More Than Half of Money Spent on Angel Stadium Went to Projects Benefiting Angels, Not Maintenance

JULIE LEOPO, Voice of OC

Angels vs Astros game Sept. 29, 2019.

The LA Angels of Anaheim have spent nearly $30 million the stadium over the past seven years, but only a fraction of that spending was for normal wear and tear maintenance, and more than half of the money was used on items that benefit the team like a scoreboard. 

Under the City of Anaheim’s 1996 lease with the Major League Baseball franchise, the team is supposed to keep the stadium in world class condition by funding regular maintenance. 

Since 2012, the Angels have spent at least $4.55 million on Big A maintenance on items like concrete replacement, steel beam replacements, new paint, pedestrian ramps and heating ventilation and air conditioning.  

“That’s too small to expect that they’ve been really doing a lot of preventive maintenance on the plumbing and wiring and things like that,” said Stanford University economics professor Roger Noll.  

He said the spending would need to be much more to keep the stadium truly maintained at a level consistent with the lease requirement. 

“The combination of what the cities pay and what the Angels pay is very low. It would normally be close to $10 million, $8 million a year would be the normal amount of maintenance,” said Noll, who’s tracked stadium deals throughout the country. 

The city contributes nearly $700,000 a year for stadium maintenance, as stipulated in the current lease. 

Noll said teams throughout the country often delay maintenance in order to get cities to help them cover the costs when negotiations come up. 

“It is usual for teams to try to save on maintenance — essentially not to maintain it as well as it ought to be and then when there’s accumulated wear and tear and it all adds up to a major renovation. Then they ask  the local government to pay for it. You see that frequently in stadiums, when every 10 to 14 years there’s $100 to $200 million for deferred maintenance,” Noll said. 

Angels spokeswoman Marie Garvey dismissed sports stadium economists’s observations. 

“We operate a first-class baseball experience at the stadium that meets and exceeds Major League Baseball standards,” Garvey said in a text message.

Yet team owner Arte Moreno argues said the stadium desperately needs updating and he wants the city to help pay for it. 

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 estimated $150 million in upgrades to the ballpark. 

While the lease calls for the Angels to maintain it to “first class” standards, it doesn’t define it. 

“Tenant [Angels] will maintain the Baseball Stadium in good condition and repair, subject to ordinary wear and tear, at its sole expense [excluding Anaheim’s mandatory yearly contribution],” reads the 1996 lease. “The standard of maintenance to which Tenant will adhere in the maintenance of the Baseball Stadium will be at least equal to first class professional baseball stadiums,” like Kansas City and Dodger stadiums at the time. 

The Angels committed $87 million to stadium upgrades when the 1996 lease was negotiated and the city chipped in $30 million. 

But the lease also states the Angels “will not be required to upgrade equipment and systems (such as, scoreboard, public address system, telecommunication facilities, etc.) in order to remain state of the art with other stadiums…” 

The scoreboard accounted for more than half of the spending, according to maintenance spending records. 

The scoreboard, which was upgraded last year, cost a total of $17.8 million. Of that, $10.6 million was for the display, $4.08 million for sound and $3.05 million for the control room, according to records obtained through the California Public Records act. 

The Angels also spent at least $2.1 million on premium seating upgrades in its suites and diamond club since 2012. 

Victor Matheson, an economics and accounting professor at College of the Holy Cross in Massachusetts, also said teams often delay stadium maintenance in an attempt to get subsidies from cities during negotiations.  

“That’s always an issue for debate. If the city’s in charge, the team always says it’s not enough. And if the team is in charge, the team always drags its feet as long as its can,” Matheson said. “The best thing for the Angels would be — or any team– to defer the maintenance so long, they can say look the building is falling down, we need a whole new one. Therefore the decrepit state of the building makes sure you get a new stadium while simultaneously not fulfilling maintenance obligations.” 

Matheson said upgraded scoreboards do help teams sell more tickets. 

“If you’re running your own stadium, you want to engage in the maintenance and upgrades you think are going to maximize your revenue,” he said. “One of the attractions at major leagues parks is scoreboards and of course there’s an arms race … every stadium thinks they need to have that as well.” 

