Before the era of the Three Kings has a chance to end, the Miami Heat has begun talks to rework a deal for public subsidies at AmericanAirlines Arena in exchange for a longer lease and a significant upgrade of the 13-year-old facility.
Citing mounting costs for keeping the 19,600-seat arena competitive for concerts and to provide basketball fans more amenities, Heat executives say they will need more help from Miami-Dade to sustain the arenas current top-notch quality into the middle of the century. They warn that without the start of a new wave of upgrades, the facility faces the fate of the teams original home at Miami Arena, which was demolished five years ago.
We are saying to our partners: Lets extend this run for as long as we can, team lobbyist and lawyer Jorge Luis Lopez said in an interview Friday in a team conference room at the arena. We need you in good faith to contribute your share.
Miami-Dade pays the arena $6.4 million a year under a deal that runs through 2029. In exchange for building and financing the $360 million arena on county land, owner Micky Arison negotiated an agreement that includes the yearly subsidy and a profit-sharing formula that has yet to deliver any money for Miami-Dade.
Heat executives say the urgency to extend a deal with 15 years remaining is driven by the age of the county-owned arena, and not the current championship run the third since LeBron James joined the team in 2010. County officials questioned the timing of the Heats request for an extension, saying they would prefer to wait, people on both sides said.
The team has another reason to start talks now, given the current state of Heat mania. James will have his first chance to leave Miami at the end of the next season, when his current contract expires. Private talks are underway at County Hall, with the Heat pushing for a quick decision in order to give them more leeway to plan the next 20 to 30 years in downtown Miami.
Were amenable to talking to our partners on anything that makes sense, said Ed Marquez, the Miami-Dade deputy mayor heading up discussions with the team. The Heat is a valuable component of the community. If they want to talk about extending, we will talk to them about extending.
Last fall, Heat executives formally exercised their right to negotiate a 10-year extension with the county. While the team technically rents space from the arena, both business entities are part of the corporate umbrella run by owner Arison, the CEO of Carnival.
Public dollars are sure to be a sticking point in the talks. Lopez said to fund the Heats planned upgrades, Miami-Dade may need to increase its current subsidy to as much as $17 million a year in the extended term that would begin in 2029.
As for the short-term, Heat executives say they arent trying to alter the current 1997 agreement. Were not looking to renegotiate, said Sammy Schulman, chief financial officer for the Heat. Were looking to extend.
At the same time, though, team executives are pointing out that Miami-Dades current subsidy payments could jump by $2 million in 2019 if American Airlines drops its sponsorship of the arena. The county essentially receives the naming-rights dollars, and Heat executives said theyre willing to consider reworking the current deal if Miami-Dade officials want to eliminate the risk of lost sponsorship money when the American deal expires.