Anaheim is gearing up for an unprecedented move by selling the 153-acre Angel Stadium land for $325 million to a newly formed company the team’s owner, Arte Moreno, is part of.
It’s still unknown who the other partners are in the freshly minted firm, SRB Management LLC, which was registered in Delaware Nov. 20, according to online filings.
City spokesman Mike Lyster, in a Monday email, said the city doesn’t know who the other partners in the firm are.
The team isn’t disclosing the other partners because SRB Management is a private company, according to a Monday email from Angels spokeswoman Marie Garvey.
And the final sale price could be lower depending on the community benefits agreements negotiated and how much — if any — affordable housing will be built on the land. The only details released ahead of the Dec. 20 public hearing to move on the land sale, is a three-page proposal overview on the city’s website.
“That will be determined in discussions to come in early 2020. Any agreement would go before the City Council for approval. The city’s goal is to see if we can secure significant affordable housing, added park space and a workforce agreement while preserving ample proceeds from a sale,” Lyster wrote.
The stadium land already has development entitlements on it, including roughly 5,100 residential units, nearly 3.1 million square feet of office and about 2.8 million square feet of commercial development. The entitlements are from the Platinum Triangle Master plan, which the stadium sits in.
Lyster said the entitlements “are not necessarily reflective of how development might specifically play out on the stadium land.”
Stadium deals across the country are usually done through leases from a county or a city to a professional sports team, but Anaheim’s stadium land sale proposal has some top experts scratching their heads — especially over the lack of detailed information released by Anaheim about the incoming deal.
“I’ve never seen anything like this and even in negotiations over new agreements, like the stadium for the Rams [in Inglewood] and Levi Stadium in San Francisco, and all the other new stadiums I’ve seen — by the time you get to the point where both the team and the city commit to something, there’s hundreds of pages of documents there saying, in detail, what you’re going to do,” economist Roger Noll said.
Noll is a stadium deal expert and Stanford University professor who’s tracked stadium and arena deals across the country for more than 40 years.
Victor Matheson, an economics professor at the College of the Holy Cross in Massachusetts, said he can’t think of an outright stadium sale like Anaheim is proposing.
“So actually I haven’t — this idea of privatizing a formerly public stadium is fairly new,” said Matheson, who also tracks stadium negotiations.
Brooklyn-based reporter, Neil deMause, who covers stadium negotiations throughout the country, said Anaheim has been very lean on details. He also said the move to sell a public stadium is pretty much unheard of.
“It’s a complete mystery. That whole three-page document is just — it’s a promotional brochure, which is fine as a starting point in discussions, but at some point you need to explain where those numbers came from,” said deMause, who’s covered stadium deals for over 20 years.
He also wrote a book, Field of Schemes, and runs a website of the same name that tracks stadium deals throughout the country.
“It astounds me that the City Council is ready to vote, seemingly, without having all the answers, but after having seen city councils vote on these things because they were popular in certain political circles … I’m not completely surprised,” deMause said. “It’s like voting on the Oscars by only watching the trailers.”
Based on the limited information released by the city, Noll said it’s possible the final price tag could be reduced to nothing.
“It’s perfectly plausible that the final result is that they give away the stadium. That there’s no cash. That the Angels get enough credit for other aspects from development, it goes from $325 million to zero,” Noll said. “There’s no way you can rule that out from what they released.”
While Matheson doesn’t know enough about the Orange County real estate market to comment on the sales price, he said the land sale will at least get the city out of the stadium business. Matheson, Noll and many other academics have found cities and counties across the country generally lose money on public stadiums.
deMause also said while the city will be relieved from its roughly $700,000 a year stadium maintenance obligation and other costs, the city could lose money on the backend of the land sale, depending on what types of community benefit agreements and amount of affordable housing are negotiated.
Currently, Anaheim receives no money from the food or merchandise sold at Angel Stadium under the current lease and the team has only made the city $1.6 million since 2010, after factoring the city’s maintenance obligation and bond payments from an unused convention hall from the 1980s, years before the current lease was signed.
An October Los Angeles Times article, without factoring in the bond payments, found the stadium only made $13 million for Anaheim since the lease was originally signed in 1996. That number is less than half of Anaheim’s $30 million contribution for stadium improvements in the late 1990’s.
“Several of my colleagues here, and I, were surprised that they’re flat out selling the stadium. I don’t think that was on the minds of anyone about the renegotiations of the lease would be ‘we’re giving up the lease completely and handing over the whole stadium and getting some cash back for that,’” Matheson said.
Matheson, noting he’s not commenting on the initial $325 million price tag, said the move will at least spur property tax from the land. But, he said, it depends on how the land was evaluated.
“One of the things we did point out is that if the property is undervalued when they hand it over in the first place, that does have a doubly bad effect because it sets a basis for the property tax,” Matheson said. “It’s extremely difficult … to establish a value of the stadium. There’s been a long, ongoing court battle in [Santa Clara] over how that stadium should be valued.”
Noll also expressed concerns about how the stadium land was appraised.
“The thing that is the fundamental problem is you cannot appraise the value of the land without knowing what it’s going to be used for — without knowing what the development rules are,” Noll said. “If they’re going to put $5 billion of development there, obviously the value goes way up … you cannot put an assessment number down without knowing what you use it for.”
Negotiations between the Angels and Anaheim officially started Nov. 15. The proposal was made public Dec. 4, after the City Council discussed the proposal in closed session twice and three negotiation sessions between the city and ball club. The City Council majority reinstated the lease this past January, after the Angels opted out October 2018, in order to buy more time for negotiations.
At the Dec. 20 public hearing, the City Council will vote on “a purchase and sale agreement for the stadium and land. A development and community benefits agreement would be negotiated and considered by the Council in spring to mid-2020,” Lyster said.
deMause, like Noll, said there’s still not enough information for anyone to examine the proposal or for the Council to vote on it.
“Somebody needs to be saying that voting on $325 million land deal just on the basis of a three-page document is the opposite of what due diligence is,” deMause said. “I’ve seen some pretty perfunctory proposals that get voted on by a city council or other elected body, but this is up there as the most perfunctory.”
Noll said the proposal summary likely isn’t binding.
“There’s nothing to vote on because there’s no plan. This is not an agreement, it has no legal force. I think what’s going on is they didn’t have enough time … to actually do something this complicated,” he said.
“There’s two possibilities, the first is there’s some secret deal,” Noll said. “Or the other alternative is they just felt this enormous pressure because the deadline for exiting the lease is coming up so quickly (Dec. 31) and they discovered in these three meetings, they couldn’t get here in this amount of time. So what they did was put up some wallpaper.”
The lack of details and speed of the proposal has one Councilman convinced his colleagues spoke with each other outside of closed session and violating state transparency law.
But city officials maintain transparency law, known as the Brown Act, was not broken during negotiations and the proposal is the result of the negotiating team.
Spencer Custodio is a Voice of OC staff reporter. You can reach him at scustodio@voiceofoc.org. Follow him on Twitter @SpencerCustodio.