Quantcast
Monday, July 2nd, 2012 at 4:54 pm  |  60 responses

Miami Heat Owner Believes Team Lost Money This Season


Over the past week, we’ve begun to see how the NBA’s new Collective Bargaining Agreement is affecting teams from a personnel standpoint. But what about the business side? Does the new CBA give owners the opportunity to turn a profit? And when it comes to owning an NBA team, is turning a profit even the goal? Miami Heat owner Micky Arison has some thoughts, via CNBC.com: “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.”

  • Add a Comment
  • Share
  • RSS

Tags: ,

  • http://9gag.com/gag/4568611 Max

    What?

  • tpathi1

    and it starts..next up they will be asking dwade to take a pay cut

  • http://slamonline.com Allenp

    Clear lie.
    He doesn’t pay rent. His revenues from TV and arena revenues obviously cover all players salary costs and operational costs. He just told a boldface lie.

  • http://slamonline.com dma

    aren’t they/Miami signing some outrageous TV deal?

  • http://slamonline.com nbk

    that is just a straight up lie.

  • https://twitter.com/sooperfadeaway nbk

    This is obviously a lie.

  • https://twitter.com/sooperfadeaway nbk

    my bad. didn’t think the first one went through. still a blatant lie. liar. and then they are going to renegotiate the Fox Sports Florida TV deal, and that alone will cover all costs. about $200M ANNUALLY!

  • http://sdflfskl.com Jukai

    Really, so you guys know the numbers for the player salary, employee salary, food/cleaning/entertainment costs and upkeep of the arena, advertisement costs, travel/hotel expenses and revenue sharing expenses vs the TV contract, merchandise and ticket revenue? You guys have all that information?
    Because if you don’t, you guys may be the bold face liars.
    What he is saying doesn’t make sense to me, but I’m not going to doubt the sole owner who actually stood up for the players.

  • LA Huey

    Shame on you, Arison.

  • https://twitter.com/sooperfadeaway nbk

    food – is not a team cost first of all. entertainment? you mean their half-time shows? those people barely get paid anything for that. If you just factored what Miami made on their own (ticket sales, local revenue) then maybe they “lost money” but then you factor in that up to $35M in “losses” (that’s what it was as of 2 years ago) can be written off for taxes, revenue from national tv broadcasts, specifically during the finals. It’s 100% safe to say he is lying. The team profited, one way or another.

  • https://twitter.com/sooperfadeaway nbk

    Jukai
    His costs are not that different from everyone else’s costs. And all of them are not losing money.
    Bottom line, as I noted during the lockout, you can run a profitable team simply by staying below the luxury tax and collecting television revenues. YOu can run a REALLY profitable team by keeping your salary near the league’s basement.
    Arison has a high salary but he has a sold out arena. He has naming rights. He has marketing. And he has a share of all television revenues.
    I don’t have to see his books to know he’s lying. The new CBA DID NOT make things worse for owners, it made things better and he said that he made money int he first year that LeBRon was with the team under the old CBA. The new revenue sharing guidelines only impact your team greatly when you are paying luxury tax in multiple years and Arison doesn’t fit that description.

  • https://slamonline.com Allenp

    That last comment by NBK was from me.
    Personally he says his television deal is only $20 million. That is obviously about to change. This is classic spin.

  • ash

    The regular season games are not sold out. Miami is not a basketball city.

  • wet

    what he means is, the cba is costing a boat load in luxury tax and revenue sharing. The cba protects smaller market teams. The teams that already ahd these huge contracts are going to get killed in costs.

  • Brahsef

    LOL, this is comical. If you aren’t making money on this team you must be awful at running a business.

  • LA Huey

    He stood up for his own interests, which were common interests of the players.

  • LA Huey

    Yeah, Brahsef. Having Wade and LeBron on your team for well below what they could get with no max salaries and not turn a profit?

  • http://sdflfskl.com Jukai

    So, you guys DON’T have exact numbers but are still throwing out the same generalities? Cool.
    And Allen, if his television contract is 180 million less than he’s about to get, then why are you still accusing him of lying about losing money “this” season.

  • http://sdflfskl.com Jukai

    And his comment was that the base salaries haven’t lowered yet but the revenue sharing has kicked in already.

  • http://slamonline.com nbk

    How does revenue sharing work? How is it different from the luxury tax?

    The high revenues generated by the big-market teams increases BRI, which increases the salary cap, which increases the amount all teams (including low-revenue, small-market teams) are forced to spend on player salaries — leading to an unsustainable system. The league’s revenue sharing plan works in parallel with the CBA (including the luxury tax) as a one-two punch to address franchise economic disparity. It is designed to help redistribute money from high-revenue teams (generally in big markets) to needier teams (generally in small markets). By 2013-14 all 30 teams are projected to be profitable under this system if they meet reasonable revenue and expense standards.

