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Angel Stadium has made Anaheim $1.6 million in direct revenue since 2010, after factoring in maintenance and bond payments, according to data provided by the city.
City spokesman Mike Lyster said while the stadium operations budget item includes bond repayments and maintenance spending directly tied to the stadium, it also includes spending in areas not related to the stadium like the City National Grove and The Catch.
“It includes the city’s capital reserve payment (maintenance), debt service payments, insurance costs, costs for any city events held in the stadium parking lot, expenses related to administration of a business-owner association of offices and businesses next to the stadium and some allocation of city staff costs,” Lyster wrote in an email.
Lyster said the budget item was set up that way to ease organizing the revenues and expenditures in that area of the city since the Grove and The Catch are next to the stadium.
The 2018-2019 fiscal year budget shows the city spent $2.45 million and Anaheim is projected to spend nearly $2.87 million on stadium operations this fiscal year.
But actual spending on the stadium is far less. According to data provided by Lyster, the average yearly direct spending on the stadium is a little over $1.1 million.
Anaheim currently contributes roughly $697,000 to stadium maintenance annually, according to a city document posted online.
And the city’s direct spending is going down because the bonds are nearly paid off and are expected to be paid by 2022, according to the document.
There also is sales tax revenue the stadium produces, but the city can’t release that data because state law forbids the release of an individual business’s tax information, Lyster said.
Numerous academic studies on sports stadium deals from the 90’s and early 2000’s found the deals to be more beneficial to the teams than cities because of the public subsidies involved and complex revenue-splitting mechanisms.
A 2008 academic article, which pooled various economists’ sports stadium studies, found most economists said stadiums don’t help drive local economies.
Victor Matheson, an economics and accounting professor at College of the Holy Cross in Massachusetts, said the old concept was the presence of the stadium would spur major development in the neighborhood around it. He’s also written academic articles on stadium financing.
“The real proof is what is there now.” Matheson said. “If sports stadiums are going to lead to massive economic development, every single square inch surrounding that stadium should be super, super high value property at this point. Because you’ve had a booming Los Angeles economy for half a century and you’ve had that stadium there for half a century.”
Angels Stadium sits in the Platinum Triangle, a development zone surrounding the Big A and the Honda Center, and is slated to be the home of 26,000 residents, 17,500 apartments and condos, 13.5 million square feet of offices and 4.8 million square feet of commercial, retail and hotel space.
Currently, there are 6,100 residents, a little over 4,000 apartments, 1.9 million square feet of offices and nearly 710,000 square feet of retail and commercial development, according to a city document.
City officials point to revenue generated by developments surrounding the stadium in the Platinum Triangle. The area currently generates an estimated $8 million a year for the city, more than doubling the $3.5 million it made during 2009, Lyster previous told Voice of OC.
Matheson said cities sometimes miss opportunities during negotiations that could maximize developments and economic activity around stadium land.
“So you might get an argument out of that although it doesn’t make us much money, it doesn’t cost us much either,” he said. “But that totally ignores the opportunity cost. What are 155 acres of prime real estate worth in the LA metro area? That’s a gigantic opportunity.”
Stanford University economics professor Roger Noll, a stadium financing expert, said Anaheim’s maintenance contribution is low compared to other cities around the country and, depending on how a new lease is negotiated, Anaheim could get away from paying money directly for stadium upgrades and maintenance.
“That’s actually at the low end,” Noll said. “You might be able to get out from under that, if they (Angels) had more development rights,” Noll said.
He said Anaheim could nix the yearly expense if the city allows the Angels develop land around the stadium and the team can use the development revenue to pay for stadium upgrades and maintenance.
Team owner Arte Moreno told the Orange County Register in February that the team will only stay in Anaheim if the city helps pay for some of the $150 million in upgrades to the ballpark.
“What they’ll do is they’ll give them (Angels) the development rights, they’ll give them partial release, but not full release from property taxes, but they’ll (Anaheim) still end up ahead. The city will probably pay some for the infrastructure development (roads, sewers, electrical), but they’ll get that back in fees,” Noll said.
A review of building permits found on the city’s website since 2003 — when current owner Arte Moreno bought the team — show at least $10.8 million has been spent by the Angels on stadium maintenance and upgrades, according to values attached to the permits.
