Case Study 2: Contract Law
EC 337: Economic Analysis of Legal Issues
Economics Department
Boston University
Dr. Ben Koskinen
1 Background
In 1960 a new major league baseball team was created called the Los Angeles Angels. Six years later they
elocated to a new stadium in Anaheim, California, and renamed the team the California Angels. In 1996,
following the huge success of the film “Angels in the Outfield,” the now-owner Disney Baseball Enterprises,
Inc., agreed to terms in the lease agreement with the stadium in Anaheim. The lease was for 30 years and
stipulated that the team name must always contain the name “Anaheim,” among other terms, at which time
the team was renamed the Anaheim Angels in consideration for the city financing stadium renovations. In
2003 the team was sold again, and renamed the Los Angeles Angels of Anaheim, to comply with the terms
of the lease. This study is about the contract signed in 1996, with details and fallout in the 2006 lawsuit
filed by the City of Anaheim, California, against Angels Baseball, Limited Partnership (ABLP).
2 Notes
Although the defendant is ABLP, the main focus of this case study is on the contract signed with the City
of Anaheim and Disney Baseball Enterprises. ABLP being the eventual purchaser of the baseball team in
Anaheim, California, need not be relevant to your answers. Some other buyer, whose willingness-to-pay
could have still exceeded Disney’s (but likely less than ABLP).
The lease agreement states, in section 11(f),
“Tenant will change the name of the Team to include the name ‘Anaheim’ therein, suchchange to be effective no later than the commencement of the 1997 Season. ”
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The City of Anaheim appealed the decision, and was denied in 2008 (Anaheim v. Angels Baseball, 2008 ).
The main point of contention by the plaintiff was a loss of “impressions,” or publicized references to
the city. A couple years after the fact, a commissioned study estimated 28 billion impressions lost per yea
(Moore, 2017 ).
In 2013, the team reached a new deal with the city and have officially dropped the “of Anaheim” from
the team name in exchange for keeping the team in Anaheim through at least the 2019 MLB season (Shaikin,
2013 ), without the mayor’s support (4-1 vote).
3 Questions
Please ensure the following questions are answered:
1. In your estimation, was Angels Baseball’s name change socially efficient? Explain your reasoning, and
identify surplus winners and losers of the name change.
2. Suppose the dissenting opinion prevailed, and ruled that the renaming was in
each of the lease
agreement. Provide a thorough description on how expectation damages ought to be calculated (N.B.
you do not need to provide a number, but rather discuss how you would find a number if you had to
provide one to the court as the City of Anaheim’s council). Other than expectation damages, provide
other options at the court’s disposal, and comment on the benefits and costs to each.
3. The lease agreement did not demand that the team specifically be called the “Anaheim Angels,” but
ather that “Anaheim” merely had to be contained within the teams name. Was this a “rational gap”
in the contract? Explain, and discuss the costs of filling this gap.
4. Much of this case discusses the injunction requested prior to the start of the 2006 season which was
denied (city requested keeping the “Anaheim Angels” as the team name until the case is tried). The
dissenting opinion (starting on page 20 of the PDF) says that an injunction at this point is useless, but
should have been issued when the City of Anaheim first requested it. As economists, we would like the
court to be expected-cost minimizing at the time the injunction was requested. Detail the (expected)
cost-benefit analysis the court should have made at the time on the injunction request, and whethe
you believe the cost did indeed minimize expected costs.
2
4 References
City of Anaheim v. Angels Baseball, L.P. no. G035159, (Cal. App. D4 June 27, 2005).
City of Anaheim v. Angels Baseball, L.P. no. G037202, (Cal. App. D4 December 19, 2008).
Moore, Jack. (2017, July 21). “The Absurd History of “The Los Angeles Angels of Anaheim”.” The
Hardball Times. https:
www.fangraphs.com/tht/the-absurd-history-of-the-los-angeles-angels-of-anaheim/.
(2018, Fe
uary 28).
Shakin, Bill. (2013, August 30). “‘Los Angeles Angels of Anaheim’ could be no more.” Los Angeles Times.
http:
articles.latimes.com/2013/aug/30/sports/la-sp-sn-angels-anaheim-los-angeles-arte-moreno XXXXXXXXXX,
Fe
uary 28).
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https:
www.fangraphs.com/tht/the-absurd-history-of-the-los-angeles-angels-of-anaheim
http:
articles.latimes.com/2013/aug/30/sports/la-sp-sn-angels-anaheim-los-angeles-arte-moreno XXXXXXXXXX