Angels lease could generate millions, but for whom?

From The OC Register:

ANAHEIM – A proposed stadium lease for the Angels contains benefits so generous that in addition to covering the cost of the team’s renovation of the ballpark, it could bring team owner Arte Moreno tens of millions of dollars of new income.

That money would continue to flow to Moreno’s investment group for 66 years, even if the team opted out decades earlier for a ballpark elsewhere, according to the proposal being used as the basis for lease negotiations between the team and the city of Anaheim.

The proposal being used to negotiate a new Angel Stadium lease calls for a deal that would extend through 2057, with opportunities for the team to opt out in 2036, 2043, and 2050. A proposal for a separate lease with Arte Moreno's Pacific Coast Investors would give PCI the right to develop 128 city-owned acres surrounding the stadium and control the property for 66 years.

That means PCI could control that development for as much as 33 years after the Angels have relocated. That's attracted some criticism.

Although the land lease with PCI has been proposed by the city to help the Angels pay for stadium renovations, city staff says there are reasons to keep the two leases separate and on timetables appropriate for their respective goals.

"First, each transaction should create sufficient economic benefits and revenue streams to the city to be independently justifiable," said Tom Morton, executive director of Anaheim's Conventions, Sports and Entertainment operations.

"Second, retaining the ability to terminate a long-term development lease if the Angels leave Anaheim will likely eliminate the developer's ability to finance construction of improvements and infrastructure."

At the heart of negotiations is the $130 million to $150 million in stadium renovations the Angels are obligated to perform over the next 20 years under the current lease. In the city’s effort to help the team defray those costs – and to ensure the team stays in town for the immediate future – city staff has proposed letting Moreno develop 128 city-owned acres surrounding the stadium.

Moreno would pay the city $1 per year for the land under the draft terms. The proposal, which appears far from finalization, also would rebate to Moreno all city taxes generated by the new development.

“I would not do the deal,” said Mayor Tom Tait, the sole dissenter in the City Council’s Sept. 3 vote to proceed with negotiations using the staff proposal as the basis for talks. “That land belongs to the people, and we need to protect the people. We certainly value the Angels, but the economic value to the city doesn’t merit giving away the land for free.”

While four council members support the plan to allow the team to develop land that is now used exclusively for parking, they also point out that all of the proposal’s details are subject to negotiation. At least two have concerns about a 100 percent tax rebate and about letting Moreno benefit from development even if the team leaves.

And at least one of those council members doesn’t want Moreno raking in millions beyond what he needs for renovations. The council is awaiting an appraisal of the land, but estimates have run as high as $380 million. Even if the land was worth a more modest $200 million and Moreno was given development rights for $1 per year, that would mean a $50 million benefit to the owner beyond his highest expected renovation expenses.

“We’ll have to make sure it’s fair for the taxpayers,” said Councilwoman Lucille Kring, a challenger to Tait’s 2014 mayoral re-election bid. “Arte Moreno shouldn’t get a $50 million benefit.”

Eager to dispel the impression that it’s making a land grab, the team emphasizes that the proposal originated with city staff.

“Including the land was the city’s idea as their contribution to fund the much-needed stadium improvements,” Angels spokeswoman Marie Garvey said. “We are trying to work through the details of the land in a way that is mutually beneficial.”

Unlikely to relocate

Driving the city’s decision to renegotiate the lease is a desire to ensure the team doesn’t relocate. The current lease lasts through 2029 but allows the team to opt out in 2016. That opt-out period was extended to 2019 by the council’s Sept. 3 vote.

It would likely cost the Angels more to move than to continue under the current lease and pay $150 million in renovations to the aging stadium, fourth oldest in Major League Baseball.

Under current terms, the team pays modest rent on Angel Stadium – the nearly $1 million in 2013 covered about half of the city’s stadium-related expenses. The team keeps all of the revenue from the first 2.6 million tickets sold each season as well as all money from concessions, advertising and non-baseball events, and virtually all parking revenue.

Those terms grossed the Angels $275 million in 2013, seventh highest in the Major League Baseball, according to Bloomberg News.

“I wouldn’t worry too much about the Angels leaving right now,” said Neil deMause, author of “Field of Schemes,” which examines taxpayer support of professional sports venues. Tait shares deMause’s view that the team will stay because it’s unlikely to get a better deal elsewhere.

Current construction of professional sports venues typically requires major investments from both the team and the public.

A deal that will move the Atlanta Braves from downtown to a suburb will cost the team $372 million for the new stadium and will cost Cobb County $300 million. The new Busch Stadium in St. Louis, completed in 2006, cost the team $321 million and the public $44 million. The Brooklyn Nets’ arena, completed in 2012, cost the team $1 billion, partially offset by the public pitching in $300 million for the venue and surrounding development.

“It’s not impossible to have another stadium built” for the Angels, said sports attorney Irwin Raij, who has variously represented teams, cities and Major League Baseball in lease talks. “I’m not saying it’s likely, but it’s not impossible.”

That outside possibility is what concerns four City Council members – including the possibility that Moreno would move even if it cost more than staying.

“I can see them move if negotiations broke down and there was miscommunication and they wanted to wash their hands of it,” Kring said. “I can see that the team might like something brand-spanking new.”