Throwing hundreds of millions of taxpayer dollars into the construction of a sports venue makes little sense, economists say, because the team that moves into the facility generally keeps almost all of the money from every sale of a ticket, hot dog, beer and T-shirt.
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.
“You always have to be willing, when you enter into any of these conversations, to say no,” Sacramento Mayor Darrell Steinberg said. “But it can be a big mistake not to say yes.”
The Angels and the city of Anaheim are on the verge of launching long-awaited negotiations on what both sides hope will be an agreement that will keep the Angels playing in their current home for years to come, with the city envisioning a vibrant cluster of shops, restaurants, hotels and homes rising on the surrounding parking lot.
The Angels also have entertained a move to Long Beach, but for now they are considering only Anaheim, with the goal of striking a deal by Dec. 31.
“We are 100% focused on Anaheim,” Angels spokeswoman Marie Garvey said. “Long Beach is on the back burner.”
Long Beach remains interested in the Angels but is evaluating other uses for its waterfront property, city spokesman Kevin Lee said.
“We had early conversations with the Angels,” Lee said. “We haven’t had any progress lately.”
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.
The stadium will be part of turning the long-neglected downtown rail yards — the NBA’s Kings spurned a proposed arena on that site 13 years ago — into an urban village that includes homes, shops, offices, a courthouse, a hospital and a transportation hub. Once the $33 million is repaid, the city would be able to keep the tax revenue and use it for public services.
Steinberg noted that Sacramento is blossoming into a city no longer defined solely as the state capital. The city also is accommodating an influx of residents fleeing the San Francisco Bay area in search of affordable housing.
“For the city to make a $30 million or so infrastructure investment is not only reasonable, it’s smart, for the future of this part of the city, and for the city as a whole,” he said.
“It’s always very important that the city first protects its taxpayers, but you also have to take the long view. If we really want to protect the taxpayers, then we will invest in ways that create a broader tax base. In Sacramento, we’ve been known for so long as a government town. We’re a proud capital city. But we realized, in recent years, that isn’t our future. It’s too limited.”
In Anaheim, the city directed one of its consultants on the Angels deal to review “public infrastructure requirements … and assist City in developing a public financing strategy,” and the options listed included the strategy used in Sacramento, according to his employment agreement. The city further directed the consultant to suggest options for “a defensible public-private template” that would accompany the sale or lease of any parking lot land.
Anaheim did not include an infrastructure rebate in the development agreement it struck last year with the NHL Ducks, a deal city officials often describe as a model for a potential deal with the Angels. However, according to city spokesman Mike Lyster, the city has a voter-approved infrastructure district in the Platinum Triangle, the 820-acre area that surrounds and includes Angel Stadium and the Honda Center.
In Sacramento, Steinberg said city officials have gotten “very little, if any, negative feedback” about the infrastructure investment. On the other hand, he said, residents long have expressed frustration about why the rail yards site has sat empty for decades.
“These issues tend to boil down to ideology: Should the public participate in the attraction and retention of major sports franchises? In my opinion, you don’t want to be too ideological about it,” Steinberg said. “If you do that, you run the risk of losing something that could be of great benefit to your city.”
That logic might not make as much sense in Anaheim, said Patrick Rishe, sports economist and director of the sports business program at Washington University in St. Louis. The Angels already are there, he said, and the city does not appear to be at great risk of losing them.
On the other hand, Rishe said, the prospect of what one city official called “L.A. Live on steroids” rising on a parking lot that the city has failed to develop for half a century could tilt the economic scales in favor of a modest form of public funding, in support of generating tax revenue from land that has generated none.
“That’s going to create a buzz and a vibrancy. There is value in that, and not just economic value,” Rishe said. “It would create a gathering space for people in Orange County. And that is a positive, if it happens.”
The last three words are a reminder that there are no guarantees. There are lively districts surrounding stadiums in San Diego and Denver, for instance, but scarcely any in Detroit, despite subsidies provided to the owner of the Tigers and Red Wings.
Rishe said the kind of subsidy approved in Sacramento and under consideration in Anaheim generally is received more favorably than a contribution from a citywide sales tax, where residents that never go to the stadium or a nearby restaurant would have to help pay for it.
“There is a lot of debate about whether there should be any public financing for sports facilities,” he said. “But, if you’re going to do it, you can create more equity and perceived fairness, and I think this is one way of doing that.”
Jose Moreno, the Anaheim City Council member who has criticized his colleagues for surrendering negotiating leverage to the Angels, said he would have to be persuaded to approve any public funding in a deal with the team.
“I’m not saying I’m totally opposed to it,” Moreno said, “but there’s a very limited tolerance level.”
Anaheim Mayor Harry Sidhu has said he wants any deal to add to the city’s general fund. The Sacramento deal is expected to do that, but not until after $33 million in taxes that otherwise would have gone to the city instead go to the team.
Moreno said his constituents have made clear they love the Angels and want the city to negotiate a deal that keeps the team in town — but not, he said, at any cost.
“Would I love to keep taking my kids to watch the Angels? Absolutely,” Moreno said. “But is it worth not having enough city resources for my kid to play every day in a park, or waiting 20 minutes for a police officer to respond?
“As my mom would often say: ‘You can’t make tacos out of love.’ ”