SBD/June 1, 2012/Facilities

AmericanAirlines Arena Audit Questions Miami-Dade's Contract With Heat

Heat's arena generates over $60M a year but no sufficient profits for profit-sharing
A Miami-Dade inspector general’s audit of the AmericanAirlines Arena operating agreement with the Heat “blasts the county for ‘poorly performing’ administrative oversight and paying little attention to the Heat’s annual budget,” according to Rabin & Mazzei of the MIAMI HERALD. The 60-page document released Thursday “faults Miami-Dade for having ‘little idea’ about whether the team has met financial benchmarks that would trigger profit-sharing from the county-owned arena.” Inspector General Christopher Mazzella in the audit wrote, “The county’s hands-off approach to an operation that now generates more than $60[M] a year is perplexing, especially an operation that has yet to produce sufficient profits to result in profit-sharing." Miami-Dade Mayor Carlos Gimenez’s office said that the audit “covers a timeframe that pre-dates his tenure, and he is working to fix any problems.” Heat execs “disagreed with the audit’s conclusions.” A “key provision” in the ‘97 accord “stipulates that Miami-Dade is to receive 40 cents of every dollar of profit after the team" earns $14M in profits. The Heat “maintains it has never come close to that magic number.” Rabin & Mazzei note the figure has never been reached “because despite some profitable years, the contract allows the Heat to pay off all of its losses before declaring profitability.” The Heat remains “well below the threshold of sharing profits with Miami-Dade,” despite F LeBron James’ decision to sign with the team during the ’10 offseason, a $13M “windfall from increased ticket sales, a giant spike in food and drink concessions last year, and $72.2 million the county poured into operating the arena.” Mazzella suggested that the county “learn how the team makes money from lucrative concessions and ‘premium’ ticket sales, including suites.” He also wrote that the county “should know more about non-basketball events at the arena, since those revenues impact potential profits” (MIAMI HERALD, 6/1).
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