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City Council Squares Off With 49ers Over &lsquoUndisclosed Documents,’ Claims Breach of Contract

In an act of political theater at the Nov. 22 Santa Clara City Council meeting, Council supporters donned green ribbons tied around their arms and held matching signs that read “Follow the Law.” This demonstration came following a similar showing by San Francisco 49ers employees earlier this month as part of a tug-of-war between the team and the city over contract terms.

The Council took issue with the 49ers stadium management subsidiary’s, ManCo’s, disclosure of information to the Santa Clara Stadium Authority relating to stadium operations. Specifically, the Council is demanding documents that delineate costs and revenue generated by individual non-NFL events. The City Council is also the Stadium Authority board.

The Council voted unanimously Tuesday to send a letter to ManCo charging the management entity has breached its contract with the city. Council Members Patrick Kolstad and Jerry Marsalli were absent, making the vote 5-0.

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“How are we to know that we are managing this public asset in the proper manner if we cannot get the proper documents?” asked Gillmor.

During previous discussions, several Council Members expressed concerns as to whether the documents the Stadium Authority and Council seek even exist. Tuesday, Gillmor repeatedly said the Stadium Authority has not “seen a single document,” a claim contested by, among others, Al Guido, president and CEO of the 49ers, who claimed it is “not true that the city doesn’t have information for non-NFL events.”

Harry O’Brien, a lawyer representing ManCo, said the company has provided most of the documents requested by the city’s Measure J compliance auditor, Harvey Rose Associates (HRA). Those that have not been provided – those containing proprietary information – are available for review at the 49ers headquarters.

According to HRA’s report, of the 16 items requested, three – capital expenditure, operations and maintenance, and transitional budgets – are part of existing Stadium Authority reports, five – audited financial statements, trial balances and revenue/expense detail, parking plans, non-NFL event plans – have been provided to HRA or the Stadium Authority, and two aren’t applicable.

The remaining six items – details about individual non-NFL events, including promoter and performer deal terms as well as event-specific security plans – were available at 49ers headquarters for HRA and Stadium Authority review, according to HRA’s report.

Ren Nosky, Santa Clara City Attorney, told the Council that city staff made the trip out to the stadium since the Council’s last meeting on Nov. 20 to “verify that the documents were prepared.” City Manager Rajeev Batra also confirmed that the documents exist. Nosky said the documents containing proprietary information combine both public and confidential information, and aren’t labeled confidential.

Tuesday’s vote came a week after the Council opted to table the agenda item to give ManCo time to provide the requested documents. The one-week delay came as a compromise to Council Member Dominic Caserta’s two-week proposal, which followed a “can’t we all just get along”-style plea to the Council.

The conflict results from differing interpretations of what constitutes “proprietary information,” i.e., information the 49ers deem trade secrets as well as venue security plans, and which the stadium lease and management contracts except from public disclosure.

“It is misleading. It’s inaccurate it is simply not the truth,” O’Brien said of the characterization of ManCo as obstructionist. “There is nothing on this list that doesn’t exist. We’ve reviewed it with the staff in the past and we’re happy to review it again. Much of the information has been provided. If you would like it in a different format … let us know what you need to see.”

Turning over all the documents to city hall would effectually put those documents in the public domain. Providing information on an event-by-event basis allows promoters to compare deals and negotiate better deals in the future, hurting the city’s competitive advantage, O’Brien said.

Further, some of the documents contain specific venue and event security details, he added, and making them public would risk people’s safety at stadium events.

However, O’Brien maintained that ManCo will work with the city to provide whatever information the Stadium Authority wants to review.

Gillmor said the city is looking for nothing more than for ManCo to adhere to the management agreement, saying several times that “it is pretty clear.”

“We decide together what is confidential. We hire ManCo. They work for us. They don’t get to decide what to keep from us,” Gillmor said. “You can’t have a company declare that something is confidential to avoid the law.”

O’Neill said the Council is not after proprietary information, but the Council cannot abide its tenant keeping information from it.

“My role is not to know how many bottles of Perrier are in Beyonce’s dressing room,” she said. “If you want to operate totally as a closed proprietary company, we might entertain an offer if you want to buy the stadium.”

Councilwoman Kathy Watanabe said having the documents is important moving forward to “insure nothing is altered.”

At the previous meeting, Watanabe drummed home the importance of obtaining the information in the documents to monitor Measure J compliance in the wake of a civil grand jury investigation into whether the city spent tax dollars to fund security operations at the stadium. The grand jury made no findings, but recommended that the city audit its compliance with its own stadium ordinance.

O’Brien countered saying that ManCo is not responsible for how the city tracks its employees’ time, adding that every bill the city has submitted to the 49ers for reimbursement has been paid promptly and in full.

“I can’t think of a single document on that list that we have not provided,” said 49ers CFO Scott Sabatino.

The disparity between the claims of HRA consultant Dan Goncher and the 49ers regarding which documents have or haven’t been received caused Council Member Davis to snipe at O’Brien, “For some reason, we get this circus,” and say that she wanted Goncher to “do your job.” HRA hasn’t provided a map between the information it wants from ManCo and the contract sections referencing these reports.

Gillmor called the conflicting testimonies “beating a dead horse.”

Most of the public commentary was the antithesis of the previous meeting, which amounted to dozens of criticisms lobbed at Gillmor for perceived slights to 49ers employees.

At Tuesday’s meeting, Davis called those opinions “obnoxious” and “diversionary tactics.”

“You don’t come here and play it out and bash the mayor because you don’t think she is doing a good job,” Davis said of the criticisms of Gillmor. “I went home last week and could not believe we were attacked.”

Tino Silva, who lost his vye for the Council to Patricia Mahan, pointed the finger at City Manager Rajeev Batra, City Attorney Richard Nosky and Finance Director Gary Ameling.

“So much time was focused on the Niners, we have lost focus on our city staff,” he said. “They have not done the job they were supposed to do.”

The letter, which was scheduled to go out the day before Thanksgiving, will give ManCo 30 days to produce the documents. If ManCo fails to satisfy the Council’s demands, the city has threatened to dissolve the lease agreement and take over management of the stadium – something that would require all three parties involved in the contracts, the Stadium Authority, ManCo, and the 49ers Stadium Company (StadCo), to agree on.

No one on the Council has publically explained how the details of promoters’ and performers’ contracts are relevant to allegations that city employees’ stadium time isn’t being reported correctly, the stated reason for the measure J compliance audit.

In other action, the Council:

  • Approved a $10,000 grant to Santa Clara Vanguard Booster Club for the Vanguard team’s travel expenses to participate in the 2017 Rose Parade in Pasadena.
  • Approved a $10,000 grant to Santa Clara Host Lions Football Club, Inc. for travel expenses to participate in the Pop Warner Super Bowl 60 in Orlando, Florida from December 1-11, 2016.
  • Appointed Elphinstone James Birch to the Santa Clara Senior Commission.
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