Heat Still Not Paying Rent At AmericanAirlines Arena Despite LeBron's Boost To Revenue
Despite a surge in revenue at AmericanAirlines Arena since the arrival of Heat F LeBron James, Miami-Dade County “has yet to collect rent on the county-owned facility," according to Douglas Hanks of the MIAMI HERALD. Three key clauses in a '97 profit-sharing arrangement agreement with the Heat have kept the county from “recouping any dollars directly from the arena.” The first clause allows the arena to "accumulate losses for years when expenses exceed revenue from ticket and concession sales, arena sponsorships, concerts and retail rent.” Those losses "accumulate interest, and the overall tab peaked" in '05 at $46M. The second clause allows the Heat to “pay itself back for the construction cost" of the $213M arena each year before sharing profits with the county. The paydown schedule “now amounts to about” $14M per year. Third, the arena may keep the first $14M of profits "before sharing” with the county. James’ arrival has helped generate “enough ticket sales to move Miami-Dade closer to recouping some" of the $70M it has paid the arena in subsidies since '00. County documents and figures from the Heat show the team’s sister company, Basketball Properties Limited, which runs the arena, “posted a cumulative loss" of $22M from '00-10. Since '11, it has "recorded a gain" of $13M. The Heat also pay the arena 5% of the revenue "collected through regular-ticket sales minus various fees charged” in selling to fans, which allows for a “pretty precise calculation of how much money” the team makes selling tickets during a good season. But slower seasons "are another matter, since the Heat shares at least $1.5 million with the arena each year, no matter what."
MORE LEBRON IMPACT: Hanks noted James' arrival has "unleashed an explosion in beer sales and ticket revenue, and triggered a huge increase in sponsorship dollars" at the venue. Sales from food and drink are up 78% since the '10-11 season, while revenue from premium seats is up 53%. Because of how Heat Owner Micky Arison “divided up the business as part of the negotiations” with the county, the arena “essentially shares profits on only the premium seats.” The Heat have also jumped from the 15th-best attendance in the NBA to fourth-best this past season. Sponsorship dollars at the arena this season are “budgeted to surge a stunning 80 percent in the course of three years” after reaching a low of $4.2M in '09 (MIAMI HERALD, 4/28).