After FTX meltdown, county has $117 million solution in Kaseya Center as Heat’s home

The Miami Heat will play in the Kaseya Center after Miami-Dade commissioners approved a $117 million deal Tuesday to name the county-owned arena after the locally headquartered software company, months after the prior sponsor, FTX, collapsed in a crypto meltdown.

Though not a well-known brand, Kaseya (pronounced kuh-SAY-ah) has become a powerhouse in the technology space through sales of IT management software. The company acquired a rival for $6 billion in 2022, and a spokesperson on Tuesday said the private company’s valuation is about $12 billion now.

The company recently announced plans to hire 3,000 more employees in Miami, and in February secured a pledge of $4.6 million in subsidies from Miami-Dade if the hiring goals are met. That agreement was approved before Kaseya’s arena talks were made public.

READ MORE: Heat arena now officially known as the Kaseya Center. The story behind the latest name change

The naming-rights deal approved unanimously provides a quick replacement for FTX and millions of dollars in yearly sponsorship money that Mayor Daniella Levine Cava used to expand youth programs and fund other initiatives aimed at curbing gun violence.

“This is a great deal,” Levine Cava said.

Leery of the last naming-rights sponsor collapsing in a crypto-fraud scandal, commissioners pressed the administration on how well Kaseya was vetted ahead of the deal. “I feel with this item that we’re asking to trust with very little verification,” said Commissioner Roberto Gonzalez. “Has anyone here seen their books? I have not.”

Jimmy Morales, the chief operating officer under Levine Cava, said the county is reasonably confident of the financial longevity of Kaseya, a company that was founded in 2003 in Silicon Valley and moved to Miami in 2015. It was one of five companies that reached out about replacing FTX, Morales said. The others: Aroma360, a Miami scent maker; iHeart Radio, a radio operator out of Texas; UBS, a Swiss bank; and Wild Fork Foods, a food retailer out of Fort Lauderdale.

American Airlines to FTX to Kaseya

A federal bankruptcy judge canceled the 19-year FTX deal in January as the Bahamas-based company reeled from criminal fraud charges against its ex-CEO for allegedly stealing billions in customer deposits held by the crypto exchange. FTX signed on as naming-rights sponsor in 2021, after American Airlines declined to renew its 20-year deal at the county-owned arena in 2020.

Miami-Dade’s original agreement with the Heat to manage the waterfront arena gives the team $2 million a year for its share of naming rights. That reduces the county’s portion of the Kaseya payment to almost $5 million a year. That would have covered the county’s own subsidy paid to the Heat, which amounts to about $5 million yearly.

Instead, county commissioners approved the Levine Cava proposal to spend arena sponsorship dollars on the “Peace and Prosperity” initiative, as the board did with the FTX deal in 2021.

The bulk of that initiative pays for the county’s Fit2Lead youth program, which funds paid internships for Miami-Dade youth during the summer and after school, both with the county and with nonprofits. About a third of the money is reserved for grants awarded by individual commissioners to fund neighborhood programs and nonprofits, as approved by the full board.

“I think this is a wonderful day in Miami-Dade County,” said Keon Hardemon, the commissioner whose district includes the Heat arena. “Because we as a board have decided to once against invest in our community.”

He complained the county hasn’t gotten credit for spending naming-rights dollars to try and reduce crime. “We have been mocked by the criminal activity of a former naming-rights partner,” he said.

Kaseya’s big and plans to get bigger

The NBA has already approved Kaseya as an arena sponsor, so the commission vote was the final step needed for a name change. The agreement brings the arena its fifth name since opening in 2000 as the AmericanAirlines Arena. The FTX Arena came in 2021, followed by two days as The Arena after the end of the FTX agreement before the county switched to the “Miami-Dade Arena.” That was the facility’s name until the commission’s vote, with Levine Cava saying the Kaseya Center title goes into effect immediately.

Until now, the company’s only time in the spotlight came after its software was infiltrated in a 2021 ransomware attack that was serious enough to draw comment from President Joe Biden. While the name change is immediate, Kaseya doesn’t expect its name on the basketball court or the arena exterior until later this year, company spokesperson Xavier Gonzalez said.

“That’s what we need to figure out now, logistically,” said Gonzalez, executive vice president for marketing at Kaseya. “The plan is before the next NBA season.”

He said privately held Kaseya has a valuation of “around $12 billion,” following last year’s cash acquisition of software provider Datto for $6 billion.

Kaseya has 900 employees in Miami’s Brickell Avenue office district and 4,500 workers worldwide. In talks with the Levine Cava administration, Kaseya agreed to terms that mostly match the average yearly payout of $7 million in the FTX agreement.

FTX signed a 19-year deal worth $135 million, but agreed to higher initial payments at the start of its time as the arena’s sponsor. FTX paid $19 million under the agreement before its bankruptcy. Because of the front-loaded payments and a one-time broker fee worth nearly $2 million in the FTX agreement, the county expects to receive about $3.5 million more from Kaseya than FTX would have paid between 2023 and 2040.

Eileen Higgins, who voted for the original FTX deal in March 2021, said she was glad to see the replacement agreement go to a local company with a record of well-paying jobs.

“It’s not in a fly-by-night thing-a-ma-bob,” Higgins said. “Just sayin’.”

This story was originally published April 4, 2023 at 1:52 PM.