Micky Arison and Miami Heat Get Audited by Miami-Dade Inspector General

American Airlines Arena.jpg
County watchdog auditing American Airlines Arena's financials.
Following multiple stories from Riptide about the Miami Heat refusing to share profits from the American Airlines Arena with county taxpayers who subsidize the place, Miami-Dade Inspector General Christopher Mazzella has apparently decided that someone should try to verify how much the team is actually making. We've now confirmed that the county's top watchdog is auditing the Heat to determine if the arena's revenues, expenses, and profits are accurately reported to the county.

Judging by public documents obtained by Riptide, Heat owner Micky Arison is doing everything he can to stonewall the IG from obtaining information beyond basic annual budgets and annual financial statements.

Since the Heat's controversial deal was signed in 1997, the county has never shared the wealth as owner Arison had promised. In order to keep the team in Miami, then-county Mayor Alex Penelas agreed to give away $38 million worth of prime waterfront public land to build the arena. The team paid $240 million for the construction, but the Heat got an annual $6.4 million subsidy to operate the arena for the next 30 years -- that's $192 million in taxpayer funds for the life of the deal. In return, a Heat subsidiary -- Basketball Properties Ltd. -- agreed to share 40 percent of all its profits over $14 million.

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Before Micky Arison blessed us, "downtown Miami was a veritable wasteland."
​The arena has never hit that magic number, not even during last season's NBA Finals run as prized free agents LeBron James and Chris Bosh helped the Heat bank $60 million in record-breaking revenue. New Times wasn't the only media outlet to note the NBA franchise's consistent inability to break the $14 million mark. Last May 5, CBS4 investigative reporter and former New Times columnist Jim DeFede did a news segment on the arena's finances.

A little more than a month later, the inspector general's office began its inquiry, according to a June 22 email from chief legal advisor Patra Liu to the Miami-Dade Internal Services Department, which administers the arena contract, requesting copies of the 1997 agreement, annual financial reports, and any other documents submitted by Basketball Properties to the county. Liu followed up with a request for more documents from Basketball Properties on July 26.

That prompted a meeting on August 31 with Liu, Mazzella, the subsidiary's Chief Financial Officer Sam Schulman, two other arena executives, and Heat lawyers Jorge Luis Lopez and Pablo Acosta to address the team's concerns that the information being requested by the inspector general were "trade secrets." As part of the inquiry, investigators requested samples of vendors lists and payments, balance ledgers, and payroll information.

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Inspector General Chris Mazzella is on the Heat's heels.
Despite the objections from the arena representatives, Mazzella stood firm that the team had to turn over the records. On October 4, he officially notified Basketball Properties that his office was conducting an audit to "include examining management agreement computations, cost allocations, including personnel and benefits costs; vendor contracts and payments to BPL's trial balances."

Two days later, Schulman sent a letter to internal services director Wendi Norris asserting that the Heat does not have a sweetheart deal with the county. Schulman complained that the county's $6.4 million subsidy is "insufficient to fund all of our basic operating and maintenance costs." The Heat has spent in "excess of $27 million since we opened on Dec. 31, 1999, on capital improvements to keep the arena state-of-the-art and up-to-date," the CFO wrote.

In addition, arena expenses ballooned 57 percent between 2002 and this year "due in large measure to an increasing event load and significant increases we have been faced with our insurance, labor and utilities, as well as the effects of wear and tear from the approximately 1.5 million visitors we get per year," Schulman wrote.

He argued the county should be proud of the Heat's contribution to remaking downtown Miami. "When we commenced construction of the arena in 1997, downtown Miami was a veritable wasteland," Schulman wrote. "We are very proud of the leadership role we have played in being the catalyst for the unprecedented growth of the downtown urban core."

The CFO and other arena officials did not respond to requests from Riptide for comment. However, a highly placed source says the team has allowed agents to sift through the requested records at the arena but has taken steps to protect its trade secrets by redacting or summarizing certain information, such as names of employees and percentages paid to concert promoters. The source insists the inspector general's audit will not turn up any malfeasance, misappropriation of funds, or hiring of "ghost employees" by the team.

"The whole profit-sharing issue is a red herring," the source says. "Because of the whole Lebron James and Chris Bosh dynamic, we are getting closer to sharing the profits. But there is no 'Gotcha!' here."

Mazzella declined comment.

