Miami Heat Owner Says Team Will Likely Lose Money This Year
CNBC Sports Business Reporter
Miami Heat owner Micky Arison is thrilled the team won the NBA title, but he says he’s hardly ringing up the cash register.
Arison told CNBC that the final numbers aren’t in yet, but his guess is that the team lost money again.
“This is a hobby of passion, it’s not a business,” said Arison, the CEO of Carnival Cruise Lines who took control of the team in 1995. “Every year in the building we’ve lost money aside from last year, under the old Collective Bargaining Agreement, because of LeBron.”
The Heat have been playing in American Airlines Arena for 12 seasons. They also haven’t ever paid rent thanks to loopholes in the agreement with Miami-Dade County including a clause that allows the team to pay itself back for its contributions to the arena’s cost before sharing the wealth.
So how does Arison explain how the team might have lost money after selling out its second straight season and 13 home playoff games?
“With the new Collective Bargaining Agreement, it works against us because of the dollars we had under contract already and the revenue sharing,” Arison said.
The Heat paid its players approximately $65 million for the 66-game season this year. A $1 for $1 luxury tax above the $58 million salary cap cost them about $7 million more. Then there’s revenue sharing and the Heat qualify as a team in the top third of revenue that has to share its revenue with the lower money-making teams.
Revenue sharing will eventually be three times as onerous as it once was, though the full sharing of revenue does hit until the 2013-14 season. It’s one of the main reasons why Arison was one of five owners who voted against the new Collective Bargaining Agreement, according to a report by ESPN’s Brian Windhorst.
“The reality is we’re not a big market team,” Arison told CNBC. “Minnesota is a larger market than Miami. Where we find ourselves struggling is our local TV revenue is smaller than big markets and despite sellouts we’re only seventh or eighth in gate revenues. Obviously our payrolls are up and our revenues are not because of the limitations of our market.”
If the Heat are that far down in gate revenues, it could be because they don’t charge enough for their tickets. They were fourth in the league in attendance this year, but their $67 average ticket is $23 less than the average Lakers ticket and $50 more than the average Knicks ticket, according to Team Marketing Report.
Last week, Arison told “The Dan LeBatard Show” on 790 The Ticket in Miami that the Knicks and the Lakers make in between $75 and $150 million for their annual television rights, but the Heat number is closer to $20 million.
Despite the popularity of LeBron and Dwyane Wade jerseys, Arison doesn’t get incremental revenue from their sales, except what the team sells locally. He also doesn’t make more on the national television deal because the Heat were on so frequently. Merchandise and national TV revenues are split equally among the league’s 30 teams.
Arison said lack of profits won’t keep him from doing what he wants to do: Bring a third title to the Heat.
Said Arison: “I can say that we’re a group committed to competing for a title every year.”
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