    The NBA also had a revenue sharing system in place with the 2005 CBA. It was funded entirely through luxury tax revenues, and paid an average of $40 million per season. However in many cases teams were getting back money they had put into the pool themselves, so the net redistribution of money was much lower than the gross distribution. Under the old plan teams received much less than under the new plan, with the highest individual receipts averaging $5 million. With the new plan, $181 million is projected to be redistributed in 2013-14, with two teams projected to receive over $20 million each, and seven teams over $16 million each.

    The basic idea behind the plan is that teams contribute an equal percentage of their total revenues into a common pool (minus certain expenses such as arena expenses), then receive an allocation equal to a 1/30 share of the pool1. Small market teams with lower revenues will therefore contribute less than they receive, and will be net beneficiaries under the plan. Large market teams will contribute more than they receive, and will be net payers under the plan. Other components of the plan are as follows:

    The plan makes teams responsible for meeting revenue benchmarks, based on the size of the market (based on the number of TV households in the team’s designated market area) in which they play. Any team that falls short of its benchmark has to make up the difference in its contribution into the pool — in other words, teams are penalized for underperforming. Revenue benchmarks range from 65% (New Orleans) to 160% (New York and New Jersey) of the league average revenues.
    Teams falling short of their revenue expectations are required to work with the league office to develop and implement a business improvement plan, which could include reorganizing business operations, hiring or replacing staff, or adopting new sales strategies. If a team fails to satisfactorily implement such a plan it could forfeit a portion of its revenue sharing payments (up to 25%).
    The percentage of revenues teams contribute to the pool is based on the percentage of league-wide revenues that go to player salaries. For example, if player salaries are 50% of league-wide revenues, then each team would contribute 50% of its revenues into the pool.
    Teams in markets with fewer than 1 million TV households do not have to contribute more than 15% of their revenues.
    Teams in markets with more than 2.5 million TV households cannot receive a revenue sharing payment. Teams in markets with 2 million to 2.5 million TV households receive a percentage of a full payment (for example, a team with 2.25 million TV households receives a 50% payment). A team with fewer than 2 million TV households receives a full payment.
    If a team is profitable without revenue sharing, it receives a smaller or zero payment. Any payments from revenue sharing that would lead a team to have a profit over $10 million are eliminated.
    High revenue teams are limited in the amounts they have to pay. No team pays more than 30% of its profits in excess of $5 million.
    The plan contains an additional discretionary fund of $15 million each year. Teams can apply for assistance payments from these funds.

  • justin05

    You are all arguing over something that is completely irrelevant anyway. This guy just wants some publicity because his team won the championship. Shortened season my friends, it must be nice to coast all season and then push your body so hard in the Finals that you get muscle cramps in your legs before the game even ends. I hate the Heat. One and done! LA,Boston,SA,OKC..someone needs to figure them out and hurt them at their wacky style of play.

  • http://slamonline.com nbk

    So naw, Miami really isn’t paying much in terms of revenue sharing. Certainly not enough for this blatant lie to be the truth.

  • Roi

    With no access to complete information, you can’t accuse anyone of saying a ‘bold-faced’ lie.

  • Brahsef

    Is anyone actually reading what nbk just dropped? A thesis in the comment section, good lord.

  • justin05

    I feel you nbk, some ppl just don’t get it. I call it stupidity. All I’m sayin is that the Heat play crazier basketball then I do on 2k12..

  • justin05

    nbk clearly has nothing better to do, just like the rest of us lol.

  • http://Slamonline.com nbk

    That was just copy and paste from the CBA faq

  • http://slamonline.com The Philosopher

    LONG… LIVE… THE KING.

  • Kabraham

    I love how people are already saying “SHORTENED SEASON”. It makes it easy to see the haters and those who arent intelligent. Shortened season? So then your team played a full 82? Miami didnt have to win 16? Haters gonna blindly hate.

  • http://sdflfskl.com Jukai

    NBK, once again, you keep claiming all of this without knowing any numbers. Allen just realized (or doesn’t buy) that Miami’s TV deal is a hundred less million than he thought.
    Sorry, but until I see the numbers, I can’t call Mickey a liar. I’m just a “facts” guy and all.
    Plus I know the Heat ain’t giving up a billion dollars on the revenue sharing plan, but you have no idea how much they are actually giving up -without seeing the numbers-

  • http://www.forbes.com/teams/miami-heat/ nbk

    Click my name. Some estimated numbers. They made money. Especially considering those estimates were in January. Which doesn’t include the title they just won (and all that finals revenue).

  • justin05

    Yep I just hate Miami. It’s a bs team and in the future they will be laughed at. Thay’ll become real champions of the sport if they can defend it. Shortened season just makes it easier to coast to get to the Finals.

  • wet

    They also had a lot less games to make money off tv/tickets sales this year.

  • http://Somethingsomething. Ugh

    Jukai:
    Revenue: $158 M
    Operating Income: $26 M
    Player Expenses5: $69 M

    Looks pretty straightforward to me.

  • Bill

    Everyone here sounds like proles trying to discuss a billionaires’ game.

    I believe anything a billionaire, sports team owner tells me especially when they whine about “losing” money which usually means they only took home a paltry $1 billion instead of the $3 billion projected, or some such nonsense.

