Miami Plans To Sell James L Knight Center
Written by Yeleny Suarez on March 17, 2005
By Yeleny Suarez
The city-owned James L. Knight Center is up for sale, and Miami City Manager Joe Arriola said he is expecting an offer this week.
A purchase proposal, according to Mr. Arriola, is likely to be made by a partnership of Hyatt Hotel, Blue Dot Capital and two investors he would not name.
"I am hoping very strongly that within the next 90 days, I will be going down to the commissioners with a sale," he said. "We are very, very close on that deal and are working very hard on the whole process."
Mr. Arriola said he made the decision to sell the property and city officials are talking to potential buyers.
The city will seek bidders for the site based on the first offer it receives, he said. That is similar to the way the recent auction of the Miami Arena was handled. The Knight Center complex could be up for bid in two or three months.
"We are going to be happy when we sell that real white elephant we got stuck with," Mr. Arriola said. "All we have to do is find a way to defuse the bonds."
The Knight Center, inside Hyatt Regency Miami, 400 SE Second Ave., consists of a 5,000-seat auditorium, 12,500 square feet of exhibition space and the Miami Convention Center.
The center brought in $4.1 million from operations in fiscal 2004 but carried $2.9 million in expenses and a $5.9 million debt payment.
"What makes the center run at a deficit is the debt services," said Armando Blanco, assistant to the city’s chief financial officer.
Commissioner Angel Gonzalez said he sees the move as a positive one. "because we will be saving a lot of money we are spending on that property."
Records show the entertainment and meeting complex is operating at a deficit, but general manager Bob Murray says the venue is serving its purpose.
Convention centers, Mr. Murray said, are built to drive economic activity and only about 5% break even. The main goal of the Knight Center, he said, is to attract international guests.
"The size of the event has a lot to do with which venue they choose," he said. "For example, Univision has been using our facility for 14 years, but the production has grown, and it no longer fits in a theater. It needs an arena. And if an artist expects to sell 12,000 tickets, he will tie in the event ahead of time to a facility that best accommodates him."
Latin artist Cristian Castro is scheduled to perform at the Knight Center’s theater April 8. The National Baptists of America Association expects about 5,000 to attend a conference there in September.
The Knight Center consists of an auditorium, exhibition space and a convention center. The Hyatt operates its own ballroom and meeting space, and the University of Miami has 23,000 square feet of conference space with 444-seat and 117-seat auditoriums and 14 meeting rooms.
Mr. Regalado said Tuesday that the Knight Center has been underused since 1997, when Global Spectrum took over its management.
Alejandra Argudin, the city’s acting director for public facilities, said 75 events in the Knight Center in 2003-04 generated revenue of $681,731. The Miami Convention Center had 92 events that brought in $392,279, and another $66,734 came through ancillary events.
City records for fiscal 2004 show that the center netted $1.2 million with $4.1 million in revenue and $2.9 million in expenses.
Armando Blanco, assistant to the city’s chief financial officer, said payment of $5.9 million on bonds was not made in 2003 because bonds were refunded and reissued, resulting in a $1.5 million saving for the life of the bond. But $5.9 million was paid in 2004 to debt services.
Mr. Regalado said the city is liable for bonds issued for the center until 2016, even if the facility is sold.
"We can not rush into this sale because we have obligations," he said. "I am not going to leave the blunt of paying the bonds to the people that will follow me when I am gone.
"The center is not being promoted as it should be," Mr. Regalado said. "It needs to reduce prices and bring in at least two events a week. We need events, events and more events to break even."
The city considered selling the center in November 1999 because it was losing more than $3.5 million a year.