The Miami Heat's lease on the American Airlines Arena does not expire until 2030, but the team already wants to start negotiations with Miami-Dade County regarding two five-year lease extensions.
The Miami Herald reported Tuesday that team president of basketball operations Eric Woolworth sent a letter to Mayor Carlos Gimenez to start the process. Though Heat owner Micky Arison financed the construction of the arena on county land, the county is officially the owner of the arena.
Under a 1997 agreement between the team and the county, the Heat keeps the first $14 million in arena profits each year, then pays 40% of any additional profits to the county. In the years since the arena opened in 2000, it has never earned enough money for the Heat to send payments to the county.
Additionally, the county pays out a $6.4 million subsidy each year to the arena, while the state government gives the arena a $2 million annual sales tax rebate. Unsurprisingly, the Heat are amenable to extending this effective rent-free arrangement.
"We're here. We're a long-term partner. We're not going anywhere," Heat Group chief financial officer Sammy Schulman told the Herald Monday.
The county is free to negotiate any of the county-specific terms in the rental contract, but county officials have yet to say anything substantive regarding a lease extension.
"There's no real time crunch for this, at least contractually," Deputy Mayor Ed Marquez told the Herald. "We're amenable to discussing anything with our partners. I don't know what they have in mind."
A lobbyist who works for the Heat told the Herald that the profit-sharing agreement will be "the elephant in the room," adding, "All terms of the extension are on the table."
The county may try to end the public subsidy payments, which would force the team to use arena profits to fund future renovations and improvements. "The building's almost 15 years old — we're about halfway through the life of the building," Schulman told the Herald. "We plan to continue to keep it as a first-class facility, whatever that means, and keep investing in it."
The letter is just the first step in negotiating the arena lease. The team is sure to face resistance on multiple portions of the lease from the county, and taxpayers may be wary of giving any breaks to the team in the wake of the Miami Marlins fiasco (when the team initiated a fire sale a year after opening a new stadium financed by public money).
Still, the Heat are held in much higher regard, which is partly why Schulman said he is not worried any Marlins-related backlash will carry over to the American Airlines Arena negotiations.