Angels’ $325m stadium land deal, day two: Still more questions than answers

I was hoping by this morning we’d know more about the proposed $325 million Los Angeles Angels stadium land purchase deal with Anaheim that would answer some of yesterday’s unanswered questions, like whether the team would pay full property taxes,  and what kind of sale-price breaks would be allowed if the team builds parks and affordable housing, etc. Unfortunately, so far today’s news coverage hasn’t shed much more light on these issues:

  • A Bill Shaikin article in the L.A. Times didn’t cover any new ground since yesterday, or even ask any new questions, preferring to focus on how “the city of Anaheim is on a pretty good run” with retaining its sports teams. (First bullet point: “So when do the Angels open their brand new, grand new [sic] stadium?“)
  • The O.C. Register’s Alicia Robinson stuck to he-said-she-said, with quotes from people calling the proposed deal a “home run” (councilmembers Lucille Kring and Trevor O’Neil) and those who still have concerns (councilmember Jose Moreno, me).
  • The Voice of OC’s Spencer Custodio posted an article focused on the secrecy with which the council negotiated this deal — the paper’s lawyer, open government attorney Kelly Aviles, said this seems like an obvious violation of the Brown Act, the state’s transparency law — but didn’t have much more on the questions left hanging by the city’s perfunctory three-page summary.

Yesterday afternoon did see the release of the appraisal of the Angels’ stadium-plus-parking-lot land, but that wasn’t super-clear either: It determined a “Range of Hypothetical Prospective Fair Market Value” for the site of between $300 million and $320 million — but then laid out more specific examples that provided a range of values between $134 million and $500 million, so it’s not totally apparent where the $300-320 million determination comes from. It still makes the $325 million sale price at least not too far off from fair market value, but when “not too far off” could potentially mean leaving $175 million on the table, you really want to make sure all the t’s are crossed.

One reporter I spoke to indicated that it was their understanding that Angels owner Arte Moreno will pay property taxes on the site, though I haven’t seen that in writing yet. If so, the main concern would be those deductions from the sale price that Moreno would be eligible for in exchange for building parks and affordable housing; as I told Custodio, while there’s some logic to Moreno getting to claim credits for building stuff that would otherwise be on the public’s dime, sometimes developers choose to build things that are public benefits because they’ll also benefit them, so getting that benefit and a land price discount too would effectively be double-dipping.

It’s too soon to be super-negative about this deal — $325 million is a hell of a lot more than the $1 Moreno wanted to pay back in 2013 — but it’s also too soon to say whether it’s a good deal for the public without knowing how all the finances will work. And it’s definitely a concern that this process is being rushed through without much time for public or council debate, with a final vote now likely before the holidays. Those unanswered questions are big ones, and the clock is ticking.

Report: Angels offer to buy stadium and surrounding land from Anaheim for $325m, so is this a good deal or what?

The Anaheim city council met last night to go over the Los Angeles Angels stadium renovation and lease extension plan, and came out promising to finally reveal the city’s land valuation of the Angel Stadium site that team owner Arte Moreno wants to develop. Only somebody jumped the gun and leaked details of the team’s actual offer to the O.C. Register:

Anaheim’s hometown baseball team would continue playing in Angel Stadium for another 30 years, and the city would sell the stadium and 133 acres around it to a business partnership including team owner Arte Moreno for about $325 million, under the proposed outline of a deal that Anaheim City Council members were briefed on Tuesday, Dec. 3…

“For every fan who told us to keep the Angels, this proposal would do exactly that,” Mayor Harry Sidhu said in a statement. “This proposal reflects what we’ve heard from the community – keep the Angels, a fair land price, money for neighborhoods, ongoing revenue, affordable housing, parks and jobs for Anaheim.”…

Angels officials are still considering whether to renovate the stadium or build a new one, team spokeswoman Marie Garvey said. They’ve hired HKS Architects – which designed Minneapolis’ recently opened NFL stadium and is working on a new ballpark for the Texas Rangers – to explore their options.

Okay, so would it actually be a fair land price? There are still a bunch of big questions that the Register story leaves unanswered:

  • What’s the land valuation on that appraisal? The last appraisal, in 2014, came up with a figure of $325 million, so this would seem to be slightly light given inflation in the real estate market since then, but in the (sorry) ballpark. But we should know more this afternoon.
  • Would selling the land mean no more rent payments from the team to the city? Though given that the city gets pretty much nothing from the stadium now, that’s not much of a loss.
  • If the Angels are outright buying the land, does this mean they’d start paying property taxes on it? If so, this could be a huge benefit for Anaheim; if not, then that’s a tax break there, friends.
  • The Register writes that “the [affordable] housing and parks would be given a dollar value that would be subtracted from the land’s selling price” — so does this mean that the team can build affordable housing and parks on its land and claim this as an in-kind payment to reduce its land price? If so, who’s going to be determining that dollar value, and what recourse is there if Moreno tries to claim this his parks are so nice that they’re worth $325 million?

