Pro Sports: Entertainment or Real Estate Catalyst? Anaheim Is the Latest City to Do the Math
Los Angeles Suburb Appraises Stadium for Options in Case Angels Baseball Team Leaves
BY RANDYL DRUMMER (via CoStar Group)
The Los Angeles Angels want upgrades to their ballpark in Anaheim, California. Photo: Major League Baseball
To get a glimpse of how U.S. sports franchise properties are increasingly seen as real estate development catalysts, look no further than the Los Angeles suburb of Anaheim.
The city council is commissioning appraisal firm Norris Realty Advisors to value the 155-acre property that includes the 53-year-old Angel Stadium as city officials try to negotiate a long-term agreement to keep the Los Angeles Angels Major League Baseball team in the city.
At stake is the answer to a growing question across the United States: Can the property of a professional team be worth more to a city than the team itself?
Norris Realty, based in Pasadena, California, is required under the contract, valued at up to $100,000, to deliver a report within three months valuing the property with the stadium, as well as without the stadium in the event the team leaves.
The property could become a giant redevelopment project in the event of a team departure. On the other hand, the baseball team could become a partner with the city in developing portions of the surrounding parking lots to create an entertainment district much like downtown Los Angeles’ L.A. Live that includes the Staples Center, home of the Los Angeles Lakers basketball team.
Los Angeles is just one model for Anaheim. From Georgia to Wisconsin to New York to Oakland, California, developments are being considered or getting built near pro sports arenas. In many cases, team owners are working with established developers of offices, apartments and stores or hotels to put those elements near their stadiums, though the owners themselves maintain large equity stakes and often bear the brunt of costs for those projects.
In theory at least, cities gain benefits including enhanced tax collections from properties that otherwise would have sat unused or under-utilized, though they still need to weigh those benefits against the potential negative impacts on neighborhoods, such as traffic and noise.
Recently completed mixed-use projects already deemed successful, based on initial lease-ups and foot traffic, include The Battery, a commercial district adjacent to the stadium housing Major League Baseball’s Atlanta Braves; and Titletown, a district next door to the home of the National Football League’s Green Bay Packers in Wisconsin.
Don Loudermilk, a senior vice president who handles sports-related properties for brokerage firm JLL, formerly known as Jones Lang LaSalle, said team owners in several cities wish they had snapped up more land adjacent to their stadiums at the time they were built, especially after seeing other commercial developers swoop in to take advantage of new energy generated by those venues.
Developments Near Stadiums
One team with no regrets, he said, is the Atlanta Braves, a JLL client that brokers advised on the feasibility of apartments, offices, retail and other elements that are now filled to near capacity next to the team’s SunTrust Park. A Braves executive told Loudermilk that representatives of other MLB teams, during a recent meeting in Atlanta, were quizzing him on the logistics of such projects.
“He said, ‘Everyone’s been asking me how we did it, and how they can do the same thing,’” said Loudermilk.
Several similar team-financed arrangements are now in the works in locations nationwide, including projects next door to the venues of baseball’s Boston Red Sox and New York Yankees, and football’s Tampa Bay Buccaneers in Florida. A similar project is also likely in Las Vegas, if the Oakland Raiders are able to complete a planned relocation to that city.
Baseball’s San Francisco Giants selected Tishman Speyer as its development partner for the 28-acre Mission Rock, scheduled to include 1,400 residential units, 250,000 square feet of retail and 1.4 million square feet of offices, on leased property just beyond the right field wall of AT&T park. Also in San Francisco, owners of the National Basketball Association champion Golden State Warriors are at work on Chase Center, which is scheduled to include mixed-use elements next-door to a new arena.
In Inglewood, owners of the National Football League’s Los Angeles Rams have a $2.6 billion project with a stadium and entertainment district planned.
In the case of Anaheim, the Angels team is owned by businessman Arte Moreno, who became the first Mexican-American to own a major U.S. sports franchise when he bought the team from Walt Disney Co. in 2003. Moreno notified the city in October that the team was planning to exercise its option to cancel the lease of the 45,483-seat stadium, which is among the oldest MLB venues.
But the council is now trying to convince the team to stay. On Jan. 15, it approved an amendment extending the date in which the Angels may terminate the lease, with a 12-month notification, until Dec. 31, 2020. This extension gives the city and the Angels necessary time to negotiate and consider a long-term lease.
Moreno is reportedly interested in purchasing two Fox Sports channels that broadcast the team’s games, Prime Ticket and FS Sports, a potential sign that Moreno wants to keep the team in the central Orange County city in suburban Los Angeles where it has been based since 1966, according to news reports.
“We are in the early days of trying to figure out a proposal that would keep the Angels here in Anaheim for another 50 years,” Anaheim Mayor Harry Sidhu said during the Feb. 19 council meeting. “We have to make sure any such deal provides the biggest benefit possible for the residents, the city and team as well.”
‘L.A. Live on Steroids’
Sidhu said the city should focus less on “what we get from the Angels this year,” and more on long-term development on the stadium property “that will be driving benefits to the city 40 years from today.”
He said at the meeting that “because there are only 30 Major League Baseball teams, development around the baseball stadium is likely worth much more, and it gives us the anchor where we can do something much more exciting than simply building as much as we can.”
City leaders have proposed what Anaheim Community and Economic Development Director John Woodhead described last month as “an L.A. Live on steroids.”
Talks to reach a long-term lease agreement are likely to include upgrades to the stadium, along with proposed development rights for parking lots around the stadium, which developers and city officials said could be turned into restaurants, shops, hotels and other commercial projects, city officials said.
The Anaheim Ducks hockey team has similar development rights to property next to its home, Honda Center, according to city documents.
Los Angeles real estate developer LT Global has proposed an Angel Stadium parking plan calling for 200 hotel rooms, 340 residences and up to 21 restaurants and brewpubs near the stadium parking lot.
A city report noted that the 820-acre Platinum Triangle district, which includes the stadium, is an emerging hub of homes, restaurants, entertainment, offices and transit built around the stadium and nearby Honda Center arena, home of the Anaheim Ducks National Hockey League team.
The Triangle is seeing significant investments in projects under way or planned in the near future but the area has not yet realized its full potential and in years to come, the area’s master plan will “create the kind of dynamic area seen around sports venues across the region and the country,” according to the city report.
The council’s recent approval of long-term lease, land sale and mass transit agreements with the operator of Honda Center reflects Anaheim’s commitment to professional sports.
“Similarly, the continuation of Angels baseball in Anaheim has the potential to advance the Platinum Triangle as an entertainment district while also generating revenue that will benefit our residents and neighborhoods,” the city staff report said.
CoStar News reporter Lou Hirsh in San Diego contributed to this story.