On Tuesday, Miami-Dade County officials exercised an option that allows the county to take over AmericanAirlines Arena naming rights talks. That decision comes with a little more than a year left on the current naming-rights agreement for the home of the Miami Heat.
AmericanAirlines Arena is owned by the county, but arena manager Basketball Properties, Ltd.–a sister company of the Heat–was granted the right to sell the original naming rights agreement. A deal was struck with American Airlines prior to the venue’s opening in 1999, resulting in the airline paying $2.1 million annually as part of a 20-year sponsorship. That sponsorship runs through the end of 2019, and American Airlines had reportedly been in discussions with the Heat about a possible renewal.
However, under the terms of an agreement struck in 2014, the county received the right to exercise an option that allows it to take over naming rights discussions. That option had to be exercised by the end of this year, and the county decided on Tuesday to move forward with taking over naming rights talks. The decision does not shut door on a renewal with American Airlines, which is expressing an interest in continuing its naming-rights sponsorship, but allows the county to widen the search for a partnership. By exercising the option, the county believes that it can put itself in a better position to collect more revenue from the arena. More from the Miami Herald:
The Heat privately opposed the move, which is allowed under the team’s 2014 updated lease for the county arena. The existing arena deal costs Miami-Dade about $5.5 million in annual subsidies, and the county receives almost no revenue from the $2 million that American pays the Heat each year to be the public building’s title sponsor under a naming-rights deal first struck in the 1990s.
County consultants expect the sponsorship to at least triple in value once the American deal expires at the end of 2019. Miami-Dade is exercising its option to end the Heat’s current exclusive negotiations with the airline in favor of a broader search for sponsors.
“We think it’s a very good opportunity for us to make a lot more money than we make now,” said Mayor Carlos Gimenez, who negotiated the 2014 extension of the Heat’s original county deal from the 1990s to build the waterfront arena. “I’ve already fielded some calls. There’s a lot of interest in naming the arena.”
American has already reached out to the Gimenez administration about remaining as the arena’s sponsor. The Texas-based airline began negotiations with the Heat earlier this year to extend its current naming-rights agreement, said Ed Marquez, the county’s chief financial officer.
As a result of exercising the option, the county must pay the Heat $2 million annually beginning in 2020 to cover lost naming-rights revenue for the team. However, the county will be able to keep anything over $2 million. The Cleveland-based Superlative Group will act as a consultant for the county.