During a February news conference, Angels owner Arte Moreno said the team will only stay in Anaheim if the city helps pay for some of the $150 million in upgrades to the ballpark. 

The last round of negotiations started in 2013, but ultimately petered out in 2014. During that time, the city proposed leasing the land to the Angels for $1 a year for 66 years and giving the Angels development rights for land around the stadium to help the team fund the stadium upgrades. The Angels were also going to take full maintenance responsibility for the stadium. 

City officials have repeatedly said that current negotiations will not be rooted in anything from the 2013 proposal, which caused a public backlash. 

Anaheim had an economic impact study conducted on the Big A in the previous round of negotiations, which estimated the economic impact the stadium provides is $240 million a year. 

But the stadium has only made $1.6 million for the city in direct revenues since 2010, after factoring in Anaheim’s yearly maintenance spending and bond payments from the 1980s for an unused convention hall at the stadium. 

Sales tax generated by the Big A and the nearby area known as the Platinum Triangle is often pointed to by Anaheim officials as stadium-driven revenue. The area contains Angel Stadium, the Honda Center and some businesses like breweries, restaurants and some construction supply stores. 

The 820-acre Platinum Triangle generated $5.1 million in sales tax in 2018 and is projected to produce $5.2 million this year. That number is up from the $3.5 million generated in 2010, according to a city document on its website

In comparison, Downtown Fullerton, which is a fraction of the size of the Platinum Triangle at roughly 65 acres, generated a little over $2.1 million in sales tax last year and the 74-acre Outlets at Orange generated $3.1 million for Orange. 

“You have a shopping mall that’s literally open 15 times longer a year than an arena or stadium,” Matheson said.  “The problem with stadiums in general is that stadiums have a tremendous amount of bed time where they’re not selling anything at all.” 

According to Forbes estimates, the Angels make $101 million a year in gate receipts, but the team’s net profit — after factoring in player and employee salaries and operating expenses — is estimated at $19 million a year. It’s also ranked the 8th most valuable team in Major League Baseball at nearly $2 billion.

The maintenance spending could be an issue depending on who’s paying for what, said Neil deMause, an author of the stadium financing book “Field of Schemes who also runs a website of the same name

deMause, who’s covered stadium negotiations across the country for over 20 years, said the maintenance issue depends on who’s spending on what — which isn’t clear from the maintenance documents provided by the city. 

“If they’re using the scoreboard as an excuse to skimp on maintenance, that’s clearly a problem,” deMause said. “If they’re actually spending what’s necessary on maintenance and saying, ‘Oh, we’re also spending a bunch of money on the scoreboard, but that’s coming out of our pocket,’ that’s not necessarily so bad. It depends on which pocket the money is coming from.” 

The team is expected to make a proposal to Anaheim some time this month. The City Council doesn’t meet until Oct. 22, although it’s unclear if any discussions of the lease will happen. 

Meanwhile, the appraised value of the stadium was apparently leaked from city hall. The full appraisal is sitting in a binder at the city manager’s office and only the City Council is supposed to see it. The city previously said it will release the appraisal to the public “at the right time,” but there’s no time frame of when that could happen. 

Matheson said sports leases are often complex, which usually benefits professional sports teams. Anaheim and the Angels have until Dec. 31, the last day the team can opt out of the lease, to finalize a new stadium lease. 

“Theoretically you can hammer this out in a weekend,” Matheson said. “We’re not trying to land a man on the moon here, we’re just trying to figure out how much somebody is going to pay to use the building.” 

He said cities and teams often make leases complex. 

“And the only thing that makes these complicated is explicit decisions by both sides to make it complicated. You can write a lease that’s pretty straightforward, but it typically is not in the interest of the team to not write a complex document. Again, they’re probably better equipped to write a complex document that works well for them,” Matheson said. 

Spencer Custodio is a Voice of OC staff reporter. You can reach him at scustodio@voiceofoc.org. Follow him on Twitter @SpencerCustodio.