The office in charge of negotiating lucrative marketing agreements for the city was hundreds of thousands of dollars in the red after its first year of operation, according to a Deloitte Touche audit report obtained by The New York Sun.

The New York City Marketing Development Corporation brought in about $713,000 last year but spent more than $1.4 million, the report says. Expenditures in fiscal 2004 by the office, which was the force behind making Snapple the official drink of New York City, exceeded revenues by about $692,000, “due to the slower than anticipated implementation of the revenue generating agreements,” the report says.

The marketing office is a local-development corporation organized last year under the state’s not-for-profit-corporation law. It is the city’s central office for sponsorship, licensing, and other commercial activities.

Just how much employees were paid or how the marketing corporation spent the $1.4 million is not detailed in the report. A spokeswoman for the marketing office said the figures were just a snapshot and didn’t include agreements such as the Snapple contract, which paid the city millions of dollars soon after the audit was concluded. The agency has been operating in the black since April, Kimberly Spell said.

“No other city in the country has a marketing office like this, generating millions of new dollars in revenue for New York City to use for essential services,” said the corporation’s chief marketing officer, Joe Perello. “New York City Marketing is not a taxpayer-funded agency and has been operating in the black since April, an accomplishment we are immensely proud of, considering we were incorporated just a little over a year ago.”

Even so, a spokesman for Comptroller William Thompson Jr. said the audit showed the agency wasn’t striking market deals fast enough. “This is a self-imposed hardship,” said the spokesman, Jeff Simmons. “The fact that the city’s effort to forge marketing agreements has been much slower than it should have been is the result of the administration’s faulty process.”

The agency was created in part to protect city trademarks and patents, such as NYPD and NYFD hats. Revenues and resources generated from its efforts were to be distributed among agencies and toward the city’s overall marketing efforts aimed at creating jobs and promoting tourism.

The Marketing Development Corp., however, has been in the crosshairs almost since its inception. It ended up in the middle of a court battle between Mayor Bloomberg and Mr. Thompson – potential opponents in November’s mayoral election – over the contract that made Snapple the official New York City drink. The comptroller said that the agency didn’t properly put the exclusive drinks contract out to bid and that Snapple got the contract even though it did not come up with the best deal for the city. Mr. Bloomberg, and a court, said the process was legal and above-board.