Economists: Stadiums Are Bad Investments

Is the city of Anaheim better off without the NFL? Is it better off without the Angels?

Councilman Harry Sidhu interrupted a choreographed news conference Tuesday to pose the first question, and the city might soon have to answer the second question. The issue reflects a growing consensus among economists that sports stadiums and arenas might be wonderful for civic pride but make for poor public investments.

“There are only two things you do not want on a valuable piece of real estate. One is a cemetery, and the other is a football stadium,” University of Chicago sports economist Allen Sanderson said Tuesday.

While American cities have traditionally assumed sports facilities would trigger urban development, local governments are increasingly wary of such assumptions -- and of using public money on the basis of them.

The NFL is considering potential stadium sites in Anaheim, Carson, the Coliseum and the Rose Bowl. Anaheim wants to include a stadium on a 40-acre chunk of the Angel Stadium parking lot, within what the city dubs the “Platinum Triangle,” an 820-acre site that would blend a baseball stadium, a football stadium and the Arrowhead Pond in what city planners call “an urban environment of a scale never before seen in Orange County.”

City officials have so far received applications for nine developments in the area, including 4,252 residences -- homes, apartments and condominiums -- on 76 of those acres. The football stadium is targeted for the site currently occupied by the Grove of Anaheim, a performance hall that city planning director Sheri Vander Dussen said is targeted for demolition with or without the NFL.

While city planners note the “opportunity for entertainment-related development” surrounding Angel Stadium, City Manager Dave Morgan stressed at the news conference that the city was not counting on an NFL stadium to spur growth in the already booming region.

Good thing, according to Sanderson. He said virtually any other use would attract more people to a site than an NFL stadium, where the home team is not scheduled to play 355 days a year.

Sidhu said the NFL was welcome to pay its way onto the Anaheim property. He said he was concerned that the council might provide that chunk of land to the NFL at no charge and said the city could sell those 40 acres to developers for $150 million.

“I would take the $150 million and hire 50 police officers immediately,” he said.

Sidhu’s assessment of land value would be correct only if the city re-zones the land to allow high-density housing, said Louis Tomaselli, senior vice president at Voit Commercial Brokerage in Anaheim. Surrounding property with that zoning, he said, would sell for $4 million to $5 million an acre.

The Angel Stadium site, which includes the parking area not proposed for the NFL stadium, covers 100 acres. Given land values then, the Angel Stadium land might be far more valuable to the city without the stadium.

In Inglewood, civic leaders already have decided the city would be better off without a major sports venue. Hollywood Park’s owners are expected to sell the 238-acre site to developers, and city officials are happily anticipating new homes and businesses -- and tax dollars.

“Hollywood Park has been a great neighbor,” Mayor Roosevelt Dorn said. “But I don’t think there’s any question, if the land were developed, it would be far better for the city of Inglewood.”

The NFL is not considering the Hollywood Park site, although the Raiders hoped to move there a decade ago, before returning to Oakland.

“The last thing we would want is a football stadium in Inglewood,” Dorn said. “It’s a white elephant.”

Under their lease with Anaheim, the Angels write a check to the city each year, for an amount that topped $2 million for the first time last year and might never exceed $2.5 million. Without the stadium, the city might be able to sell the site to developers for $400 million or more, then reap taxes from the developments. That calculation, Sidhu said, prompted him to speak out in the hope that an NFL deal would not resemble the Angels’ deal, which he called “a total disaster for the city.”

The city has sued the Angels, alleging their name change violates their lease and prompting comments from owner Arte Moreno and a team attorney hinting that failure to resolve the suit could prompt the team to look elsewhere. While city officials -- Sidhu included -- say they want the team to stay, they are convinced they would suffer no financial harm if the Angels ever left town.

“We’re aware of the opportunity for the property. It’s significant,” Mayor Curt Pringle said. “But the amount of love from the City Council for the Angels is immense, so I wouldn’t even fathom that. That’s not what we’re looking at.”

The Angels paid the city $2.1 million last year, with $1.9 million shared in ticket revenue and the rest in parking revenue, said Greg Smith, who oversees the stadium for the city.

For every ticket sold over 2.6 million, the Angels pay the city $2, a fixed amount regardless of how much Moreno might raise prices. The Angels sold a record 3.5 million tickets last season -- 95% of capacity -- so the annual revenue shared with the city cannot rise significantly.

In its lawsuit, the city alleges the Angels’ name change -- to the Los Angeles Angels of Anaheim -- has caused irreparable harm. In a court hearing in March, Angel attorney George Stephan said those sellout crowds affect local shops and restaurants.

“I guarantee you they would be very unhappy if we left,” he said. “That’s irreparable harm.”

However, with residential and commercial developments adjacent to a stadium -- and possibly in its place -- city officials note that people could flock to the area every day, not just on game days.

The estimated sale value of $4 million to $5 million an acre probably would rise by 2016, when the Angels have an escape clause in their stadium lease and the passing of another decade presumably has increased the scarcity of available land in Orange County. The parking lot would be needed if Anaheim attracted an NFL team.

Moreno said in February he had been contacted by representatives of other locations interested in the Angels and refused to comment when asked whether the lawsuit might prompt him to consider searching for a way out of Anaheim before 2016.

“It’s an incredible market for baseball,” Councilman Richard Chavez said. “I’m sure another team would love to come.”

City officials insist their vision of the Platinum Triangle includes the Angels, no matter how many millions Anaheim could add to its treasury without them.

“We’re not looking in that direction,” Sidhu said. “We’re just honoring the lease.”