Miami fell for FTX. Then FTX fell. Now Heat arena is stuck with a name no one wants | Opinion

There’s no shortage of millionaires and billionaires dangling shiny objects in front of Miami-Dade officials, always with promises to help heal some community ailment.

When the now-failed cryptocurrency exchange firm FTX went before the County Commission in 2021 to ask for a naming-rights deal for the Heat arena in downtown, Mayor Daniella Levine Cava and supporters sold it as a key to solving gun violence. FTX’s payments to the county would go toward neighborhood programs to combat the issue and promote economic development.

But just like cryptocurrency itself, the naming deal turned out to be highly volatile.

The arrest of former FTX CEO Samuel Bankman-Fried on Monday, after the firm declared bankruptcy, once again made Miami-Dade the butt of the joke. It’s not on a par with the Marlins stadium boondoggle that left Miamians stuck with an enormous debt, but we feel duped all the same.

It raises questions about the wisdom of Levine Cava’s administration negotiating a deal with a company that was only 2 years old at the time, and with commissioners rapidly and overwhelmingly supporting it. Only one of them, Rene Garcia, voted against the agreement, saying it had not been made public long enough before it was up for a vote. The deal was pushed so hastily that an FTX lawyer told commissioners, “If you sit on this for 30 or 60 days, there will be additional deaths” from gun violence.

Now, less than two years later, the county has asked a bankruptcy court to terminate the deal. Levine Cava’s office told the Herald Editorial Board via email she must wait for court approval to look for a new naming rights partner, which she promised to do “as swiftly as possible.”

The contract was supposed to last for 19 years, and there were legitimate questions from the get-go on whether such a young company in a new, loosely regulated industry could sustain it. Even Miami-Dade Chief Operations Officer Jimmy Morales recognized, at the time, that “there is risk in this deal.” The County Commission’s decision to distribute nearly a third of the money among its 13 board members, under the vague guise of combating gun violence or promoting economic prosperity, was also problematic. The allocations looked more like slush funds ripe with opportunities for mismanagement.

No one expected the mayor’s office to have a crystal ball to predict Bankman-Fried’s downfall. Her office said it doesn’t foresee an immediate impact to the programs funded by the deal, given that the company has already paid $20 million of the $135 million agreement. Still, another $5.5 million is due in January. The county doubts the company can honor that, so it will pursue legal action to receive it. That could subject taxpayers to a protracted legal battle.

Bankman-Fried’s legal woes, just 18 months after the naming-rights deal was signed, makes us wonder how much the buzz surrounding crypto and his company played a role in the decision.

Levine Cava’s office contends her administration did its homework, saying the “search process included a financial review and an additional due diligence report by the Office of the Inspector General, and the Miami Heat and NBA also conducted their own independent vetting processes. At the time the deal was approved, FTX was incorporated in 47 states and at least two of its shareholders, Sam Bankman-Fried and Changpeng Zhao, founder of Binance Holdings Ltd., had a net worth of over $8 billion each.”

If Bankman-Fried was as good at deceiving investors, lenders and customers as prosecutors say, it’s possible he did the same to Miami-Dade. The 30-year-old used his whopping fortune, which has now been wiped out, to gain influence and build credibility for crypto. He was a big Democratic campaign donor with a roster of celebrity endorsers like Tom Brady. He was the kind of hype man Miami was ripe to embrace as it sought to become the crypto capital of the world.

Last year, he appeared with Miami Mayor Francis Suarez in a virtual conversation titled “Miami: Crypto City?” part of a crypto summit. It was May 2021 and Bankman-Fried boasted that it had been a “phenomenal year” for the industry. Suarez was not involved in the arena naming deal — it was negotiated by the county, not the city government — but he has been an unabashed promoter of crypto while burnishing his own image as a Republican with rumored higher-office aspirations. Where is Suarez now that the crypto world is in chaos, with other companies also plunging in value?

By putting its name on the Heat arena, FTX replaced American Airlines as a main sponsor of a sports facility in Florida. But now the name has become an albatross, the county’s most famous sports facility emblazoned with the name of an internationally disgraced company.

Federal prosecutors say Bankman-Fried was the architect of “one of the biggest financial frauds in American history.” If that’s true, he is exactly the kind of snake oil salesman that Miami-Dade too often attracts.

This story was originally published December 14, 2022 at 3:59 PM.