Lyster said the team has actually spent closer to $30 million since then.
The spending also includes Anaheim’s yearly maintenance contribution.
The permits show at least $1.19 million was spent on upgrading and renovating luxury box suites at the Big A, including $95,000 to turn a former sports press area into the owner’s suites in 2004, shortly after Moreno bought the team from Disney.
The team also spends money on infrastructure repairs, like the $1 million for repairs to concrete in the stands in 2009 and various plumbing and electrical repairs over the years.
Some of the spending, according to the permits, is also used for aesthetics, like the $2 million to replace signs and video screens in 2004.
Because the Angels have hired development consultants, Noll said Moreno might be looking to do something similar to what the Los Angeles Rams are doing with their new stadium in Inglewood.
The Rams’ stadium, estimated to cost more than $5 billion, is being built with private funding instead of tax dollars. Rams owner E. Stanley Kroenke is looking to embed the stadium and its developments into the surrounding neighborhood to produce money all year, not just during football season.
Noll said while it’s a relatively new concept, especially for football, that it can be done with baseball stadiums. He compared it to the Boston Red Sox’s Fenway Park, the oldest ballpark in baseball.
While Fenway Park wasn’t originally designed in 1912 to produce revenue throughout the year, its small footprint and location accidentally placed the stadium in the surrounding Boston neighborhood and helped produce numerous business developments that bolster local economic activity, he said.
“It’s almost the anti-Anaheim stadium. It’s exactly the opposite in every conceivable way. There’s not enough space inside the stadium for enough concessions to feed everybody there. It’s a throwback to 50 years ago — you get a stamp on your hand and you walk across the street to the bars,” Noll said. “The whole rest of the neighborhood is really part of the stadium and that’s very successful.”
Under the 1996 lease with the Angels, which was reinstated in January after Mayor Harry Sidhu brought the proposal to the Council, the team keeps all advertising revenue and the city won’t see any ticket revenue unless the team sells over 2.6 million tickets in a year. The city also gets 25 percent of parking revenue above $4 million and 25 percent of other event revenue — like motocross and monster truck shows — above $2 million.
The team could stay under the current lease until 2029 if a new deal isn’t struck or if the team doesn’t leave the current one by Dec. 31.
The Angels don’t pay rent at the stadium either because its $87 million for the stadium upgrades in the late 1990’s was considered prepaid rent, according to the 1996 lease. The city also chipped in $30 million.
Matheson said the new approach to stadium developments is largely the lessons cities learned from funding stadiums that are only used a portion of the year and surrounded by parking lots.
“This idea of really tying the stadium to neighborhood economic development is at least newer, because in the 90’s and 2000’s we really did get this idea that building a stadium with a whole lot of parking lots around it, that’s obvious to anyone that’s really not a good development strategy,” Matheson said.
Noll said baseball stadiums, like football stadiums, don’t produce much of anything during the offseason because the buildings aren’t equipped to handle a wide variety of other events, like enclosed arenas that are able to host concerts and other sporting events like Ultimate Fighting Championship and boxing matches.
“There’s really nothing you can do with a football stadium or baseball stadium other than playing games in it. So it spends most of its time dark. That’s an economic sink for a local neighborhood,” Noll said. “That’s what’s behind the motivation for these new stadium designs,”
Anaheim still hasn’t received a final version of the stadium land appraisal and the city’s negotiating team meets with itself Sept. 13. The team includes Sidhu, City Manager Chris Zapata and City Attorney Rob Fabela. The city hired two consultants to advise the team and Convention Center Executive Tom Morton will also help — Morton and the consultants not be directly involved in negotiating.
The Council seemingly agreed at its Aug. 27 meeting to have the team pay market-based rent on the stadium, or sell the property at market value, depending on how negotiations pan out.
The city expects a proposal from the Angels sometime in October and hopes to get a deal done by Dec. 31, the latest the Angels can leave the lease, or they have to stay until 2029.
Noll said that’s not enough time to hammer out a new lease.
“They can’t possibly come up with the details on that between now and December,” Noll said. “The right way to go about doing this is to have design competitions on components of it.”
He continued, “When you’re doing something ambitious you want to involve a lot of people in the process to get as many ideas as they can … they can agree that that’s what they’re after and sign a good faith agreement and come up with a detailed lease a year later.”