The Register gives no indication of whether its reporters saw the actual agreement or just got some cherry-picked highlights (the only sourcing note is to “city information”), so it’s really tough to know if we’re getting the whole picture here, or just the PR spin. More tomorrow morning after the appraisal is out and I’ve had time to read it, because that’s what journalists are supposed to do, read source materials and report back what they find, or at least so I always thought.

UPDATE: Spencer Custodio of Voice of OC points out that this entire story is apparently sourced to a three-page fact sheet on the city of Anaheim’s website, which is exactly as undetailed as you’d expect a three-page city fact sheet to be. Questions above answered: zero.

Anaheim council really doesn’t understand how this whole “negotiating” thing works

The city of Anaheim and Los Angeles Angels officials are set to have a second closed-door negotiating session tomorrow for a new lease that would include a stadium renovation plan, as the clock ticks down to a December 31 deadline for the team to decide on whether to opt out of its current lease. Or, doesn’t tick down so much at all?

The team faces a Dec. 31 deadline to opt out of its stadium lease or remain bound to it through 2029, but one city councilman suggested the deadline might not be that firm.

“I’m hearing it’s not a big pressure point,” Councilman Jose Moreno said after Tuesday’s council meeting…

Even without an extension, there is nothing that would prevent the team and city from resuming negotiations in the new year. The Angels are well aware that their ultimate deadline could be next November, when three of the seven council seats come up for election.

I mean, sure: There is nothing stopping Angels owner Arte Moreno from declining to exercise his opt-out next month, then continuing to negotiate with the council to rip up his old lease and give him a new one that grants him development rights to the stadium parking lot. Except that would be really dumb, for both sides: Moreno’s only leverage to force Anaheim to rip up his lease is that opt-out, and Anaheim has no incentive to do a stadium deal unless that threat is on the table; it’s always possible that the city could agree to extend the opt-out for a year like it did last December, but what would it gain from that?

While it’s tough to tell given the secret nature of the talks, this whole thing certainly smells less like private and public parties each trying to negotiate the best deal for their respective sides, and more like two partners in general agreement on wanting to do the deal haggling over the exact details while waiting for the clock to wind down to the point where there won’t be time for any public debate before a final vote. Not that it’s always bad to be non-adversarial — hey, maybe this deal would be so lucrative that the city and Moreno will both end up with big cash windfalls (spoiler: it won’t be) — but when hundreds of millions of dollars are at stake, it’s more than a bit disconcerting to see the public’s representatives saying, Sure, the bomb goes off at midnight, but we can always just ask him to shut it off and keep talking, it’s all good.

Angels owner waiting till last minute to bring stadium proposal to council for vote, this can only go well

After opting out of his lease last December and then un-opting-out and then spending all year on such matters as pretending he could move to Long Beach and waiting on a city appraisal of stadium land that was completed but never released, Los Angeles Angels owner Arte Moreno is finally ready to make a proposal to the city of Anaheim for stadium renovations! And with a whole six weeks to go before the next opt-out deadline, much of which will be taken up by negotiations!

Anaheim City Manager Chris Zapata told the council about the Nov. 15 sit down during Tuesday’s, Nov. 5, council meeting.

But officials declined to say whether the Angels might come with a concrete, formal proposal or a collection of potential deal points…

[City spokesperson Mike] Lyster said negotiators for the city, including Mayor Harry Sidhu, and the team would likely meet a few times behind closed doors before a possible deal is brought to the full council.

So that means council debate likely won’t begin until December, with a vote having to be taken by the end of that month. No wonder the council didn’t want to promise 30 days of public debate on an Angels stadium plan!

Now, under sane circumstances, that deadline would be hanging over Moreno’s head just as much as the city’s, if not more so: If no new deal is in place by December 31, the Angels owner faces a choice between 1) opting out of his lease again and leaving himself nowhere to play in 2021 (or at least without such perks as super-low rent on his current stadium) and 2) not opting out and being stuck with no leverage to demand a new stadium until 2029. In the world we live in, though, where the council already responded to Moreno’s last opt-out with Oh, please, sir, here is a fresh gun to hold to our heads next year, it’s likely that the council will treat Moreno’s deadline as a council deadline, and rush to approve the deal regardless of whether the city would be getting fair market value for its parking lot development rights.

That’s if we even know by then what fair market value is, as the city still won’t make its appraisal of the site public. It’s promised to do so “at the right time,” which hopefully means before the actual vote; also hopefully it means that the full appraisal and methodology will be revealed then, not just a napkin with “whatev team wants to pay, ‘s cool” scrawled on it.

