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Miami-Dade County

Miami Heat to play in FTX Arena after county approves $135M deal with crypto exchange

 

The Miami Heat’s home court will become the FTX Arena under a $135 million deal Miami-Dade commissioners approved on Friday, clearing the way for the obscure cryptocurrency exchange to take the place of American Airlines as a leading sponsor in Florida sports.

Approval of the 19-year deal for naming rights at the county-owned arena will bring the venue’s first name change since it opened in 1999 with a New Year’s Eve Gloria Estefan concert. The iconic silhouette of an airplane on the “AA Arena’s” roof is set to be replaced with the FTX logo, unprecedented exposure for a company with a Hong Kong-based exchange for buying and selling Bitcoin and other digital currencies.

Launched just two years ago, FTX CEO Samuel Bankman-Fried — a 29-year-old MIT graduate known as one of the world’s wealthiest “blockchain billionaires” — secured the Miami deal for FTX’s U.S.-based exchange, FTX US, which only launched in 2020.

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An FTX lawyer submitted an affidavit to the county last week promising the companies behind the naming-rights agreement, West Realm Shires and FTX trading, don’t have any contracts or ownership interests with government agencies in China. In remarks Friday, lawyer Daniel Friedberg said Bankman-Fried is a U.S. citizen and his minority partners are foreign residents and live in China.

The agreement passed on a 10-1 vote. Commissioner René Garcia voted against the proposal, noting the legislation was only made public Thursday evening. “I want to show a united front. I really do,” he said. “But the way this was brought to the county commission was wrong.”

Commissioners Joe Martinez and Javier Souto did not attend the special meeting called this week to approve the agreement.

The deal replaces the Heat’s agreement with American, which cost the airline $2 million a year and expired at the end of 2019. While the Heat negotiated that deal in the 1990s, Miami-Dade exercised its option to take over naming rights in 2018 in exchange for guaranteeing the team a $2 million yearly payment starting in 2020.

Miami-Dade Mayor Daniella Levine Cava won approval Friday to spend the county’s $90 million share of the deal on an undefined effort to reduce gun violence and improve incomes across the county. Nearly a third of the money will be distributed to the 13 commissioners for spending within their districts, with the money required to fall under the same categories of preventing gun violence and improving prosperity.

“Over the lifetime of this partnership we will be able to invest in programs and solutions that will keep all of our communities safe,” she said.

The allocation of 30% of the naming-rights revenue to commission districts became a dividing line among the board members.

Some objected to steering a portion of the money away from the countywide budget in favor of letting commissioners allocate the dollars in their districts. Board approval is still required for the allocations, but objections are all but unheard of when it comes to district allocations.

“We’re starting to create 13 mini governments,” Commissioner Eileen Higgins said. “I’d much rather have a comprehensive plan for reducing gun violence.” She later secured an amendment returning her district’s portion, an average of $363,000 a year, back to the administration for inclusion in the countywide plan. Higgins represents District 5, which covers South Beach, Little Havana and other portions of Miami.

An emotional debate for Black commissioners

The most passionate arguments for the proposal came from the four commissioners who are also Black men. The most senior of them, Jean Monestime, said the vote to dedicate $90 million over 19 years to combat gun violence was his “best day” after 10 years on the commission representing northern Miami and surrounding areas.

“Maybe the prayers of many crying mothers have finally reached God’s ears,” he said, rising from his chair, a rare move in a chambers where commissioners address each other from their seats. “At least we are doing our jobs.”

Keon Hardemon, the legislation sponsor who negotiated the spending plan with Levine Cava, closed the debate by recalling how he hugged Monestime after his speech.

“That grown man cried in my arms,” said Hardemon, whose Miami district includes the arena site. “What does that tell you?”

The countywide plan on gun violence and prosperity is supposed to allocate resources based on which districts have the most shooting incidents. The commission’s five Black members — including Oliver Gilbert from the Miami Gardens area and Danielle Cohen Higgins from South Miami-Dade — represent the commission districts with five highest amounts of shooting homicides outside of city limits, according to county statistics released Friday.

Hardemon recalled hearing 13 gunshots outside his Miami home, and “the fear in my daughter’s face, and my powerlessness to my wife because we could not get to my 1-year-old fast enough because she was sitting in a highchair. ...