  • king_pac

    Is this a way of asking a cost-cut for the NBA Champions?., Profit is a big thing, and that’s a fact but you should think thrice before making some decisions about that matter. Players sacrifice themselves by working hard for you, and all you have to do is support them., You should pull-out J.Howard, R.Turiaf, D.Pittman & T.Harris.. I suggest you boost the Heat Roster with Brandon Bass, Ray Allen, Andrew Bynum & Tyson Chandler. I know this is much but I want you guys to dominate in the League. It maybe a desperate move but you’ll be the best and others will do anything to make you fall. God bless and Earn another NBA title this 2013, 2014, 2015 and so on!..

  • http://sdflfskl.com Jukai

    Yes, the 26 million operating costs is as believable as Mickey’s statement.

  • http://Roosterteeth.com Caboose

    Just keep it simple, Mickey is either a liar or a putrid businessman. Take your pick.

  • neaorin

    If only the local government would spring for a new arena, they would get back into the green in no time.

  • Justin G

    It seems to me like a rather obvious question is being missed. If all of these numbers and facts are supposedly so easily researched, why would Arison lie about it? Seems to me he wouldn’t want to look like a fool when it can apparently be so easily disputed. It’s amazing to me that you geniuses aren’t somehow GMs and owners yourselves because it’s obviously so easy to do

  • http://www.huwlhopkins.com #6marjon

    even if they lost money, do you really think many other teams would make money in the shortened season? I’m not surprised to hear this news, but the giant paycheques certainly won’t help

  • tpathi1

    mickey probably just planting a seed right now so he can renegotiate his big threes contracts down the line

  • http://www.nba.com Saviour

    Hilarious that you all think sports teams make masses of money….in the UK football teams lose millions and millions each year, Man U has been in the red (no pun intended) for over a decade. It’s how it works. Strange though isn’t it!

  • http://www.slamonline.com TADOne

    “Arison told CNBC that the final numbers aren’t in yet, but his guess is that the team lost money again.

  • http://www.slamonline.com TADOne

    Did everyone just overlook that first statement?? He didnt come out and flately state that the team lost money. He was just projecting before seeing the final numbers. He wasnt even sure. However, i have a hard time believing he lost money. If anything, they broke even just from the playoff money.

  • T-Money

    jukai: why is 26 mil in operating costs not believable? serious question, not trolling.

  • Lisa

    lost money by paying the refs lol

  • http://minusthebars.blogspot.com don

    Arison: We don’t believe you, you need more people.

  • http://www.fullc0urtpress.com KHOLIDAY05

    When companies (or in this case, a franchise) say they’ve lost money, it doesn’t always mean they didnt turn a profit. It could mean they fell below projections or made less than they did in the previous year, but they still made money. If the Heat were projected to make $60M and only made $48M, they lost money. Don’t think Arison is lying, he’s just stating his gut feeling, which could be true at the end of the day because of what the Heat expected, or have made in previous seasons.

  • DJ

    one thing that’s being ignored is that regardless of what the team shows on the balance sheet, every year, most of the teams in the nba, especially high profile ones like the heat, lakers, celtics, etc., increase their net value. so, even if they ran a deficit in the operations of the team, which, in a championship year is fairly unlikely, if arrison sold the team, he would more than make up the difference with how much more the team is worth now.

  • bike

    Ummm…he didn’t say that lost money…he said he anticipates losing money but even he hasn’t seen the final figures yet.
    Not exactly a lie.

  • AQWORD

    But they did win a title this year so S.T.F.U. rich playboy b!t(h!

  • Justin05

    Fu ck the heat anyway. Consider this a phase for the NBA, were any teams really great last year? I was pretty bored actually. Charles Barkley nailed it on the head at the beginning of the season.

  • Ryan D.

    Simple business equation. If revenue does not exceed long term costs then a business will no longer be able to operate. He has ran the team for 17 years and 12 of those years they have lost money?

  • Justin05

    If the East was more balanced with talent then maybe the West teams wouldn’t have to work twice as hard as the East to make it to the Finals.

  • http://slamonline.com nbk

    Tad he knows they didn’t lose money. Saying “probably lost money again” is a lie. He knows the Heat profited. Not reaching projections is not losing money. Turning a profit in any way shape or shorm is not losing money. The Heat, didn’t lose any money. Not team that has ever gone through a season and won the championship has ever lost money. EVER

  • alex80

    Poor F@keen billionare!! so sorry man

  • LP

    I’m so happy that was a copy/paste, I felt like an idiot for a minute….

  • davidR

    operating income = your earnings before interest and taxes.
    basically, it’s how much profit/loss you have after you subtract the operating costs from your revenue.
    so, if the $26 million in operating income is true according to forbes, then the heat have $26 million, and still need to payback their taxes and interest payments.
    their final number will be much lower than $26m because of all the taxes and interest he has to pay.
    hope this makes sense

  • Jerome

    This year’s budget has an * on it. Lol

Advertisement