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Will the LA Angels Leave Anaheim? It Depends on the Money

In Anaheim, most of the MLB-related drama is related to Albert Pujols' recent resurgence and Mike Trout's statistical otherworldliness. But there may be a bigger story on the horizon. According to the Los Angeles Times' Bill Shaikin, the Angels are "exploring" the possibility of a new home in Irvine, Calif. Although the distance between the cities is less than a 20-minute drive, one of the team's biggest markets -- L.A. -- would be farther away.

To some, a move doesn't appear to make economic sense, especially in a period when Angels fans continue to be some of the most devoted in baseball. So what is the team thinking?

Diving into the negotiations
To understand this question, one must delve into the spellbinding, sometimes sensational discussion that's taken place between Angels ownership and the city of Anaheim. Both sides are currently negotiating a new stadium lease to cover Angel Stadium (below) and the 100-plus acres of surrounding city-owned land.

Angel Stadium of Anaheim. Image via Pyro Spectaculars by Souza's, Flickr.

As The Orange County Register points out, the Angels' current lease goes through 2029, with an opt-out clause in 2016. This agreement allows the team to keep all sales from the first 2.6 million tickets it sells each season, and 100% of concession, event, and ad revenues. It also mandates the Angels include the word "Anaheim" in their name.

According to the Register, the terms of the proposed lease are a bit different, and would run through 2057, with opt-out clauses in 2036, 2043, and 2050. The other key points are:

  • The Angels keep all sales from the first 3 million tickets sold (they hit 3.01 million last year, and 3.06 million in 2012).
  • The word "Anaheim" can be removed from the team's official name. 
  • The team pays for stadium upgrades, which could cost as much as $150 million.
  • The Angels can also "develop" the 100-plus acres of surrounding land, at an annual rental cost of just $1.00.

The last detail is the most controversial. Anaheim Mayor Tom Tait told the Register"we certainly value the Angels, but the economic value to the city doesn't merit giving away the land for free [or very close to it]." And that's understandable. A recent appraisal estimated the entire Angel Stadium plot to be worth more than $200 million, the Times reported. 

Why the Angels would leave Anaheim
Even if the Angels agree to pay a higher rental cost, there's another sticking point: the money made from the land once it's developed. Assuming office buildings, apartments, and parking structures are built, the resulting revenue could well surpass the $150 million -- or more -- the Angels expect to spend on stadium upgrades.

If that happens, it's reasonable for the city to get a cut. The only question is: how much? According to Shaikin, Mayor Tait thinks a 50-50 split is fair, and "he is not in favor of letting the Angels keep a majority of [the] money under any circumstance." Hence the reason the Angels would leave Anaheim. If the team does want more than 50% of revenue from the land surrounding its ballpark, it may be an impossible deal to attain in Anaheim.

How much would relocation cost?
Although it's tough to estimate the odds of a move, there's at least the possibility it could happen. In that scenario, the Angels could bolt town beginning in 2016. So how much would a relocation cost? There are two major variables that will affect this figure: land and stadium development costs.

Given that a Major League team like the Angels can generate millions of dollars in local economic activity -- it improved spending in Anaheim by $120 million in 2012, according to an economic impact study by Conventions, Sports, and Leisure -- it's reasonable to think a competing city could give away the land required for a new park. Irvine is only the latest name in the rumor mill. Tustin, Calif., about five miles north of Irvine, is also a possibility. Both cities have large plots of land near freeways and public transportation.

Actually building a new stadium, though, is an entirely different animal. The Atlanta Braves' next park will likely cost close to $675 million, with about half that coming from taxpayers. Marlins Park, completed in 2012, cost almost $650 million, and the Minnesota Twins' Target Field cost $545 million. In Miami, the local government covered about three-quarters of the park's cost, while Minneapolis taxpayers were responsible for $350 million of Target Field's total bill, according to the Wall Street Journal.

Given recent history, a city like Irvine could conceivably be convinced to pay for half of a $600 million to $700 million stadium for the Angels. If that happens, and the land is free, it may be a better deal for the team to leave Anaheim, especially if the alternative is to make expensive upgrades to an aging Angel Stadium. The park was built in 1966, and would be almost a century old by the end of the proposed Anaheim lease. 

On the other hand, if free land isn't available, and a new group of local taxpayers aren't willing to foot a significant portion of stadium development costs, it might make sense to stay put. It's this scenario that Mayor Tait was likely envisioning when he told the O.C. Register earlier this year that a move could cost $1 billion. 

The bottom line
So what will the team do? Like most things in life, it depends on the money. Instead of paying attention to ongoing negotiations between the Angels and Anaheim, though, it may be smarter for concerned fans to keep an eye on what nearby cities like Irvine or Tustin are offering.

In my opinion, a team that brands itself with the "L.A." name should stay as close to Los Angeles as possible. But if the cards fall right, and the combination of free land and public subsidies allows a new stadium to have a similar price tag as upgrades to Angel Stadium, it makes sense for the team to consider a move.

