I Team: County Receives Nothing From Heat, Arena Revenue
MIAMI (CBS4) – During the Miami Heat’s most recent playoff game, no one was more excited to see the Heat play than six year old Cole Wilburn.
“I want to see the Heat rock,” said Cole, as he waited to get into the AmericanAirlinesArena.
Cole’s mom took him to the game because Cole is a good boy, a considerate child, who knows what it means to share with others.
Asked by CBS4’s Jim DeFede why sharing is good, the young boy responded, “Because it’s being kindful.”
Unfortunately, in the eleven years since the Miami Heat moved into their new arena, they haven’t been very kindful.
Watching fans stream into the Triple-A with Cole, it is hard to imagine a more profitable venue in South Florida. Forbes magazine recently listed the Miami Heat as one of the most profitable franchises in the NBA, and part of that value is based on the arena itself.
Built on a prime piece of county waterfront and subsidized with millions of dollars in county tax money, the arena was supposed to be more than just a playground for millionaire athletes and their billionaire owner. It was also supposed to be an investment for the community.
In the late Nineties as the Heat’s owner Micky Arison lobbied for a new arena, he sweetened the deal for county officials by promising that if the arena generated more than $14 million a year in profit they would share 40 percent of that money with the county
No who was involved in the negotiations for the county are still with county government and none of the governmental officials there now can say who came up with that $14 million figure. Also, as is now evident, the Heat managed to place enough conditions on the “revenue sharing” clause of the contract to make it effectively worthless.
Because in the last eleven years, Miami Dade County has not received a single penny from the Miami Heat under the revenue sharing provision of their arena contract.
According to the financial statements the Miami Heat provides to the county every year, the arena just isn’t profitable enough – at least not on paper.
Last year, the arena generated more than $53 million in revenue – that includes everything from those over priced hot dogs to the luxury suites that circle the court to the $6.4 million in subsidies county taxpayers provide. This includes revenue that comes in not only for Heat games, but also concerts, the circus and corporate events.
On the other side of the ledger, the arena showed $32 million in expenses.
Now you might think that means they had $21 million in profit last year and the county was therefore entitled to some of that money. But unfortunately for Dade County the Heat took a $14 million in amortized arena costs.
What is that? Well, when CBS4’s Jim DeFede asked the county that question, a county spokeswoman sent us the following response:
“County staff cannot answer why Basketball Property Limited (BPL) amortizes items as they appear in the financial statements. You can contact Eric Woolworth, President of Business Operations, Basketball Properties Ltd., for clarification. ”
Basketball Properties Limited is a wholly owned subsidiary of the Miami Heat.
The most fascinating aspect of that answer is the willingness of the county to simply abdicate any responsibility they might have in making sure they are not losing a possible source of money.
Last week CBS4 News went over to the arena to try and speak to Eric Woolworth. We were told he was in a meeting and couldn’t be disturbed. Later we were told he was out of town.
After a few days, CBS4 News received word from the Heat that they would not be answering any of our questions.
“The Heat, as usual in these deals with the county, got way more than they should have and the county got not nearly enough,” sighed Katy Sorenson, who voted against the arena deal when she was a Dade County Commissioner.
Sorenson recalls how lots of promises were made at the time never came true. There was supposed to be a park and a soccer field, she said, but that never happened either.
“It’s not with any sense of pride or joy that I feel vindicated,” says Sorenson, who is now the president and CEO of the Good Government Initiative at the University of Miami. “It’s just why do we keep making these bad deals over and over again.”
She felt the same way about the recent deal to build a new stadium for the Florida Marlins. Sorenson said politicians become so enamored of professional athletes that they “give away the store” rather than protect the interests of taxpayers.
“Sports are sexy and sports are big time and elected officials often want to be associated with that,” Sorenson said.
And even after a deal is made, no one at County Hall seems interested in questioning anything the Heat does. For instance, every year, the Heat submits a budget for the county to review.
But it is not clear anyone at County Hall even looks at it. CBS4 News found a copy of this year’s budget in a file with other documents associated with the arena.
Among the things CBS4 News found that seemed odd, was the fact that in the last few years the salaries for arena employees – not basketball players like Dwyane Wade or LeBron James – but arena staff, rose from $8 million to more than $12 million.
Why? Why was there such a large increase in salaries? No one at the county could answer that question and it was clear no one at the county had even noticed the increase until CBS4 News pointed it out.
Also, every year there is a line in the arena budget for “public relations firm fees” for $125,000. In the last ten years that would mean thaat firm has received $1.25 million.
What is the name of the firm? Who owns it? What do they do for that money? Is that firm politically connected to any of the county officials who helped negotiate the arena deal more than a decade ago?
The county claims they have no idea where that money is going. And the Heat refuses to answer any questions.
The Heat apparently takes the view that since they are responsible for the majority of the arena’s expenses they are not obligated to provide details to the county or the public. But if the county did a better job of trying to hold down expenses, then maybe the arena would start generating enough profit so that the county could finally see some dollars flowing their way under the revenue sharing agreement.
Six-year-old Cole Wilburn may not understand the intricacies of arena finance. He shrugged when asked about arena cost amortization schedules. But he does know the difference between right and wrong.
Asked if it is good to share, Cole nodded and said, “Yes it is.”
And should the Heat share some of the money that is pouring into the arena?
“Yes,” Cole said, “they should.”
Now if only the Miami Heat and our elected officials could reach the same conclusion as a six year old.