Heat lease

Miami Heat backs off in email flap with Mayor Carlos Gimenez

 

A team lobbyist says the wording of a Micky Arison email touting the mayor’s support of an arena deal was “more final” that it should have been.

 
Miami Heat fans gather outside the AmericanAirlines Arena Friday, July 9, 2010, in Miami.
Miami Heat fans gather outside the AmericanAirlines Arena Friday, July 9, 2010, in Miami.
ALEXIA FODERE / MIAMI HERALD FILE

dhanks@MiamiHerald.com

The Miami Heat on Thursday sought to defuse an awkward stand-off with Miami-Dade Mayor Carlos Gimenez, caused by team owner Micky Arison’s announcement that the mayor had endorsed a new arena deal that Gimenez later said he doesn’t support.

“The words were more final than they should have been,’’ said Heat lobbyist Jorge Luis Lopez, who helped prepare the email Arison sent out Wednesday evening to season-ticket holders announcing a deal with Gimenez. “It failed to clarify that the negotiations were ongoing.”

Gimenez said Thursday he was still baffled at Arison’s sending out the email, which touted an extended lease that would have the Heat pay rent on the county-owned AmericanAirlines Arena but also increase Miami-Dade’s subsidy tab by about $121 million through 2040. “For some time, I relayed to them I was not comfortable with that amount,’’ Gimenez said during a round of interviews in his office Thursday.

A day after the puzzling he-said-he-said episode between the county’s top-ranking elected official and its richest resident, neither side fully clarifed how the mixed messages came to be. Gimenez’s aides have been briefing commissioners all week on the terms outlined in Arison’s email, with some commissioners saying they thought the deal was done and others understanding that the talks continue.

Whatever the chronology, the imbroglio helped reveal a rift between County Hall and the Heat over the long-sought deal to add 10 years to the arena’s lease, as well as skepticism among commissioners that Arison’s favored terms were fair to Miami-Dade.

“I find Mr. Arison’s [email] statement disturbing,” Lynda Bell, vice-chairwoman of the commission, said in a statement that called the proposed terms “onerous.” “The AAA operator cannot ask Miami Dade residents to commit to a future debt of $121 million when we are currently facing a budget deficit in our County.”

Rebeca Sosa, the commission chairwoman, said the $147 million in hotel-tax subsidies the Heat would receive during the 10-year extension were too high. “We have to think in terms of what is going to happen in the future in the county,” she said. “What are the numbers that have been promised in terms of debt?”

The proposed Heat deal swaps the current profit-sharing arrangement for fixed rent: The team would pay about $550,000 this year and a maximum of $1.5 million annually by the time the extended lease expires in 2040.

Despite record crowds and repeat championship runs, that profit-sharing agreement has netted the county a total of about $300,000 in the 14 years the Heat has played at the arena. A 2012 Inspector General report criticized the county’s oversight of the arrangement, but Heat executives insist the arena’s modernization needs have sapped away the profits Miami-Dade would have otherwise enjoyed during the LeBron James era.

With the higher subsidies costing $147 million and the new rent totaling $26 million, the proposed deal would cost the county $121 million more through 2040. That’s on top of the $103 million in subsidies Miami-Dade still must pay the arena through 2030 under the existing deal. The county would also lose its share of higher naming-rights revenue once the $2 million-a-year deal with American Airlines, struck in the 1990s, expires in 2020.

In his email Wednesday, Arison, the chairman of Carnival Corp., who has a reported net worth of nearly $6 billion, touted the “agreement with Miami-Dade County Mayor Carlos Gimenez” as a chance to “proudly formalize our commitment to remaining in the Magic City.” He also said the arrangement would let the team better manage its on-court spending, since “cost-certainty” is a “necessity in this age of punitive NBA luxury taxes.” The deal would let the Heat “maintain our commitment to all of you to put the best possible product on the floor.”

Commissioner Sally Heyman said she would keep in mind that Miami once lost a professional ice hockey team to Broward County as she considers whatever deal Gimenez presents to the board. “What’s it going to mean if we don’t have a guaranteed team here?” she asked.

With the Heat paying so little to Miami-Dade after 14 years, it’s harder to justify increasing subsidies for the future, said Commissioner Esteban “Steve” Bovo. “We haven’t received anything substantial from them,’’ he said. “If we were getting something, maybe it would be a different story.”

Gimenez aides briefed commissioners separately on the proposed deal. Bovo and others said they left those meetings with the impression that the Heat talks were still under way, while Heyman and Commissioner Juan C. Zapata said they thought the deal was done. In his email, Arison told fans to expect a commission vote at the May 6 meeting. But that schedule got a cold reception Thursday.

Commissioner Xavier Suarez met with Lopez and Lopez's lobbying partner, Pablo Acosta, Thursday morning, and told them the situation was too muddled for a quick decision.

“I told them if I were them, I wouldn't present this to the commission on May 6,” Suarez said. “When you have the mayor saying one thing and Micky Arison saying the opposite?”

Gimenez said he met with Lopez and Acosta Wednesday afternoon, and told them he would not support the proposed terms. About five hours later, an aide showed him Arison’s email announcing the mayor’s support. “I called Jorge,’’ Gimenez said of Lopez, whom he described as a friend and early political supporter. “I said: ‘What’s this all about?’ We didn’t speak very long, and he didn’t say much.”

Lopez said Wednesday the Heat had “no regrets” over Arison’s email, and said it was sent out to preempt “rumors and innuendo” about the pending agreement. On Spanish-language radio Thursday morning, Lopez characterized the misfire as “part of the broad process of these type of negotiations.”

“Everything is fine,” he said on WAQI-AM (710), known as Radio Mambí.

Getting details of the negotiations out is a good thing, Lopez insisted.

“To a certain extent, God knows what He does,” he said. “He has given us the opportunity to speak to more people.”

Read more Miami-Dade stories from the Miami Herald

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