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Read/Post Comments (14) | Recommend This Article (13)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On May 06, 2014, at 3:02 PM, AlonzoHawk wrote:

    That threat is no threat at all. The larger neighbor (and former owners of the Angels/Disney) down the street would probably love to sit down with the City of Anaheim and discuss use of that land for recreational and commercial development.

    I smell another theme park brewing!!! Adios Los Angeles Angels (formerly of Anaheim) of Irvine.

  • Report this Comment On May 06, 2014, at 3:36 PM, AlonzoHawk wrote:

    This in not a credible threat. Disney (down the street) is probably salivating at the chance to sit down with the City of Anaheim to discuss development of a land parcel that big.

    New retail and themed amusement area anyone?

    Maybe Artie should back up a bit. The Los Angeles Angels of Irvine doesn't really roll off the tongue now does it?

  • Report this Comment On May 06, 2014, at 3:58 PM, GAsLawnchair wrote:

    I hope LAA does move - somewhere near the county border in or around Santa Fe Springs - that would be great for me and my buddies.

    Plus, Anaheim hates LAA for the name change & they will never get over it - time for a change!

  • Report this Comment On May 06, 2014, at 8:55 PM, FArthurLauder wrote:

    As a Los Angeles resident living on the border of LA and OC, getting to the games was hard enough with the PATHETIC transit policies of the LACO BOS. Moving to Irvine would make getting to the games harder.

  • Report this Comment On May 06, 2014, at 9:45 PM, robdela1965 wrote:

    walnut her we come

  • Report this Comment On May 06, 2014, at 9:58 PM, kentito24 wrote:

    I'm not sure the author has idea one about how things get done in OC. First, a $700 million stadium elsewhere is a $900 million stadium in CA. Secondly, by the time the NIMBYs get done with their lawsuits, it will be 2025. Moving the team in OC is a hollow threat.

  • Report this Comment On May 06, 2014, at 10:40 PM, crosby wrote:

    Just another slap in the face to Anaheim.

  • Report this Comment On May 06, 2014, at 11:25 PM, twalshiii wrote:

    The one thing missing from this article, Disney did a total rehab of the stadium in 1997-98 and it's considered one of the best in baseball.

    However the best thing for Anaheim is let Artie take his team and sell the land to Disney and say good riddance to the bum and be happy they had baseball for 50 years.

    In the long run, the city of Anaheim and its taxpayers do way better with the team gone.

    And Artie can move the team to downtown L.A. where an NFL stadium will NEVER be built.

  • Report this Comment On May 07, 2014, at 11:32 AM, ken62 wrote:

    California is like NY or Boston, .i.e., NO WAY IN HELL would a new stadium there cost what it does in Texas, Florida or Georgia. Tack on an additional 25% minimum in cost for the same quality as stadiums in the south.

  • Report this Comment On May 07, 2014, at 6:14 PM, motley89450 wrote:

    Not Realistic...Tustin and Irvine potential sites already have too much traffic,,,add 81+ dates for Angel games would not be welcome in either area. As it is people use lots of side streets to access Anaheim Stadium/Edison field/this year's name.

    Also, Irvine can be very difficult to deal with once an agreement is reached. Not sure what the adjoining 100 acres is other than existing parking lot.

  • Report this Comment On May 07, 2014, at 10:27 PM, Richardbfagan wrote:

    Maybe the Angels should worry a little less about where they play and focus a little more about how they play. This team is going no where except maybe .500 ball without a true number one starter and a real closer. Right now they have neither. Three players being paid more than $450 million on the offensive side of the ball. It's embarrassing to be fan of a team that is managed this poorly. Maybe they can play at Disneyland somewhere so we can wish they might one day make the playoffs!

  • Report this Comment On May 08, 2014, at 1:29 AM, CAsouth wrote:

    It would be a win/win if the Angels moved to Irvine. I would assume they would move near the 133 close to Verison which would be far enough from most of the NIMBY people. Irvine also has more than enough money to give away the land and pay for half the stadium. While Irvine is fairly wealthy, Anaheim is mostly a ghetto in the shadow of Disney. That land Angel Stadium sits on would be bought within minutes of the Angels moving.

  • Report this Comment On May 09, 2014, at 4:48 AM, BobMarley420 wrote:

    Arte Moreno needs to be smart, take the deal with the City of Anaheim and change the team name back to the "California Angels". He also needs to do a minor rebrand and bring back the "CA" logo.

    I live in LA County but I'm an Angels fan and I hate the fact they are called the LA Angels, they play in OC and represent the whole LA/OC/Inland Empire in Southern California.

    Also the "CA" logo is still popular as people wear the retro "CA" hats all over the place. It lets you know you're from Southern California thanks to the Halo A.


  • Report this Comment On October 04, 2014, at 2:23 AM, ratpackman wrote:

    I realize this article is a few months old, but the negotions the team had last year with the city council allowed them to immediately drop the 'Anaheim' from their name, that's why all the major sports news outlets have been calling them just the Los Angeles.

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Jake Mann

Jake Mann covers sports, economics and politics for the Motley Fool.

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