Miami-Dade may have found a way to reduce its Heat arena subsidies, two decades later

The old joke about the New York Times is that you need to read the articles backwards, since all the most important information is usually buried way at the bottom. That’s sort of the case with this Miami Herald article about Miami-Dade County taking control of naming rights sales for the Heat‘s arena, which takes a long time to explain what’s really going on. With the unimportant bits redacted, we get:

Miami-Dade is exercising its option to end the Heat’s current exclusive negotiations with the airline in favor of a broader search for sponsors….

Miami-Dade had until the end of 2018 to exercise its option, or let the Heat negotiate the arena’s next naming-rights deal under more favorable terms for the county….

Superlative Group’s Myles Gallagher said a new sponsorship deal in Miami should bring at least $6 million a year….

By exercising its naming-rights option, Miami-Dade must pay the Heat an additional $2 million a year starting in 2020 to make up for the money the team currently receives from American Airlines. … Anything over $2 million, the county gets to keep.

If you’re still confused, here’s what’s going on: Back in 1996, when the arena measure was going to the polls for a public vote, there was a lot of opposition to the notion of putting tax money into a private sports arena. So the Heat owners pulled a last-minute switcheroo: Instead of Miami-Dade paying for the team’s arena, the team would pay for it — but the county would pay the team $8.5 million a year to play in it, amounting to the exact same amount of subsidy at the end of the day. But the team would at least pass along its $2 million a year in naming-rights fees to the county as part of the deal.

Flash forward to today, when $2 million a year is a relative pittance in naming-rights fees. Miami-Dade County leaders clearly realized this, and figured, “Hell, if there’s more money to be had from naming rights, we should be getting it to defray our annual subsidies to the team.” And thanks to that lease clause, they could do it.

The upshot: If Miami-Dade officials can manage to sell naming rights for more than $2 million a year, which they should be able to do if they hire a halfway competent rights-fee manager, Miami residents might finally see their annual costs for the Heat’s arena go down a tad. Score one for whoever got that naming-rights buyback clause inserted back in the day, and for today’s officials for remembering it was there — it’s only the kind of due diligence we should expect from our elected officials, but sadly not the kind we usually get.


4 comments on “Miami-Dade may have found a way to reduce its Heat arena subsidies, two decades later

  1. Royal Caribbean Arena has a nice ring to it! LOL, I am sure the owner of the Miami Heat would love that.

  2. Have the Heat started asking for a new arena yet? I’m sure that’s the next step now that they’ve realized they left that much money on the table for the city to take.

  3. Is this correct: the city paid for the arena and pays the Heat to play there? The Heat don’t pay rent? Of course, should I even bother guessing who gets event revenues?

    • No, the team paid for the arena, but in exchange for that, demanded that the county pay them to play there, in an amount that was equal to what the county was originally being asked to pay for arena construction.

      This thoroughly confused voters enough that they approved the ballot measure authorizing the arena deal.