Business

Miami Heat Gusher Keeps on Spewing Cash

By: Nancy Smith | Posted: June 2, 2014 3:55 AM
Miami Heat 5-30-14

So familiar: LeBron James, Heat celebrate

The Miami Heat, headed into the title series for the fourth consecutive season, is poised to become the greatest money gusher in the history of the National Basketball Association.

Not yet. The Heat, valued at $770 million, has the New York Knicks, the L.A. Lakers and the Chicago Bulls ahead of it. But the stars are aligning.

There's just one more step.

To keep the well blowing out cash, Heat owner Micky Arison knows he will have to re-sign LeBron James, the game's pre-eminent player, whose contract expires this year, and who is largely responsible for the Heat's towering rise in the community and in the league.

He also knows he needs to keep his two other stars, Dwyane Wade and Chris Bosh. 

Right now Arison only wants to talk about Miami and San Antonio in the finals, which begin Thursday. But he has said if the "three kings" return, he can put more money into aging AmericanAirlines Stadium, seventh-busiest stadium in the country, and do more than that for Miami.

Since James' arrival as a free agent in 2010, the Heat's fortunes on and off the court have soared. Even Forbes Magazine acknowledges what this team has done for the South Florida economy in four years is virtually incalculable.

TV ratings on Sun Sports soared 43 percent. They were the second highest in the league. On top of that, the Heat locked up more than half of season ticket holders in a unique three-year ticket renewal option. 

The Heat's success has been a study in how powerful an economic driver professional sports can be for a city.

Heat executives say they're proud of what the team has been able to do for Miami. They point to an economic-impact study they commissioned last year that claimed $1.5 billion in benefits from the arena, including valuations for civic pride. Execs estimate those at $3.7 million for Miami and $20.6 million for Miami-Dade.

“We have been an incredible success story for Miami-Dade County,” said Eric Woolworth, president of business operations for the Heat. “If you compare photos of the area around our site when we broke ground with what it is now ..." the accomplishment is beyond question.

According to Forbes, the team's sellouts and related sales last year generated a revenue-sharing check for its landlord, Miami-Dade County, for the first time since the arena opened in 1999 -- in the amount of $257,134. The Heat paid for construction of AmericanAirlines Arena on county-owned land in exchange for a $6.5 million annual subsidy and the promise to share profits with the county once they topped $14 million. 

What Arison wants to do is end the profit-sharing arrangement in favor of donating about $1 million a year to the county’s parks department. The billionaire team owner, chairman of cruise line giant Carnival Corp., also is pledging to stay in the arena through 2040 in exchange for a richer subsidy package that in 2031 would more than double the $6.4 million that Miami-Dade currently pays the arena each year out of hotel taxes.

Woolworth, meanwhile, says he is busy expanding the Heat's fan base to China, Brazil, Argentina, in fact, all over the world. But to keep it up, to maintain the lure, the team must retain its kingpins -- James, Wade and Bosh.

More than 100 million Chinese watched the Heat on television during the 2010–2011 season alone, said Woolworth. And more than 7 million people follow the team on Facebook -- of which only 10 percent are from South Florida and only half from the United States.

“This is an opportunity, with this team (President) Pat Riley has built, unlike any the game has had,” Woolworth says.

The whole idea of marketing the sport globally is uncharted territory, he says. No American sports team has engineered an international business model. But the Heat has done it. Even though the NBA, which traditionally limits teams to marketing themselves within 75 miles and broadcasting themselves within 150 miles, wasn’t even certain it wanted to go there.

“We got them to relax that,” Woolworth says. “Now we’re working with them on how to build the NBA around the world.”

In 2010 Christina De Nicola at Bleacher Report compiled a list of 10 ways the James signing would impact Miami and its economy. She wrote it would mean increased merchandise and ticket sales, sponsorships, television revenue, downtown development, more attention to other South Florida sports teams, such as the Marlins and the Panthers, and increased media attention. She was correct right down the line.

Miami looked at Chicago to draw a comparison. The Windy City saw the phenomenon of the Super Athlete before. Nearly 20 years ago, when Michael Jordan soared for the Bulls -- when he carried them to playoff after playoff -- city fathers got a taste of just how much star power could enrich the world around them.

In the Jordan era, Chicago broadcast execs grew giddy over towering ratings and ad sales to match. When network television carried an NBA game, nearly half of the time it chose the Bulls. Miami has received the same favoritism for the last four seasons.

Friday night's Game 6, conference-title clincher in Miami was a laugher, 117-92, with James and Bosh each scoring 25 points. The NBA Championship Series, against the San Antonio Spurs again, begins Thursday.

LeBron James and Co

From left, Dwyane Wade, LeBron James and Chris Bosh


Reach Nancy Smith at nsmith@sunshinestatenews.com or at 228-282-2423. 


Comments (1)

Michael
7:57PM JUN 3RD 2014
No, the Heat deal is not good for the Miami -Dade County region.
Quite the reverse, yet another fine example of taxpayers subsidizing billionaire owners.

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