Heat offering to stay put 10 more years in exchange for $66m worth of arena renovation subsidies

The Miami Heat’s arena deal is one of the weirdest in pro sports, thanks to a last-second switcheroo that the team pulled in order to win a public vote back in 1996. With time running down and the vote looking close, the Heat owners decided to scrap their original plan in which the city would pay for a large chunk of the arena costs, and instead pay for the entire construction cost themselves — but in exchange for $6.5 million a year in “operating subsidies” from the county. It came to the exact same thing in terms of who was paying for what, but it sounded better to voters, and the arena measure passed.

Now, with the operating subsidy deal set to expire in 2029 (only 15 years away!), the Heat are looking to do some renovations to AmericanAirlines Arena, and want to get the public to help pay for them the same way they did the original construction:

The current deal expires in 2029, and the Heat said it wants to work out an extension through 2039 now in order to invest in more upgrades at the county-owned arena. A county commissioner is pushing the mayor to get the deal done by March…

In November, team lobbyist Jorge Luis Lopez said a new deal may require as much as $17 million a year in public subsidies to produce the kind of renovations that will keep the arena competitive. Marquez declined to say what the Heat was asking for, or whether the team wants to increase the current $6.5 million subsidy as part of a new deal.

“There have been numbers thrown around,’’ Marquez said.

Those are some numbers, all right, so let’s crunch ’em. If the Heat are really looking for $17 million a year over ten years, starting in 2029, then in current value, assuming a 5% annual discount rate, that would be … I get $66 million. Which is less than the county kicked in the first time, but then it was getting a promise by the team to stay put for 30 years, whereas here it would only be extending the Heat’s lease by 10 years. That seems like a good candidate for a dictionary illustration to me, but let’s wait and see where the numbers land after they’re done being thrown around.

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5 comments on “Heat offering to stay put 10 more years in exchange for $66m worth of arena renovation subsidies

  1. From the angle they took the photograph in the Herald article, that arena looks like Darth Vader’s helmet.

    I can’t be the first person to see that.

  2. Let’s see. Yet another leverage-free request. Although the article says the deal “lets the team play at AmericanAirlines Arena”, I assume it –requires– them to play there for the next 15 years. Who knows what the basketball economy will look like in 15 years? Maybe they’ll discover that too many jump shots causes colon cancer. You’re essentially subsidizing the team’s upgrades now, gaining nothing for the community and pushing the cost off onto the next generation.

    Sorry, that’s not throwing good money after bad. That’s an example of being ethically bankrupt.

  3. @Keith
    Public funding is not the end of the world… Miami as a city and county can afford sports… im a Oakland fan.. and i dont know what is going on with the A’s, Warriors and Raiders… at least your team has been wining championships… and from what im told do a lot for the Miami communtiy… look public funding is not going away, but i do feel that teams can fund and do more for the community in exchange for these “gifts”

  4. @harry
    Unfortunately, yours is the popular, naive view. “It’s inevitable, so lie back and enjoy it.” We conveniently overlook the fact that teams need a place to play. They have more than enough money to build their own facilities. So they’ll build them, with or without subsidies. Teams will still win championships. Teams will still be “part of the community” to build a following. Subsidizing something that will happen anyway is pure waste.

    No, it’s not the end of the world. But it is a frustrating example of how full of short-sighted stupidity the world is today.

  5. Seattle Heat has an interesting irony to it. But this subsidizing crap needs to stop. Notice they’re asking for this while LeBron is still on the team. The Heat can pay for the renovations themselves.

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