Miami Heat probed by county for cheating taxpayers

Following multiple stories from Riptide about the Miami Heat refusing to share profits from the American Airlines Arena with the taxpayers who subsidize the place, Miami-Dade Inspector General Christopher Mazzella has apparently decided that someone should try to verify how much the team is actually making. We've confirmed the top Dade watchdog is auditing the Heat.

According to public documents obtained by Riptide, meanwhile, Heat owner Micky Arison is doing everything he can to stonewall the IG.

Since the Heat's controversial deal was signed in 1997, the county has never shared the wealth as owner Arison had promised. In order to keep the team in Miami, then-county mayor Alex Penelas agreed to give away $38 million worth of prime waterfront public land. The team paid $240 million for the arena's construction, but the Heat was awarded an annual $6.4 million subsidy to operate the arena for the next 30 years — that's $192 million in taxpayer funds for the life of the deal. In return, a Heat subsidiary — Basketball Properties Ltd. — agreed to share 40 percent of all its profits over $14 million.

The arena has never hit that magic number, not even during last season's NBA Finals run as prized free agents LeBron James and Chris Bosh helped the Heat bank $60 million in revenue.

The IG's office began its inquiry June 22 with an email to the Miami-Dade Internal Services Department, which administers the arena contract. An IG investigator requested copies of the '97 agreement, annual financial reports, and any other documents submitted by Basketball Properties. A similar request followed on July 26.

On August 31, Mazzella met with the subsidiary's chief financial officer, Sam Schulman; two other arena executives; and Heat lobbyists Jorge Luis Lopez and Pablo Acosta. The team complained the information he requested was a "trade secret."

Mazzella stood firm. On October 4, he officially notified Basketball Properties that his office was conducting an audit. Two days later, Schulman sent a new letter to the county complaining that the Heat does not have a sweetheart deal and that the team has helped revitalize downtown. "We are very proud of the leadership role we have played in being the catalyst for the unprecedented growth of the downtown urban core," Schulman wrote.

Sources tell Riptide a full report from Mazzella is forthcoming. Mazzella himself declined to comment, as did Heat officials.

KEEP MIAMI NEW TIMES FREE... Since we started Miami New Times, it has been defined as the free, independent voice of Miami, and we'd like to keep it that way. With local media under siege, it's more important than ever for us to rally support behind funding our local journalism. You can help by participating in our "I Support" program, allowing us to keep offering readers access to our incisive coverage of local news, food and culture with no paywalls.
Francisco Alvarado was born in Nicaragua and grew up in Miami, giving him unique insight into the Magic City and all its dark corners. An investigative reporter with a knack for uncovering corruption, Alvarado made his bones as a staff writer at Miami New Times and remains in dogged pursuit of the next juicy story.