Value of Angel Stadium Subsidy is Unclear

From the Voice of OC: 

As the City of Anaheim and the Los Angeles Angels of Anaheim sit down to negotiate a new stadium lease, there’s a fundamentally difficult question to answer at the outset:

How does the city place a hard-dollar figure on what the public could be giving up, or getting in return?

There seems to be little agreement on the value of the land and the stadium.

There are no publicly available studies to show how much tax revenue the city would reap under the proposed deal that would allow owner Artie Moreno to develop the 155-acres around the stadium. In contrast, there’s no estimate of how long the land would lie fallow under alternative scenarios.

“This is a very complicated deal. We don't know enough right now, we don't have enough to make a valid statement,” said Mark Rosentraub, an economics professor at the University of Michigan who specializes in sports stadiums.

The City Council in a 4-1 vote earlier this month approved a framework for negotiations that grants Moreno the land around the stadium for 66 years at $1 per-year.

The idea is that Moreno could use revenue from development of the property – which is entitled for more than 5,100 residential units, 3 million sq. ft. for office space and 3 million sq. ft. for commercial – to finance up to $150 million in improvements for the stadium.

Moreno under the framework can drop Anaheim from the current team name, “Los Angeles Angels of Anaheim.”

The city council majority that day also gave Moreno nearly three more years to quit the stadium and move to another city.

With Moreno was facing a tight window on whether to seek another location, the council majority worried publicly that he could panic and act irrationally during negotiations on a long-term lease.

However, Mayor Tom Tait – the only vote against the council's decision – along with academics who study stadium deals, say that by allowing Moreno more time to organize a credible threat of moving, the city gave away key negotiating leverage.

Tait argues that the proposed deal framework is lopsided.

He says Moreno is already required to make the renovations under the current lease, so the city isn't getting anything more than it already has, yet is still giving away land and a stadium that has a combined replacement value approaching $1 billion.

If anything, the city loses not only land but also community pride because Moreno can keep the team named after Los Angeles, and drop Anaheim.

“A reasonable compromise would be if the Angels drop Los Angeles, and we drop Anaheim, and change it to something that includes Anaheim, like California Angels, or Southern California Angels, or Orange County Angels,” Tait said. “The other part would be a joint venture where we put up the land, and the we split the profits, fifty-fifty, or some sort of reasonable split, where the taxpayers get something out of it... something commensurate with putting up real estate worth hundreds of millions of dollars.... that's what a reasonable deal would be. It could be a win for us, and a win for them.”

Other council members didn't return phone calls seeking comment. The only official the city would make available for an interview spoke on condition of anonymity.

That official took issue with Tait's arguments, saying the stadium has a direct economic impact to the city of over $100 million – along with indirect impacts that add up to $206 million.

The official also said the redevelopment of the land around the stadium could result in an economic boom, pointing to AT&T Park in San Francisco – home of the Giants -- as an example where the area around AT&T Park blossomed with development after the stadium was built.

While voters in San Francisco refused to pay for a stadium, the city contributed some infrastructure improvements.

The official also said that parking encumbrances around the stadium also pose a challenge to other developers. They would have to construct expensive, multi-level parking structures to support other buildings.

The official said that estimates on the amount of tax revenue that could be generated by Moreno developing the land wouldn’t come in until there are proposed developments. The city is contemplating rebating some – if not all – of the tax revenue back to Moreno.

Here's what else is known about the stadium and surrounding land:

The value of the land Moreno would lease ranges anywhere from $30 million to $240 million, or $150 million to $380 million, depending on which of two city studies you're looking at.

The lower end of the range is the value of the land in a bulk sale, while the higher numbers would come if the city carved up the land and sold it by individual parcels and also factors improving economic conditions, according to the city official and documents provided by the city.

Then there's the value of the stadium and, parking lot improvements, and the city venue known as the City National Grove of Anaheim, all of which Tait says must be added to the total figure in order to know the full value of the subsidy.

Tait says the stadium is worth what it costs to build a new stadium. For example, San Diego's Petco Park was built for $457 million.

A city official refuted that claim, saying that the value of the stadium to the city is approximately $80 million and is lower because its uses are limited. But Tait argues that the city has to look at what it would cost for Moreno to replace the stadium.

Victor Matheson, an economics professor at the College of The Holy Cross in Massachusetts who specializes in sports, says that Tait has a good point.

He said Moreno would have to find upwards of $800 million to build another stadium somewhere else, placing the city “in the driver's seat” on the negotiations.

“There is no doubt that the mayor is correct, that whatever is being offered by the city of Anaheim is going to be a good deal for the Angels... they will probably have a hard time finding a better deal elsewhere. That is absolutely right,” Matheson said. “Given the fact that its so expensive to build a stadium elsewhere form the ground up, it's unclear why the city of Anaheim thinks it needs to sweeten the pot for the Angels given the fact they have a stadium up and ready to go.”