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The LeBron-ified Miami Heat are finally playing like juggernauts. And the team is profiting like one, too, from ticket and paraphernalia sales. In fact, the Micky Arison-owned wunderkinds expect to make more money this season than ever before.
Do you think that means they might actually pay rent on their shiny, county-owned, waterfront stadium?
Don't count on it.
In the ten-plus seasons the Heat has played in American Airlines Arena, a $213 million-venue sitting on $38 million of county land, the team hasn't shelled out a penny for its use. In fact, the county has paid $64 million in operating subsidies.
Back in 1997, owners of the Heat — which then played in the eight-year-old, publicly financed Miami Arena — threatened to move to Broward County unless they were given the bayside plot of land originally slated to become a public park. The Miami-Dade mayor at the time was Alex Penelas, who has a devastatingly pretty face and the business acumen of a Labrador retriever. After the county and team reached an agreement, Raul Masvidal, the consultant hired to represent Penelas in negotiations with billionaire Carnival Cruise owner Arison, told the New York Times: "We expect the county not only to come out even — we expect it to make money."
These days, Penelas has been ousted from politics, Masvidal faces felony grand theft charges for misuse of public funds, and taxpayers are a decade into a 30-year contract that may earn them no compensation for prized public land.
The agreement called for Basketball Properties, Ltd., the Miami Heat entity managing the stadium, to give 40 percent of annual arena profits above $14 million to the county. Those profits come from luxury box and concession sales, concert rentals, and naming rights ($2.1 million annually from American Airlines). Additionally, the county agreed to pay $6.4 million a year to maintain and operate the facility.
Although the arena's revenue nearly doubled from $25.6 million in 2001, after the Heat's first season there, to $45.4 million last year, the team has never declared more than $6 million in arena profit during a season.
Our access to the team was revoked in 1996 when a porcine caricature of Arison, along with the headline "Micky Arison is a Corporate Pig," graced our cover. So we'll suggest the oinker knows how to finesse the system. For instance, in 2009 and 2010, respectively, Basketball Properties advanced $7.9 and $6.4 million to the Miami Heat — transactions counted as financial losses on ledgers submitted to the county. In such a manner, it would seem the team can artificially deflate profits. The Heat Group didn't respond to our request for comment.
This season, the Heat expects to make a bank-bursting $59 million in arena revenue. But don't expect a rent check. "It was never a good deal," says former Miami-Dade Commissioner Katy Sorenson, who opposed the new arena in 1996. "There are certain politicians who just get stars in their eyes and don't really think about what the real cost is going to be."