was able to help with the state's guaranteed portion of this project."
The board was created by the Legislature in 1991 to promote capital venture investment in the state. It places investments with major venture capital funds that have strong potential to create jobs or otherwise boost Oklahoma's economy.
The board invests in private venture capital partnerships rather than investing directly in individual companies, on the basis that risk capital should be provided by qualified, professional investors instead of falling on the public's shoulders. Those partnerships are supported with funds that have investment strategies consistent with OCIB's objectives.
The board was most recently called to step in on behalf of the state at the request of state Treasurer Scott Meacham. As an inducement for relocating the New Orleans Hornets, Oklahoma City government, private investors and OCIB each agreed to share a third of the $10 million commitment that will be called if revenues for the season fall short of $40 million. The NBA team's regular season begins Tuesday at the Ford Center.
Board President Devon Sauzek said the OCIB called a special meeting Sept. 16 to decide whether the Hornets were an appropriate risk: "Board members looked at the benefits to the state and the structure of the project, and determined it was worthy of support," he said. Mayor Mick Cornett announced the deal a week later.
Since inception, the OCIB has supported investment in 16 venture capital funds, which in turn have attracted investment of nearly $100 million to Oklahoma projects. The board has supported more than $38 million in development loans to 1,300 small Oklahoma companies.
Other projects in which the board has been involved include investing in Prolog Ventures, a biotech investor that helped establish Inoveon in Oklahoma City, and the Emergent Technologies Inc. venture firm which spun off Pure Protein Inc. and Heparinex with development at the University of Oklahoma.
Brian Brus reports on metro area government, finance, agriculture and other issues. You may reach him by phone at 278-2837 or by e-mail, brian.brus@journalrecord.com.