The $325 million starting price tag for Angel Stadium could be low compared to land next to the stadium parking lot that sold for nearly double the per-acre price than the stadium’s starting point.
The 3.8-acre land that was eventually developed into the George Apartments sold for $17 million in 2014, which is nearly $4.5 million an acre, more than double the per-acre cost Anaheim’s starting price for the stadium is.
“That’s probably a red flag that you should reevaluate the numbers,” said Brooklyn-based reporter Neil deMause, who tracks stadium deals across the country on his website.
The nearby 6.48 acres that’s now the Gateway Apartments sold for $22.6 million in 2012, at nearly $3.5 million an acre. And the 3.72-acre condo land across the street on State College Boulevard sold for $30 million in 2005, or $8.06 million an acre.
“We’re coming down to the wire here on a decision being made and it seems like there’s just more and more questions about the deal and whether it’s a good one for Anaheim. It seems like it would make sense to hold off a few weeks or months to make sure that the numbers actually add up,” said deMause, who wrote the stadium deal book, “Field of Schemes.”
The Angel Stadium land’s starting price is a little over $2.1 million an acre. But the final sales price could be lower because the City Council still needs to hammer out affordable housing, community benefits and local workforce agreements with the shadowy LLC recently created to own the stadium land, SRB Management.
Former Mayor Tom Tait and Assemblyman Tom Daly (D-Anaheim), also a former mayor, wrote a joint opinion piece criticizing the proposed stadium land sale, published by Voice of OC Tuesday.
Daly and Tait took issue with the $325 million starting price.
“‘Community benefits’ are only vaguely defined, and will most assuredly reduce the final sale price by millions of dollars, possibly hundreds of millions. There is no limit on this loophole, and the people of Anaheim will be paying the price,” Daly and Tait wrote.
Anaheim’s City Council wants to begin a land sale process at its Friday public hearing. Then, next Spring, they would consider approving a host of development and community benefits agreements once the LLC has ownership over the land.
Regardless of the final price, Anaheim won’t get all the money at once. Instead, the city will get $70 million by 2025, the deadline to close the sale. Although the sales proposal documents also indicate prices could be lowered depending on what benefits the Council negotiates next spring.
“We literally have no idea on how much cash Anaheim would end up collecting on this deal,” deMause said. “It would be somewhere between $325 million and nothing.”
Stadium deal expert Roger Noll, a Stanford University economics professor, said the land valuation could be tricky because it’s hard to compare land with a stadium on it, but the parking lot could be undervalued because the city said it expects mixed use development.
“I think this is really an interesting finding and I think it does come up with a number that benefits the Angels,” said Noll, who’s followed stadium deals since the 1970s.
He said all the stadium land may not reach the $4.4 million an acre the George apartment land sold for because of the required 12,500 parking spaces. But, Noll said, the portions of it that will be developed into a combination of commercial and housing projects could be valued much higher.
“I do think that (apartment land) valuation does give you some sort of a baseline had the city decided to say, ‘Okay, let’s consider just removing the stadium in the parking lot and doing this Platinum [Triangle development],’” Noll said. “What would the land have been worth? That is useful information for evaluating this deal.”
The stadium land appraisal estimated the 153 acres and ballpark are worth between $300 million and $320 million. It was released Dec. 4, the same day as the land sale was announced and less than three weeks after negotiations between the city and ball club officially started. The appraisal had to be revised Dec. 3 and no specifics were given on how the evaluating firm arrived at those numbers.
After the land sale announcement, Councilman Jose Moreno questioned if his colleagues spoke to each other about the deal outside of closed session leading up to the deal, because he said they asked minimal questions when presented with the deal.
According to a city document tracking the progress of stadium negotiations, the two negotiating parties met Nov. 15, 22 and 26.
The City Council only talked about the stadium deal twice in closed session, according to meeting agendas. The first discussion happened on Nov. 19 and another discussion Dec. 3, the day before the land sale proposal was released. During the stadium discussions, the city was working off Arte Moreno’s proposal, instead of proposing a deal.
And Councilmembers didn’t vote on a formal wishlist on what it would like the city to get from the stadium deal. Although the Council generally discussed deal points at an August Council meeting, like no direct subsidies or not trying to get Anaheim back in the team name, it didn’t vote on any direction for its negotiating team.
Mayor Harry Sidhu got himself appointed to the city’s negotiating team in July, which also includes City Manager Chris Zapata and City Attorney Rob Fabela.
The Anaheim Chamber of Commerce, which spent nearly $240,000 on Sidhu’s 2018 campaign for mayor, is hosting a rally to “keep the Angels in Anaheim” with the Angels at Golden Road brewery 5 p.m. Wednesday, across the street from the stadium.
