Miami Heat: Extended arena deal cheaper for Miami-Dade than a new arena

With owner Micky Arison willing to invest in an aging facility, county subsidies are “the cost of the extension,” Heat representatives say.

05/21/2014 6:48 PM

05/21/2014 9:03 PM

The Miami Heat sees a proposed arena agreement with higher government subsidies and fixed rent to Miami-Dade County as a more affordable option for the public than having to build the team a new arena.

“We’re trying to avoid a new stadium,” Eric Woolworth, the Heat’s president of business operations, told the Miami Herald Editorial Board on Wednesday. Added Jorge Luis Lopez, a Heat lobbyist and lawyer: “This is a conscious decision by the owner to avoid that kind of situation.”

With its team pursuing a third straight NBA championship, the Heat’s front-office is chasing a new deal with Miami-Dade that would add at least five years to an arena agreement set to expire in 2030. Miami-Dade owns the AmericanAirlines Arena and pays the Heat about $6.5 million a year as an operating subsidy.

Owner Micky Arison arranged private dollars to fund the $240 million development in the late 1990s and is being paid back out of arena profits that otherwise would be shared with Miami-Dade under an arrangement that has yielded almost nothing to the county after 14 years.

A deal endorsed by Miami-Dade Mayor Carlos Gimenez would rework the current arrangement by ending profit-sharing in favor of a $1 million yearly donation to the county’s parks department. The current county subsidy to the Heat would remain in place until 2031, when it would increase to $8.5 million a year.

Miami-Dade also would share in any gains once the 1997 American Airlines’ sponsorship deal resets in 2020. In 2025, the Heat would have a chance to negotiate new terms to remain in the county-owned arena through 2040 or it could scrap the existing deal past 2035.

Heat executives cast the proposed agreement as a financial gain for Miami-Dade, given the minimum of $81 million the Heat must spend on arena improvements through the life of the extended agreement.

A county summary of the deal put the cash cost to taxpayers at $19 million after 20 years, given that the Heat would ultimately receive more from a new subsidy than it would pay in park donations. Taking inflation into account, the county summary said, the total cost through the life of the deal is about $2 million in 2014 dollars — not counting the expense of the existing subsidies.

The proposal recently won a rare thumbs-up from the Field of Schemes blog, the most widely read (and reliably anti-subsidy) chronicler of stadium proposals. “I have this costing Miami-Dade about $6 million, which seems completely reasonable for an extra five years of locking the Heat into not moving,” author Neil deMause wrote last week.

Commissioner Juan C. Zapata, an early critic of Arison’s original request for a richer subsidy package, said this week he was happy to see “improved” terms but wasn’t ready to endorse the latest proposal. “I don’t know any details,” he said.

Lopez said Miami-Dade needs to contribute something if the Heat opts to continue investing in the county-owned arena and commit to remain in the facility for at least two more decades. “That’s the cost of the extension,” he said.

With the Heat enjoying record fan support, team executives still face an uncertain political environment as the county’s elected leaders weigh a soccer-stadium proposal by David Beckham on public land next to the arena and a new plan by Miami Dolphins owner Stephen Ross to receive bonus payments for bringing major events to Sun Life Stadium.

The Dolphins bonus payments would come from the same pool of hotel taxes that fund the Heat subsidies, which could add to a projected strain in future years as debt payments increase for Marlins Park.

“There has been a lot of sports teams and organizations in the news,” Woolworth said. “We understand there is some public skepticism.”

Join the Discussion

Miami Herald is pleased to provide this opportunity to share information, experiences and observations about what's in the news. Some of the comments may be reprinted elsewhere on the site or in the newspaper. We encourage lively, open debate on the issues of the day, and ask that you refrain from profanity, hate speech, personal comments and remarks that are off point. Thank you for taking the time to offer your thoughts.

Terms of Service