May 25 (Bloomberg) -- Chesapeake Energy Corp., whose top executive invested in the Oklahoma City Thunder, almost doubled its spending on the professional basketball team during the past four years buying tickets, luxury box seats and naming rights for the home arena.
Chesapeake directors are under pressure to investigate conflicts between Aubrey McClendon's duties as chief executive officer and his personal finances, which include a 19.2 percent stake in the Thunder. New York City pension funds, which own 1.9 million Chesapeake shares, complained this month about the company's spending on the National Basketball Association squad.
While the $8 million expenditure so far this year on the team is less than half of what Chesapeake spends drilling for oil and gas in an average day, it underscores how the company's board hasn't always erred on the side of caution while overseeing McClendon's potential conflicts of interest. On May 27, the Thunder will add to Chesapeake's bill when it enters a third round of playoff games against the San Antonio Spurs.
"I'm a basketball fan too and believe that everyone has the right to invest in their local team," New York City Comptroller John C. Liu, who oversees the pension fund investments, said in an e-mailed statement this week. "But as long-term Chesapeake shareowners, we have a real problem with a board that allows the use of the corporate treasury to support personal investments."
'Oversight Failures'
As Chesapeake traded at about half its year-ago price, Liu chided Chesapeake directors in a May 17 letter for "costly oversight failures," including the company's "multi-million dollar deals" with the sports team partly owned by McClendon.
Chesapeake's May 23 statement responding to Liu's criticism did not mention the Oklahoma City Thunder.
Chesapeake expects to benefit from the team's success on the court, Jim Gipson, a company spokesman, said yesterday in an e-mail.
"The success of any professional sports team significantly increases the value of an arena naming agreement," he said. "Our naming agreement and sponsorship are valuable investments."
Chesapeake's spending this year is up 72 percent from the $4.7 million it spent after joining four other corporate sponsors during the Thunder's inaugural 2008-2009 season, a Bloomberg review of federal filings show.
Playoff Tickets
The company also has committed to buy an undisclosed number of tickets for all playoff home games; the Thunder are making a second-consecutive appearance in the Western Conference Finals in a best-of-seven series with the San Antonio Spurs. Last year's playoff spending added $1.4 million, triple the year- earlier playoff spending of $400,000, according to filings.
"Our season tickets are used for our business partners, potential partners, customers and by our employees," Gipson said. "We do not resell tickets."
McClendon has been a fixture at Thunder home games during the playoffs, sitting a couple of rows back from courtside in Chesapeake Energy Arena. As television cameras followed the action up and down the court during the Thunder's May 21 elimination of the Los Angeles Lakers, McClendon was seen decked out in a blue t-shirt with the team's "Let's Go" logo pulled over his office attire.
Chesapeake employees are a big part of the scenery at every game, said Royce Young, an Oklahoma City-based NBA reporter for CBSSports.com who also writes Daily Thunder, a blog for ESPN.
Chesapeake Fans
"Chesapeake buys an ungodly amount of tickets to the games, and people go," Young said.
Dan Mahoney, a spokesman for the Oklahoma City Thunder, did not return e-mail and telephone messages.
In a 2011 filing, Chesapeake said McClendon's ownership was not "a determining factor" in the company's sponsorship of the team. Chesapeake's support of the Thunder and other local sports teams is part of its commitment to the community, it said in the filing.
"In addition, we make game tickets available to our employees as a way to thank them for their hard work and dedication," the company said.
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