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22 comments
michael wind
michael wind

bay harbor islands has more than 5000 companies that list their home there,but less than 300 listed by this corrupt town,and not contributing any money to the county,complete fraud,time for a investigation.

du_scurrilous
du_scurrilous

From The Globe & Mail: Carnival stock loses 16.5 % in wake of cruise ship disaster.

Karma is a @#$%.

Neil'sGhost
Neil'sGhost

"When we commenced construction of the arena in 1997, downtown Miami was a veritable wasteland,"He forgot to add "the stench you smell in downtown Miami comes directly from Mickey Arison."

Polly
Polly

More and more sexy girls guys join the  dating site stdster... c0m to look for sex partner.

Fake expenses?
Fake expenses?

Let's hope the audit shows the Heat and it's boss Mickey Arison's tricks to steal from the taxpayers. Inflated depreciation and amortization schedules? What's that about?

Illegal LED billboard advertising generating I'll gotten gains for Arison?

Bring it on.

County lawyers suck
County lawyers suck

This is another example of why the government should never use the taxpayers money to go into business with the private sector. With these so called joint ventures the taxpayers always get screwed.

Look at Jungle IslandLook at the $3 Bil diverted to the MarlinsLook at the $1.5 Bil diverted to the 2 broke museumsEtc

P_Nis
P_Nis

Lol, you're making too much sense YO!

Half_the_Man_I_Used_to_Be
Half_the_Man_I_Used_to_Be

Kind of like the way Micky will move his cruise ships out of ports that make him pay taxes, follow regulations or pay living wages; Micky will just move the Heat to Seattle, San Diego or St Louis if he has to pay anything for the arena.

Neil's ghost
Neil's ghost

Fuck you Mickey Arisonofabitch. And fuck all your dirt bag low life landsman cohorts. Sheisters in brooks brother suits. And the beauty is that one of Mickey's ships flipped over today. Staffed by modern day slaves who are uneducated and incompetent. All in the name of the almighty dollar. Hahahahahahahahahahahahahahahahahahahahahahaha!!!!!!

country girl
country girl

These guys eat at the pubic trough and never pay. Nothing will come of this and we will continue to pay. Thanks Frank for keeping this in the forum.

Sleazy and stupid lawyers
Sleazy and stupid lawyers

The reason Arison is a billionaire is 1. He had a rich father 2. His lawyers are much smarter than the County and City lawyers.

The County will keep paying $6.4 mil per year to the Heat and Arison will refuse to stop using the wall of the AAA Arena as an illegal billboard and Arison and his sleazy employees will refuse to pay rent.

nanook5
nanook5

don't forget how he got his job - his dad moved to israel - solely to avoid paying US estate taxes.

Jose Pena
Jose Pena

Exactly. Nothing illegal, but when you have an agreement based on profit, just don't make that much profit (revenue - expenses = profit), just increase the expenses!

J
J

I'll gladly pay you Tuesday for a hamburger today.  I'm willing to bet the Arena will never reach that magical 14mil and the city will never see a single dime. 

Bribes much?
Bribes much?

Why is the Heat allowed to install an illegal electronic sign on Biscayne Blvd? Did the Heat get FDOT permission? How much money do they take in selling ads for plastic surgery, trips to the Bahamas, health insurance, Malt liquor, crack cocaine...? Does Arison and the Heat bribe Carlos Gimenez?

Illegal billboard
Illegal billboard

Then to compound his crimes Micky Arison and the Heat installed an illegal LED billboard facing Biscayne Blvd. The Heat makes a fortune selling ads on the illegal billboard. Then they have the nerve to stiff the County on the rent?

P_Nis
P_Nis

Inspector Mazella is on the case. Don't hold your breath!

BeGoodMickey
BeGoodMickey

Be a good citizen and pay your taxes.  This country made you what you are, give back to it, it's only fair.

Dantevida
Dantevida

Alot from the original agreement never got done on the part of the Heat (Basketball properties)  Remember the public playing fields and facilities they were going to build just east of the arena, and what about the required pedestrian overpass to Bayside?

Deadbeat
Deadbeat

Micky Arison is a billionaire and he pays several of his employees $20 MILLION per year. Some get more. But when it comes to paying rent he stiffs the owners of the AAA Arena. Like a deadbeat he refuses to pay rent while he hides behind an army of high paid lawyers and various flacks.

Anthonyvop
Anthonyvop

More Government Mooching.  Taking from the Productive members of society to appease the unproductive.No wonder Miami's economy blows.

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