Miami-Dade budget has a new cost: $2 Million to Miami Heat for missing arena sponsor
Months past the deadline to sign a new sponsor for the Miami Heat arena, Miami-Dade County has budgeted the $2 million it owes the team if it can’t land a naming-rights buyer to replace American Airlines.
Miami-Dade’s proposed 2021 budget includes an extra $2 million for the county-owned arena, which already receives a county subsidy worth $5.4 million a year. The county pays the Heat $6.4 million, but the team donates $1 million of that to the county Parks Department.
The 2021 budget proposal up for its first County Commission vote on Thursday lists the AmericanAirlines Arena expense at $8.4 million, reflecting the $2 million Miami-Dade must pay the Heat for naming rights starting this year. There’s no offsetting revenue in the budget from a would-be sponsor as the county enters its ninth month without an arena naming-rights deal after the . American Airlines agreement expired at the end of 2019.
Miami-Dade hired a consultant to find a sponsor willing to pay more than the $2 million the airline paid to have its name on the building and a large airplane painted on the roof since the arena opened in 2000. The consultant, the Superlative Group out of Cleveland, didn’t manage to land a deal before the end of 2019 and now is navigating a sponsorship market upended by the coronavirus pandemic.
The Heat sent Miami-Dade a bill for $2 million on March 16 for the naming-rights revenue it was supposed to begin collecting from the county in 2020.
Ed Marquez, the county’s chief financial officer, wrote team president Eric Woolworth on March 30 saying the county didn’t owe the money yet since a naming-rights deal could be closed by the end of the year.
Nearly six months later, Miami-Dade still doesn’t have a replacement for American Airlines, which said in 2019 it didn’t want to renew its deal at the downtown Miami arena. Now the county is facing the $2 million bill for 2020, and possibly another $2 million cost in 2021 without any sponsorship revenue to cover the expense.
On Friday, Marquez said talks are still underway with would-be sponsors that the county hasn’t publicly identified. “Regarding naming rights, there are currently active discussions moving forward with several large companies,” he said in an email.
The new arena expense was always going to be on the books in 2020, but Miami-Dade had assumed it would have far more than $2 million coming in from sponsorship revenue to cover the cost.
Over the Heat’s objections, Miami-Dade decided in 2018 to end the previous arrangement of the Heat paying the county $2 million a year in exchange for the team managing arena sponsorship.
Because the team controls VIP suites, and branding inside the arena, it could sell American a package deal with the naming rights at the centerpiece.
Miami-Dade can only offer the name itself, a prize it’s now trying to sell at a time when the NBA is playing its games in Orlando and concerts are banned by emergency county order.
Meanwhile, a spike in unemployment and drop in consumer spending has companies slashing marketing budgets and double-guessing new expenditures. American Airlines has been flying about half of its normal schedule this summer, and the usually bustling cruise terminals at nearby PortMiami remain idle.
“It’s a tough sell,” said James Pokrywczynski, a communications professor at Marquette University in Milwaukee who tracks stadium sponsorships. “The types of industries that used to be interested in these types of things are now suffering the most.”
