With the City Council pulling the plug on a sale of the home of the Los Angeles Angels after corruption charges against city officials, Angel Stadium development and the future of the team in Anaheim may not be quite as murky as outsiders assume.
To catch you up on all the action: earlier this week Anaheim Mayor Harry Sidhu resigned over accusations that the sale of Angel Stadium and surrounding land came under questionable circumstances, linking the sale with a million-dollar campaign contribution. The Anaheim City Council then followed up by voting to cancel the $320-million sale of the ballpark and the 150-acre site to SRB Management, which include Angels owner Arte Moreno and development partners. Angels owner Arte Moreno and his investment group were seeking to buy the 20-acre Angel Stadium site and an additional 133 acres comprising 12,500 parking spaces for games and events, and City National Grove of Anaheim, a 1,700-seat theater. The total cost: $150 million in cash and $170 million in community benefits, including affordable housing, though in the end the commitment to affordable housing was scaled back, much to the chagrin of city residents who rightly see the issue a very important one in Anaheim. The goal was a mixed-use development a la The Battery. Moreno would also have the power to decide whether to build a new ballpark at the site or renovate Angel Stadium. This was a move fraught with risk: SRB Management had already deposited $50 million with the city, and language in the agreement calls for a return of this deposit plus fees if the city cancels.
The city council, however, is moving forward with the assumption that there was wrongdoing on the part of Moreno and his investors. The problem: no one, including the FBI, has accused the Angels of any specific wrongdoing whatsoever. This may change, of course, but as of now the city had no legal basis to unilaterally cancel the purchase agreement. City attorney Robert Fabela argued for canceling the agreement, saying that the FBI allegations “demonstrate that this deal was not a good faith, arm’s length transaction.” But this is a political argument, not a legal argument; it’s hard to cancel an agreement because your side misbehaved. And other city officials, including city manager James Vanderpool, want to see the development agreement renegotiated, but not totally scrapped.
Which is the likeliest course once cooler heads in the city prevail and the realization sets in that the Angels still have plenty of power in this situation, thanks to the Angel Stadium lease running through 2029, with options through 2038. Under the teams of that lease, the Angels can demand ballpark upgrades with a fairly standard “state of the art” clause—upgrades that could run as high as $150 million. In addition, the lease also gives the team some power to limit development around the ballpark. Opponents of the development contract see the 150-acre site as a cash register with $7 million/acre valuations and a wealth of affordable housing options, but that’s simply not the case at this time. The city could put development rights up for bid, but without the Angels’ consent, it’s hard to see a rush of developers swoop in offering $7 million per acre.
If negotiations do reopen, a new deal may not look all that different than the deal canceled by the city, something ballpark foes admit: “In a morning appearance on KPCC, Jose Moreno said starting over might well result in a project that looks pretty much like the one he wants the city to cancel.” (Jose Moreno is a city councilmember who has consistently opposed the Angels deal. No relation to Arte Moreno, by the way.) A deal providing more revenue to the city and more affordable housing while keeping the Angels in Anaheim and also shifting required ballpark renovation or replacement costs to the Angels may be the best deal the city receives. And no, there will not be another sports team to replace the Angels: the notion floated by Jose Moreno that you will see a third NFL, NHL, NBA or MLS team in Los Angeles is silly and naïve.
So don’t look for the team to move. Yes, Long Beach is once again pitching a 13-acre waterfront site for a new ballpark—the so-called Elephant Lot parcel next to the Convention Center. When you’ve been planning a major 150-acre development at Angel Stadium, scaling back expectations to a 13-acre site is a major step backwards: that’s barely enough land for a ballpark, much less than parking needed, and no room for development unless you start tearing down existing buildings like the next-door arena.
And forget about moving to a different market like Las Vegas or San Antonio. The Angels have the second-best local TV contract in MLB: a 20-year, $3-billion deal with Bally Sports signed in 2011. (To put that into context: national MLB TV revenues are estimated to be $60.1 million per team this season, or less than half of what the Angels receive locally.) No way there’s a similar TV-rights contract awaiting the team in Las Vegas or San Antonio or Portland or Nashville.
So what happens next? Likely not much in coming weeks. Yes, SRB Management could sue and compel the city to live up to the original development contract, but if the city fights, we’re looking at years of lawsuits. A new agreement with some upgraded terms would seem to be the most cost-effective solution for both sides: more revenue and more affordable housing allows the city to save face, and it allows SRB Management to move forward with development plans. Then again, the team could do nothing and let the current lease run its course and still be perfectly fine from a financial viewpoint.
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