So yeah, the Anaheim city council voted 4-2 late Friday night (early Saturday morning if you were watching from the East Coast like me) to approve the sale of Angel Stadium and its surrounding parking lots to Los Angeles Angels owner Arte Moreno, despite the concerns of some (well, two) on the council and many Anaheim residents that the deal was being rushed through without considering some of its very very many known unknowns. With the vote officials, the city and team will now move ahead on … well, that’s not entirely known, either.
Throughout Friday’s near-endless council hearing, Anaheim Mayor Harry Sidhu and other backers of the deal insisted that the vote to finalize the sale was not actually final in any way, because either side can still walk away from the deal before it’s consummated, which could take up to five years:
Several other agreements are expected to come forward by spring: a commitment that the team would play in Anaheim through 2050, with another 25 years of extensions; and a separate agreement that commits SRB Management to renovate the stadium or build a new one without any public financing, describes what would be developed around the stadium, and lays out details and costs of affordable housing, park space and a labor agreement.
Those community benefit costs would be subtracted from the $325 million land price, so the final cost is not yet known. Closing the sale could take until 2025, so until then the current lease remains in place.
How the value of those “community benefits” would be calculated, or what would be included (Anaheim planning director David Belmer said during the hearing that it could also include things like transit upgrades paid for by the developers) remains a mystery, something that councilmember Jose Moreno asked about to no avail on Friday. The only thing really agreed upon in the vote, according to this argument, was the baseline sale price of $325 million — everything else remains TBD.
A little more information has seeped out about how that $325 million figure was arrived at, when some iterations of the city’s appraisal came up with a value for the parcel of $500 million, and comparable properties nearby have sold for even more than that per acre. The $325 million number is the value of the land “encumbered” by a stadium and parking spaces for one, which is a good bit less than its value if you could fill it from edge to edge with any kind of development you wanted.
Think about this for a second, and this seems reasonable: If you want the Angels to remain on the land, this is a condition of the sale, and so that’s how the land should be valued. Think about it for more than a second, and it comes to a significant public subsidy being handed to Moreno:
Let’s say you’re selling, I don’t know, an ice cream truck. The value of the ice cream truck is going to depend on how much ice cream you can sell out of it, which is going to depend on the demand for ice cream, how much ice cream it can carry, etc. However, the only person who is allowed to bid for the ice cream truck is someone who lives in another state during the summer months, so would only use it to sell ice cream when it’s cold out. You can see how the value of an ice cream truck to them would be far less than to someone who would use it year-round. If you calculate the sale price based on the value to our single bidder, then, they’re getting a significant discount compared to what anyone else would pay.
Dropping the metaphor and back to reality, Arte Moreno is getting a piece of land worth $500 million or more for only $325 million because he wants to keep playing baseball on it. You can certainly make a case that that’s a reasonable deal to make to keep the team in Anaheim — many, many people at the hearing talked about how terrible it would be for the Angels to leave Anaheim — but then be honest about what you’re doing in exchange for keeping the team: selling 153 acres of public land at a massive discount. That’s still absolutely a public cost, just as much as if Moreno saw the land for sale at the market price and said, “I’ll buy that, so long as you give me a $175 million rebate check as part of the deal.”
And that’s before even accounting for the “community benefits” discount, which would be like if you (sorry, back to the metaphor) agreed to allow your ice-cream truck buyer to deduct even more from the sale price for giving out free ice cream on Tuesdays, or something, without knowing how much that free ice cream would count against the final payment. (City officials testified on several occasions that it would not be impossible for Moreno to get so many credits that the city would end up having to pay him to take the land, though they didn’t hazard any guesses as to how likely that was.)
The good news is that it’s still possible for Anaheim (or Moreno, for that matter) to walk away from the deal if the two sides can’t agree on the community benefits discounts and other yet-to-be-negotiated elements of the deal — and if so, the Angels would presumably then be locked into their current lease through 2029, since their opt-out clause would by then have expired. The less-good news, if you’re rooting for that to happen, is that the council seems dead set on moving ahead with this plan full speed ahead: Five of seven councilmembers (one missed the hearing because he was in the emergency room for unexplained reasons) are solidly behind it, meaning the two council seats up for re-election next November held by deal supporters would have to flip to anti-stadium-sale, with deal critic Denise Barnes holding her seat, to change the voting calculus.
This is all, needless to say, a big mess, and hopefully makes clear why sports team owners are increasingly turning to things like discounted land prices as a way to get subsidies for their stadium projects: If Arte Moreno had walked up to the city council and said, “I’ll keep the Angels in Anaheim, but only if you pay me $175 million to do so,” he probably would have gotten “What the hell, no way” for an answer. (Probably; elected officials writing checks like that has been known to happen.) By couching the demand in terms of a discounted land sale, however, with its necessary accompanying talk of appraisals and fair market value and encumbrances and other words that tend to make laypeople doze off, Moreno effectively muddied the waters to where at times those testifying on Friday often seemed more upset about whether the team would still be called “Los Angeles Angels” rather than “Anaheim Angels” that whether the public was leaving $175 million on the table. It’s all about misdirection.