“You all know the stories,” he said. “When you talk about ‘these neighborhoods,’ I live in that neighborhood. This is my Cuba. This is my Hitler. There is no greater issue facing the Black community in this Miami-Dade County than gun violence.”

The FTX deal would mean $8.2 million in 2021 for the new programs, with about $5.7 million for the plan Levine Cava must present to commissioners and the remaining $2.5 million available for commissioners to allocate to groups and programs in their districts. The front-loaded deal has payments below $2 million through 2023, and would average $4.7 million a year through 2040.

FTX would pay an average of $7 million a year, putting it above some recent NBA arena deals (Smoothie King pays $4 million a year in New Orleans) but behind others (State Farm pays $9 million in Atlanta, and Chase $15 million in San Francisco).

Out of FTX’s naming-rights fees, Miami-Dade must pay the Heat $2 million a year for the team’s guaranteed sponsorship revenue. In 2021, the payment is $4 million to cover the 2020 fee the Heat delayed until a sponsor could be signed. The marketing firm Miami-Dade hired to find a naming-rights sponsor, Cleveland’s Superlative Group, receives a $5 million commission in the deal, paid out through 2023.

By dedicating the naming-rights revenue to new expenditures, the county’s hotel-tax budget will be under more strain. Hotel taxes cover the county’s various sports-facility expenses, including about $7 million a year for the Heat arena. That includes the $2 million naming-rights payment to the Heat.

The budget, more than $100 million a year before the pandemic, funds museums, cultural institutions, and theaters. Revenues are down about 50%, and Miami-Dade plans to use a chunk of its more than $500 million in federal COVID relief dollars to plug the budget holes, Levine Cava said.

When does FTX go on the arena roof?

Levine Cava said the plan was to put the FTX brand on the arena for the 2020-21 NBA season, which ends this summer. FTX can still pull out of the deal if the NBA declines permission to put the company’s logo on the Heat court, and the county would still receive $2.5 million.

The Heat’s front office and Miami-Dade had no answers Friday on when the FTX logo would go on the arena’s roof, or even when the county-owned building should be called the FTX Arena. County legislation doesn’t take effect until 10 days after a commission vote, unless the mayor waives her veto option. It’s not clear if the name change can happen ahead of NBA approval.

The deal drew concerns on the dais and beyond about Miami-Dade lashing the county’s most famous building with a cryptocurrency exchange.

The Seattle lawyer FTX dispatched to represent the company in Miami, Daniel Friedberg, drew a rebuke when he tried to defend the deal against questions.

On FTX’s owners from China, Freidberg said: “I know with the way our country is now, there is a bias against Asian people. I hope that you guys can be open to the fact that there are some international people.” The commission’s chairman, Jose “Pepe” Diaz, was born in Cuba and about 54% of Miami-Dade’s population is foreign born.

On complaints the process was rushed, Friedberg said FTX could wait for approval but questioned why Miami-Dade would wait on the extra money for discouraging gun violence. “If you sit on this for 30 or 60 days, there will be additional deaths,” he said.

Diaz cut him off shortly after that, and Garcia called his comments “a complete insult to this community.” For FTX, Garcia said, “this contract is about putting money into your pocket and advertising. That’s what this contract is for you.”

Barry White, who lives in the Kendall area, was the lone member of the public to speak at the meeting at the Stephen P. Clark Center, and read from a news article noting cryptocurrencies are used by some to evade regulations and money-laundering laws.

“Do we really want to support such a nefarious business?” he asked commissioners.

Jimmy Morales, the county’s chief operations officer, acknowledged Miami-Dade’s deal is with a startup company formed in 2019 that’s reliant on a new financial sector.

“We of course recognize there is risk in this deal, particularly with a relatively new company in a relatively new industry,” he said. Morales noted the deal is front-loaded so that FTX pays $14 million in 2021, then an average of $7 million a year through 2040. Deducting the Heat’s share and Superlative’s costs, Miami-Dade would have about $4.7 million to spend during an average year.

“By the way,” Morales told commissioners, “the payments to the county will be in U.S. currency, not in Bitcoin.”

This story was originally published March 26, 2021 2:29 PM.

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