Sidhu promised voters he’d fight to keep the Angels in Anaheim during his 2018 campaign and in June he convinced the Council majority to give a no-bid $425,000 contract to the Chamber to help promote local businesses. Although the Chamber contract didn’t have many specifics, it promised to advertise Anaheim at its own baseball stadium.
“I reached out to the team’s owner, Arte Moreno, to see what we could do to keep the team here, unlock the potential of the land around the stadium and craft a plan that benefits our city and our residents,” said Sidhu at the Chamber-sponsored state of the city in March.
During the last round of negotiations in 2013 and 2014, the Chamber endorsed a proposed lease that would have given the stadium land to the Angels for $1 a year for 66 years.
In this round of negotiations, Sidhu and Angels representatives said putting Anaheim back in the team name isn’t a priority.
“I suspect that the mayor of Anaheim, his main goal is to keep the Angels and prevent them from moving to Long Beach,” Noll said.
In the city’s lawsuit against the Los Angeles Angels of Anaheim for its name change from Anaheim Angels, the city had a report conducted on advertising losses to the city. Laren Ukman from IEG Sponsorship Services projected the city would lose nearly $100 million in marketing value from 2005 to 2016. If the team had made the playoff series at least six of those years, Ukman estimated the city would lose $191 million during that time.
But Noll and deMause have said attempting to value the team name is nearly impossible. The 1997 name valuation report — after the California Angels became the Anaheim Angels — also said it was difficult.
Meanwhile, the other people behind SRB Management remain unknown. The company was first formed in Delaware Nov. 20, five days after negotiations between the Angels and Anaheim officially began.
Angels owner Arte Moreno (unrelated to Jose Moreno) is part of SRB Management, but the city doesn’t know who the other business partners in the freshly minted company and the Angels aren’t disclosing who the other people are.
Instead of a direct cash subsidy, Anaheim could be giving Arte Moreno one in the form of a price break by starting at a low price that could be further lowered when the Council begins to finalize the agreements next spring, deMause said.
“It’s easier for a developer, for a sports stadium or not, to say we don’t want some cash, but we need some help in the form of saving us tons of cash,” deMause said. “We’re seeing this in other places. The current (New York) Islanders deal, the Brooklyn Nets’ arena involved a discounted land sale by the state that no one ever quite figured out what the value on it was.”
deMause covered the New York Islanders arena deal for the Village Voice and found that state officials didn’t initially order an appraisal of the land, formerly the Belmont Park horse track, before announcing an impending deal with the hockey team. He found state officials were leasing the land to the Islanders for $50 million, which may have saved the hockey team as much as $300 million when comparing the land to nearby properties.
Noll also said the final sales price could be a subsidy to Arte Moreno, who’s team is valued at nearly $2 billion, according to Forbes.
He said if the land is being sold for half the price per-acre than what the apartment land sold for, then it’s a form of a subsidy.
“Likewise if they knock off value in the form of credits (community benefits, affordable housing), that’s also a subsidy. It’s not cash payment out of the budget, but it’s a forgone set of revenues that they could have had if they had not wanted to do something for the Angels,” Noll said.
Leading up to the city’s Dec. 4 stadium land sale announcement, the City Council kept stadium negotiations in the dark.
Councilman Trevor O’Neil successfully nixed the monthly stadium update in March.
After shelving the transparency proposals in October, the Council decided it doesn’t need to hear similar proposals more than once in a six-month period.
The new agenda-setting requirement bars Councilmembers from trying to agendize for at least six months a discussion if it doesn’t get support from two colleagues. The same six-month restriction also applies to “Council-initiated agenda items that the Council has considered or taken action on at a meeting (Including, but not limited to, by voting on, postponing or tabling) …”
deMause said Anaheim’s negotiation process unfolded like a stadium deal playbook.
“It’s truly amazing, this is the standard operating procedure for 30 years now and it seems like they’re pulling the wool over people’s eyes,” deMause said.
He also said if new businessman came to the city with a land proposal and had a shadowy company like Arte Moreno’s SRB Management, Anaheim probably wouldn’t go for the deal.
“Because (Arte) Moreno’s been able to portray this is a solution to the Angel Stadium problem, that suddenly it’s, ‘oh, let’s not worry too much about the specifics. At least we’re getting a deal done that’s not as bad as it could be,’” deMause said.
He said the Council should delay the upcoming Friday vote and get all the development and community benefit specifics first.
“You’re only going to be able to sell the stadium land once. You want to get it correct.”
Spencer Custodio is a Voice of OC staff reporter. You can reach him at scustodio@voiceofoc.org. Follow him on Twitter @SpencerCustodio.