And speaking of the appraisal of land for the New York Islanders arena that was approved back in August, I just got notice today of the second delay in my Freedom of Information Law request for the full documents; I’m now projected to get a response (or notice of another delay) by December 19. Anyone wishing to lay odds on whether the appraisal is released before the arena’s scheduled opening date in fall 2021 is welcome to place wagers in comments.

Anaheim council to public: No, we won’t tell you what Angels land is worth or promise time for open debate of stadium deal

Yesterday morning, Voice of OC reporter Spencer Custodio reported that the Anaheim city council was set to vote on finally releasing the Los Angeles Angels stadium land appraisal that it had promised to release to the public and then decided enh, maybe not. Last night, Custodio reported that the council had voted not only not to release the appraisal, but not to promise even 30 days for public review of any deal before it’s voted on:

Anaheim’s City Council is not interested in publicizing the value of their public stadium and also doesn’t want the public to have much time to look over potential stadium deals before they are approved.

On Tuesday night, the Anaheim City Council voted against releasing the Angel Stadium appraisal, despite repeated calls by the public and some Councilmembers to release it.

A council majority also voted against a potential 30-day review of a final lease proposal…

Councilman Jose Moreno, who successfully scheduled all the items on the agenda, kept trying to overrule [Mayor Harry] Sidhu’s motion [to table the votes] by calling for points of order.

“What the Mayor is doing is he is saying he does not want these issues discussed,” Moreno said.

The appraisal, in case you haven’t been following, is important because the deal being sought by Angels owner Arte Moreno is for the city to sell the stadium parking lots to Moreno for development, and Moreno to use the proceeds to upgrade the stadium. As we’ve seen in other sports venue deals, if the local government sells land at a discount price, that can be a way of funneling stadium subsidies to a team owner under the table — in fact, that’s exactly the concern that led former Anaheim Mayor Tom Tait to scuttle a previous plan that would have given the parking lots to Moreno for $1.

This is, needless to say, a worrying trend: not just that team owners and elected officials are trying to play hide-the-subsidy, but that they’re increasingly trying to limit public debate so that no one can figure out what’s going on until it’s too late. It’s especially troubling given that as opposition to straight-up cash grants to teams grows, we’re seeing more convoluted deals that involve land gifts or tax increment financing or other things that are tough to explain without a public comment period — something that the Los Angeles Times’ Bill Shaikin praises as the wave of the future:

Is there a way for a city that values sports to contribute to a venue without letting the team stuff its pockets full of taxpayer dollars? Sacramento believes it just made such a deal, as a way to lure a Major League Soccer team, and the city of Anaheim might do the same in helping build — or rebuild — a stadium for the Angels…

In Sacramento, announced last week as the home of the newest MLS franchise, the city is paying nothing toward the cost of the $252-million stadium, or the purchase of the privately owned land on which the stadium and surrounding entertainment district will be built.

The city agreed to divert the first $33 million in taxes generated by the developments — money that otherwise could be available for parks, libraries, police and other public services — to reimburse the team for the cost of infrastructure to support the developments: streets, sidewalks, sewers, a light-rail station and traffic management.

That is not paying nothing! Allowing a sports team owner or developer to keep their tax money on the grounds that the cash is coming from them in the first place is the Casino Night Fallacy, and is exactly the same, from the tax break recipient’s perspective, as getting a check from the public treasury. But it’s way more confusing, which is no doubt why sports team owners have learned to love it as a tactic.

Shaikin’s article also mentions, almost in passing, that an Angels spokesperson has said that “Long Beach is on the back burner” as far as relocating there is concerned. This should be no surprise given that Long Beach had a site too small for a stadium and no way to pay the $1 billion construction cost and that Moreno apparently only started negotiating with Long Beach to increase the pressure on Anaheim to get a deal done, so now that the Anaheim council is playing ball — including conducting negotiations in secret and promising to limit any public debate — of course Long Beach is on the back burner. If rich people wanting public officials to do their bidding know one thing, it’s how to leverage not-very-veiled threats to get what they want.

Anaheim failed to ask Angels owner for $8m fee for breaking lease, mayor waves it off as “distraction”

I’ve been trying to give new Anaheim mayor Harry Sidhu and the newly elected members of the Anaheim city council the benefit of the doubt that they’re really intent on negotiating a new lease for the Los Angeles Angels that will benefit the public, even after they gave Angels owner Arte Moreno a ten-year lease extension while pretending it wasn’t one and promised to make public an appraisal of the stadium land Moreno wants then withheld it from the public once it was done. But it really doesn’t make it any easier when it’s revealed that the city could have collected an $8 million termination fee when Moreno terminated his lease last fall, but decided not to bother:

“As a condition of such termination,” the lease reads, “Tenant shall pay or cause to be paid to Landlord a termination fee.”

