State auditor issues critical review of Angels’ Stadium lease

ANAHEIM, Calif. (KESQ) - State Auditor Grant Parks today issued a review of Anaheim's lease with the Angels for Angel Stadium, criticizing a lack of access for inspections and its revenue-sharing terms, which compare unfavorably to other stadiums in the state.

Sen. Tom Umberg, D-Santa Ana, who asked for the audit with Assemblyman Avelino Valencia, D-Anaheim, in August, blasted the lease agreement and said he will work with the city on how to get more detailed inspections of the nearly 60-year-old stadium.

"If nothing else, we need to at least look out for the health and welfare for folks who attend the stadium,'' Umberg told City News Service.   

"One of the most stunning (terms of the lease agreement) is the prohibition on inspections, which I think is outrageous,'' Umberg said.   

A detailed assessment of the stadium is also necessary ``in terms of the deterioration of the asset,'' Umberg added. ``This is a huge asset to the taxpayers of Anaheim. We have an obligation to ensure it's basically not falling to the ground.''

Umberg said extreme weather from climate change poses new risks to the stadium that weren't there when it was built such as high winds fueling wildfires.

``This building was built so long ago the conditions that existed back in the day have changed,'' Umberg said. ``That's an immediate concern.''   

Umberg noted he wrote a bill in 2022 that passed, which voids public contracts ``if the contract negotiated was not in the best interests of the constituency.'' Public corruption such as a bribe could lead to the voiding of a contract, for example.

On Friday, former Mayor Harry Sidhu is scheduled to be sentenced for his role in the failed stadium sale deal. When Sidhu pleaded guilty in August 2023, he admitted he shared negotiation terms with then Anaheim Chamber of Commerce CEO Todd Ament and an Angels consultant, but though he was caught on an undercover tape expecting a $1 million campaign contribution from the Angels for his help steering the deal through the city council, he has emphasized in court papers that he never asked for a contribution and was never charged with bribery.

Parks said in his letter to Gov. Gavin Newsom and state lawmakers that the lease, which started nearly 30 years ago, ``does not clearly provide Anaheim with a right to inspect its publicly owned stadium to verify its upkeep and maintenance, and the terms to no require any public reporting of the stadium's physical condition or deferred maintenance.''   

Anaheim Mayor Ashleigh Aitken said the audit will help guide city officials going forward.

``We welcome the recommendations, which will inform any future lease discussions,'' Aitken said. ``Our residents can rest assured that any future lease will be better and stronger. This is a 30-year-old lease that we are bound by. The Sidhu Council had the opportunity to address many of these issues -- and didn't. Moving forward, I'm confident in our city audit team's oversight of this lease with our latest audit set for later this year.''  

The city is receiving just modest-at-best revenue from the stadium since the Angels paid $76 million in rent in 1997. Flagging attendance has choked off even more revenue.

The city's share of ticket revenue is $2 for every ticket sold in excess of 2.6 million tickets annually, the auditor said.   

``Low attendance meant that Anaheim did not receive a share of baseball revenue between fiscal years 2020-21 and 2022-23,'' Parks wrote in his letter. ``In the nearly 30 years between fiscal years 1997-98 and 2024-25, Anaheim received revenue of $30.6 million from baseball ticket sales, parking and other events while incurring $30.2 million in expense for debt service and stadium maintenance, resulting in a net total of just $415,000 for Anaheim over this period, excluding rent revenue and stadium renovation costs.''

City officials ``returned to Angels ownership the $76 million that ownership had prepaid for rent in 1997 -- along with providing an additional $20 million -- to contribute toward the Angels' stadium renovation efforts,'' Parks wrote.

``Angels ownership pays no ongoing rent, and will pay no ongoing rent, despite its option to extend the lease with Anaheim multiple times, including the three-year extension option it exercised in February 2025.''   

The city's lease runs through December 2032, and it can be extended for up to six more years.  

The city and Angels could be on a collision course in court over a disputed amount of money regarding repairs over the years, the auditor said.   

The agreement includes a ``capital reserve fund'' that the Angels and city pays into for improvements.

``The lease provides that if Angels ownership spends more on capital maintenance and repair for the stadium and parking area than what is available in the fund, Angels ownership can credit the additional amount against its next succeeding obligations to fund the capital reserve in future years,'' according to the audit.  

The team has spent $35.6 million more than what was available in the fund, so the owners claim the city is on the hook for that expense, though city officials argue that is ``meritless,'' according to the audit.

The auditor faulted city officials for making just ``minimal efforts'' to verify that the profit sharing with the team was accurate.   

``Angels ownership annually provides the city with letters indicating the revenue due to the city, but the letters do not include any supporting documentation,'' the audit reports.

``City staff verify the baseball ticket sales figures that Angels ownership reports by comparing them with figures reported by (Major League Baseball), but do not take other steps to determine whether the parking or other event revenues appear reasonable.''

The non-baseball events at the stadium such as monster truck shows and motocross competitions ``have been Anaheim's largest source of stadium revenue in recent years,'' but ``city staff neither document the other events held at the stadium, nor request any information about other events from Angels ownership,'' according the audit.

City officials say they depend more on ``periodic audits'' rather than auditing twice a year as allowed under the lease, according to the audit. Over the last 12 years, there have been just two audits -- in 2013 and 2018, the auditor said.

The auditor found that the revenue the team has paid the city was ``consistent with the requirements of the lease,'' but it appears the team overpaid $95,000 for tickets in 2021, which the city intends to refund.