No matter how many different ways you run the numbers, the proposed new agreement between the Miami Heat and Miami-Dade County to use the bayside arena for professional basketball games seems to offer the public a better deal.
The new arrangement negotiated by Mayor Carlos Gimenez slated for a vote by the Board of Commissioners on Tuesday exchanges what has been an unproductive profit-sharing contract for a guaranteed $1 million annual payment. At the present time, the county provides a $6.4 million annual subsidy and essentially gets nothing back (except for a onetime payout of $257,134.12, a fraction of 1 percent of the arena's operating windfall between 2011 and 2013).
In addition, the arena’s 1997 naming-rights deal with American Airlines resets in 2020, which could mean millions more to Miami-Dade, since the current $2.1 million annual payment is one of the lowest in the NBA.
There is, of course, something for the Heat in this new offer: The annual subsidy goes from $6.4 million to $8.5 million for the years from from 2031 to 2035, whereas there is no foreseen subsidy at present in this five-year period.
Given all this, raising questions about a deal that virtually guarantees that the Miami Heat will remain in the current venue for at least five additional years beyond the current contract instead of asking for a brand new home — as is too often the case with professional sports teams — would be tantamount to looking a gift horse in the mouth.
But prudent management of the public’s finances requires commissioners to take their time in holding this deal up to the light and looking at it from every possible angle. They should keep in mind that one reason this proposal looks better than the current one is that the existing agreement, written by Miami Heat lawyers, didn’t do the public any favors.
A 2012 Inspector General’s report criticized county officials for not scrutinizing the Heat spending decisions that helped keep profit-sharing close to zero for more than a decade. Members of the current commission should not make the same mistake.
And here’s the other question: Is now the time for Miami-Dade to surrender its claim on future profits at the Heat's home court? It doesn’t take an MBA in accounting to know that revenues are up since LeBron James and the team’s other stars begin a third NBA championship run, and things can only get better if the stellar trio in the lineup stays intact for the next few years.
The commission must also look at recent developments that have undeniably increased the market value of the asset they are now being asked to subsidize for more than 20 years.
The recent offer of $2 billion (!) for the Los Angeles Clippers suggests that in this Golden Age of sports franchises and TV deals, the sky’s the limit when it comes to a team’s value. Earlier this year, Forbes.com listed the Clippers as the 13th most valuable franchise in the NBA at $575 million. The Heat, meanwhile, came in 7th at $770 million, and its TV ratings were second in the league.
Team owner Micky Arison and his management team deserve kudos for putting together a winning combination, earning enormous goodwill from the public and generating, the team says, over $1 billion in local economic impact. As we know from sad experience, not all professional sports owners are as mindful of public sentiment.
Still, Miami-Dade commissioners won’t get another shot at this deal. They should take their time and not rush to judgment.