The amount was $8 million. Yet the city did not collect that $8 million, or even try to do so, or even mention it when the city council voted to reinstate the Angels’ lease three months later.

City officials apparently didn’t even tell the city council that they could have tried to collect the $8 million — this was revealed in questioning by councilmember Jose Moreno, who said he “absolutely” would have wanted to know what the city was passing up by allowing Moreno to reinstate his lease — and Sidhu now calls the termination fee a “distraction” from signing up the Angels to a new lease. Or, you know, it could have been a point of leverage — “we’ll waive that termination fee you owe us if you agree to pay more for our parking lots” — but as has been established, city officials tend to be terrible negotiators, especially those who have stated up front that their top goal is to get a deal done, not necessarily a good deal.

Friday roundup: How Kansas City evicted a team for rent non-payment and ended up costing itself $1m, and other stories

This week’s recommended reading: Girl to City, Amy Rigby’s just-published memoir of the two decades that took her from newly arrived art student in 1970s New York to divorced single mom and creator of the acclaimed debut album Diary of a Mod Housewife. (Disclosure, I guess: I edited an early version of one chapter for the Village Voice last year.) I picked up my copy last week at the launch of Rigby’s fall book tour, and whether you love her music or her long-running blog (guilty as charged on both counts) or enjoy tales of CBGB-era proto-gentrifying New York or coming-of-age-stories about women balancing self-doubt and determination or just a perfectly turned punchline, I highly recommend it: Like her best songs, it made me laugh and cry and think, often at the same time, and that’s all I can ask for in great art.

But first, read this news roundup post, because man, is there a lot of news to be rounded up:

Friday roundup: More on MLB attendance decline, plus stadium rumors and the reports of rumors

In case you missed it, I revisited the question of MLB’s attendance decline for Deadspin this week, by way of picking apart a New York Times article on the topic that got a couple of things right and a whole bunch of things less right. The upshot is that team owners don’t really need lots of fans to show up, but they sure would like them to, but only if they can accomplish this without cannibalizing the luxury seat sales that are their bread and butter these days — all of which makes all the “Whither baseball?” handwringing even less justifiable. Lesson: Don’t try to measure the demand curve just by looking at product sales. (Okay, maybe that’s only the lesson I take from it, but it’s one lesson.)

Meanwhile, news!

Anaheim completes appraisal of Angels stadium land value, won’t let public see it

Good news: The city of Anaheim has finally received its completed appraisal of the value of stadium parking lot land that Los Angeles Angels owner Arte Moreno wants development rights to as part of a new lease deal, after weeks of saying it only had a “draft” version that couldn’t be released to the public. Significantly less good news: The Anaheim city council still won’t release the appraisal to the public, because reasons.

The City Council directed the city staff to make the appraisal “available to both the public and Council,” according to the meeting minutes. On Tuesday, the City Council received the results of the appraisal — then declined to share those results with the public.

After a handful of speakers urged the council to be transparent in its negotiations with the Angels, Councilman Jose Moreno proposed a public presentation of the appraisal next month. He needed three votes out of seven. He got two votes, one of them his own…

None of the council members who opposed Jose Moreno’s proposal explained why — including Stephen Faessel, who voted last November in favor of releasing the appraisal publicly.

This is disturbing, if not exactly shocking: The state of New York, after all, only released its appraisals of public land being provided for an Islanders arena three and a half hours before the final public vote on the plan (and still has only released the executive summaries, not the complete appraisals). And as the Los Angeles Times notes, Anaheim itself kept its appraisal of Ducks arena land under wraps until five days before voting on that team’s new lease deal.

The advantage for public officials of not wanting to release land value figures is obvious: You can negotiate anything you like without anyone in the press or the public trying to kibitz whether you’re getting a fair price or not. This is also why the public might want to consider screaming bloody murder when officials pull this sort of move, since democracy still involves public oversight of elected officials’ actions, at least last I checked.

All of which could still be fine, so long as the Anaheim city council uses its powers to negotiate in secret to strike a deal that gets the best value for the public, while sitting in a room with only Angels execs and no danger of anyone else knowing what they’re talking about until it’s too late to do anything. That’s not impossible — Anaheim didn’t do a terrible job with the Ducks deal under similar circumstances, after all — but still, it would be nice to have more than five days to make sure everything is on the up and up. Let’s just hope the don’t choose to release it, say, the day before Thanksgiving, with the vote the following Monday. (Oh, crap, I probably shouldn’t give them any ideas, should I?)

Angels sell $101m a year in tickets, but only pay $178,000 in rent to Anaheim

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!