Report: Heat May Lose Money This Year
MIAMI (CBSMiami) – The Miami Heat have just finished one of the most impressive postseasons in team history en route to an NBA championship. But, according to Heat owner Micky Arison, the team is likely to lose money again this year, according to CNBC.
“This is a hobby of passion, it’s not a business,” Arison told CNBC. “Every year in the building (AmericanAirlines Arena) we’ve lost money aside from last year because of LeBron.”
The Heat don’t pay rent at the AAA and just sold out for a second consecutive season, including 13 straight sell outs at playoff games, according to CNBC.
The problem, according to Arison, is the collective bargaining agreement and revenue sharing. The NBA has a soft salary cap and a luxury tax line above the soft cap. Currently, the CBA’s luxury tax is $1 for $1 spent. In other words, if a team is $10 million above the luxury tax, that team will pay $10 million in penalties.
The Heat is well above the cap and above the luxury tax limit and that will be problematic in years to come. Starting this season, teams will pay an incremental tax that increases with every $5 million above the tax threshold. Additionally, repeat luxury tax offenders will have more charges added on to the tax payments.
Arison also lamented the fact that the Heat’s television deal isn’t nearly at the level of several others in the NBA. The Lakers and Knicks have the gold standard of TV deals, bringing in upwards of a hundred million dollars for their team. Arison said the Heat’s number is roughly $20 million.
“Obviously our payrolls are up and our revenues are not because of the limitations of our market,” Arison told CNBC.
Despite everything, Arison has never shied away from spending big to bring championships and superstars to the Heat. However long that will last under the new CBA isn’t known. But Arison vowed to stay committed to pulling off a Heat-peat next year and for years to come.