Now here’s a fun headline you don’t see too often, though it could run pretty much anywhere anytime:
Angels Make $100 Million a Year at Stadium While Anaheim Barely Gets a Slice
The news here is that Voice of O.C. reporter Spencer Custodio got ahold of Anaheim’s receipts from Los Angeles Angles ticket sales revenue sharing, and it turns out it’s next to nothing: Because the Angels’ lease says the team only has to share $2 a ticket with the city once it’s sold more than 2.6 million tickets, Anaheim ended up bringing in only $11.5 million total between 2010 and 2018, while sending $9.9 million back to the Angels for maintenance costs, for a net rent of $1.6 million over nine years. At the same time, according to Forbes’ numbers, the team brings in $101 million a year from ticket sales alone.
I’m heavily quoted in the article, along with sports economists Allen Sanderson and Roger Noll, but I think some of my points may have gotten garbled a bit — I’m quoted accurately, but some of the context got lost in translation. So let me elaborate here, where I can go on and on and no one can interrupt me for word count:
- This is, of course, a terrible lease. Anaheim paid $24 million to build Anaheim Stadium in 1966, and paid $100 million to renovate it again in 1996 as part of the deal that set up the current lease. Yet the city receives only a pittance in rent — and nothing from concessions, advertising, or naming rights — that won’t even come close to paying off the last renovation. (“You got to be more hard nosed, hard assed or something in terms of negotiations and got to be willing to let the team walk, or you’re going to lose money on this,” says Sanderson in the article.)
- It’s terrible largely because of that 2.6 million ticket threshold, which 1) is an extremely high level to reach (only ten teams in MLB sold that many tickets last year, and most didn’t clear it by much), and 2) gives the team a huge incentive to raise ticket prices rather than keeping them low enough to draw more fans, since if they sell fewer tickets for more money, they don’t have to share any of it with Anaheim. Especially since selling fewer tickets for more money seems to be MLB’s marketing strategy these days.
- A better revenue-sharing plan would have set the threshold lower, or had no threshold at all. As Noll says: “Historically, before the stadium subsidy craze took hold, the standard agreement between a local government and team is they would pay rent in a fraction of gate revenue, which was usually six percent. It would be huge now because [the Angels] take [in] over $100 million now.”
- Even that could be problematic, though, given current trends in ticket marketing. For example, let’s say Angels owner Arte Moreno had to share six cents on every dollar in ticket revenue with Anaheim, as Noll suggests. Moreno’s first task, I’m sure, would be to figure out how to reclassify as much income as possible as not from “ticket sales.” One possibility off the top of my head: Instead of selling season tickets for $5,000 a season, charge a $4,000 “membership fee” to the “Angels Premier Fan Club,” which would allow you to buy season tickets for just $1,000 a year. That’ll be $60 to you, Anaheim — what, no, you can’t have any share of the other $4,000, that’s not ticket sales, that’s a membership fee!
- Accordingly, the fairest system (and the hardest to game) is just straight cash rent. As I told Custodio, that way “you’re not penalizing the city if the team is terrible and you’re not disincentivizing the team to sell tickets.”
Either way, the upshot is: The Angels have a sweetheart deal on their lease, and Anaheim really should drive a harder bargain in their next one. This isn’t made any easier by the fact that the city just gave Moreno a nine-year lease extension without apparently realizing they were doing it; still, given that Moreno is drooling at the prospect of getting development rights to the stadium parking lot, that should be some leverage to demand more cash for the city in the next lease, right? Leverage? You Anaheim city officials have heard of using leverage to make demands, right? It’s all the rage!