Anaheim is sailing into uncharted waters as it gears up to sell Angel Stadium and the 153-acre land it sits on, breaking away from decades-old pattern of professional sports teams receiving direct public subsidies for stadiums.
But the final sales price is unknown because the city still has to negotiate community benefits agreement, including affordable housing and a local hire program, which will lower the initial $325 million starting price. Although the City Council votes Dec. 20 to begin the land sale, effectively tying up the land in the process, it won’t decide on those agreements until next spring.
The Angel Stadium land will be sold to a shadowy company, SRB Management, who’s only known business partner is Angels owner Arte Moreno.
Stadiums were mostly financed and owned by wealthy sports team owners 100 years ago, but a switch to fully or mostly publicly subsidized stadiums started to happen in the 1960’s and 70’s and became commonplace by the 1990s, according to research by the American Economic Association.
The Louisiana Superdome helped kick off the boom in publicly subsidized stadiums, said Stanford University economist and stadium finance expert Roger Noll, who’s been tracking stadium deals for over 40 years.
“The big jump is when the Superdome was built in New Orleans,” Noll said. “It was intended to be something of a tourist attraction — the first dome stadium and a lot of talk went around on how the Superdome was going to become the center for this neighborhood and, of course, you went there 10 years later and you found the Superdome created a suppressed neighborhood.”
In 1966, Louisiana voters approved construction of the $35 million football stadium, but that cost kept rising. According to two different inflation calculator websites, today’s cost would be over $270 million.
By 1978, the total cost of the Superdome rose to over $300 million, according to a New York Times article published that year. That’s roughly $1.5 billion in today’s value. By then, the Superdome had already proved itself to be a drain on public coffers — less than four years after the dome opened, according to the article.
“That was when we went from a world from predominantly privately financed to predominantly publicly financed,” Noll said.
Sociologists Kevin Delaney and Rick Eckstein also note the 1960’s and 70’s shift to publicly financed stadiums in their book, “Public Dollars, Private Stadiums.”
“With the advent and explosion of television coverage, professional sports become more lucrative and teams and leagues more powerful,” Delaney and Eckstein wrote. “Throughout the 1960s and early 1970s, this demand produced a steady increase in the number of stadiums being built and financed by municipalities.”
The 1990s saw an explosion of publicly financed stadiums and arenas said Noll and Victor Matheson, an economics professor at College of the Holy Cross.
“Between 1992 and 2008, we had a huge number of stadiums built all over the country in all sports,” Matheson said. “Then 2008 rolls around, we got the Great Recession and people start saying it’s pretty distasteful to pour money into stadiums to benefit billionaire owners.”
Matheson specializes in tracking stadium deals.
Although public subsidies began drying up for sports teams, especially in cities that have experience with stadiums, some cities are willing to foot the stadium bill, Noll said.
“There’s much more resistance now than there used to be, but it’s incomplete. We still get catastrophes like Las Vegas. Cities who have experience with sports teams aren’t providing subsidies, but cities like Las Vegas, are getting hosed. Just like other cities got hosed in the 80s, 90s — that’s when it got completely out of control,” Noll said.
The Raiders football team is moving to Las Vegas from Oakland, lured by $750 million in public bonds approved for construction of the $1.8 billion stadium in 2018. Clark County, which oversees the stadium, approved a nearly 1-percent increase to hotel taxes to pay for the bonds, according to the Las Vegas Review Journal.
Between 1995 and 2009, nearly $18 billion was spent on stadiums across the country, according to Mayya Komisarchik and Aju Fenn in a Colorado College academic study.
Komisarchik and Fenn found $7.08 billion in stadium funding came from private sources.
“Public costs outweigh this figure, though not staggeringly. $10.34 billion in government funds were committed to major league venue projects 1995-2009, with $3.15 billion for baseball, $4.03 billion for football and $3.11 billion for basketball and hockey arenas,” the Colorado College economists found.
The rising number of taxpayer-funded stadiums rang alarm bells for Congress when it included a provision in the 1986 Tax Reform Act that stipulated no more than 10 percent of bonds can be repaid from revenues generated by a project like a stadium.
Noll said the tax reform law, signed by President Ronald Regan, did nothing to curb the publicly funded stadium boom.
“It took away the use of tax exemption of interest on local bonds for subsidies of private commercial development and sports facilities played a prominent role in the debate, but it didn’t slow down the sports construction boom one iota,” Noll said.
Instead, cities and sports team owners looked elsewhere for public money to pay off stadium debt. Since the stadium revenues can’t be used to repay bonds, cities and counties have dipped into other funds to pay down the debt, including hotel taxes and developer fees.
Georgetown University researchers Michael Farron and Anne Philpot discovered the tax reform law shifted more stadium costs onto the public.
“However, the law backfired, creating an all-or-nothing situation where at least 90 percent of the municipal bond debt service had to be publicly funded to qualify for tax-exempt status. So rather than ending stadium subsidies, Reagan’s tax reform actually encouraged more public money to go to stadium construction,” wrote the two researchers.
The Chicago Cubs tried to get public funds to pay for stadium upgrades, but failed.
Cubs owner Tom Ricketts wanted the city to divert money from its amusement tax to help fund $300 million in renovations to Wrigley Field in 2010, according to the Chicago Tribune. But the idea was ultimately shot down and Ricketts instead relied on new advertising signs installed in the 100-year old stadium instead, along with Chicago letting the team freely use public sidewalks for concession sales during the renovations.
For Major League Baseball teams, the defining moment was in 1992 when the Baltimore Orioles’ opened their new stadium at Camden Yards. The ballpark was developed with a baseball-only approach, departing from the multi-use stadiums that housed a professional football team and a baseball team — like when Angel Stadium housed the Rams and the Angels for roughly 14 years. The Angels have played there since the stadium opened in 1964.
“That’s such a great stadium, everybody said they want one of those. So that kind of kicked off the big building boom, not just in Major League Baseball, but all other leagues,” Matheson said.
Camden Yards also brought a new approach to development around ballparks: the stadium will serve as an anchor and the surrounding mixed-use developments will help create a new consumer district in the city with nightlife, shops and restaurants.
A 2017 Associated Press article dubbed the stadium development approach “The Camden Effect.”
The Orioles’ ballpark was also financed with $210 million from taxpayers and the plan appears to have killed economic growth in the area, according to a 2013 Bloomberg article.
“More than two decades later, the pledge stands unfulfilled. Baltimore is burdened with 16,000 vacant properties and some of the highest taxes in Maryland. The neighborhoods around Camden Yards have fewer businesses than they did in 1998. And the ballpark and a National Football League stadium nearby will require state and local debt service of about $24 million in 2014,” states the article.
Meanwhile, Anaheim is selling Angel Stadium and Moreno hopes to develop the land into a sprawl of mixed-use development, including housing, retail and nightlife attractions, according to city documents.
Noll, Matheson and other economists and sports stadium specialists Voice of OC interviewed over the past 10 months have said stadiums are generally poor development anchors because they’re closed for most of the year.
Matheson, in a September Voice of OC article, pointed to Angel Stadium as proof that stadiums generally tend to be poor development anchors.
“The real proof is what is there now.” Matheson previously 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.”
Spencer Custodio is a Voice of OC staff reporter. You can reach him at scustodio@voiceofoc.org. Follow him on Twitter @SpencerCustodio.