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Stadium Authority Demands to See ManCo Contracts, Threatens Breach of Contract

A lack of paperwork explaining a massive revenue decrease at Levi’s Stadium has caused the Santa Clara Stadium Authority to request a copy of every contract for non-NFL events, putting the stadium’s management on notice that it is in breach of contract.

At a special meeting Wednesday night, the Stadium Authority Board voted unanimously not only to request copies of every contract for stadium operations and non-NFL events but also to cease paying any bills before seeing supporting documentation.

On March 14, the Forty Niners Stadium Management Company (ManCo) submitted an additional $2.8 million in expenses and claimed net revenue for non-NFL events would generate only $750,000 for 2018-19 and an anemic $175,000 in 2019-20. The figures threw a wrench in the City’s budget approval process. Finance department estimates projected $4 million and $5.8 million for those years, respectively.

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“These last minute developments, with new information, raise serious questions about how ManCo is managing the City’s asset and cause for concern […],” said Angie Kraetsch, the City’s Finance Director and Stadium Authority Board Treasurer.

Another point of contention is a $650,000 bill for floor maintenance submitted by ManCo. City Manager and Board Executive Director Deanna Santana sent a letter to ManCo saying it breached its contract when it approved that work; the contract requires Board approval for work that exceeds $250,000.

Since the Board’s last meeting on March 19, Santana met with ManCo in hopes of getting to the bottom of the disparity, but returned to the Board Wednesday night with no greater insight into the reasoning for the low estimates.

If ManCo’s estimates are correct, the City would see no money from non-NFL events in 2019-20. However, ManCo’s estimates do not jibe with information the City has from stadium profit and loss statements and comparisons to previous years’ revenue, Kraetsch said.

Although ManCo has yet to demonstrate the low estimates are due to the curfew, members of the Board inferred that it would be ManCo’s reasoning. The curfew has been a dispute between ManCo and the City the past few years — one that has caused speculation by some that it will hurt Levi’s Stadium’s revenue.

However, Santana said the issue of the stadium supposedly losing revenue because of the curfew is a red herring, saying that alone cannot account for the disparity.

“It is more multi-factored than the curfew itself,” she said.

Kraetsch said if ManCo’s estimates for non-NFL revenue are accurate, there would be no performance rent paid to the City’s general fund. Her department projects a $34.9 million decrease in debt for 2019-20.

Board Member Raj Chahal attempted to curb the implicit vitriol in the Chambers, saying the Board needs more “clarity” around these issues, implying that not all the blame should be laid at ManCo’s feet.

But Santa Clara Mayor and Board Chairperson Lisa Gillmor dismissed Chahal’s comments, telling him that if he wants to “make something more formal, put it on an agenda.” She said that if the curfew is really hurting revenue, then ManCo shouldn’t have trouble demonstrating that with documentation.

Board Member Kathy Watanabe said Northside residents should be a priority, saying that weekend events are “just as profitable” as weekday events.

“Taylor Swift doesn’t live on the Northside; U2 doesn’t live on the Northside. They get to leave,” she said.

Board Member Teresa O’Neill wondered how much of the revenue is dependent on large-scale events like concerts, adding that she was “concerned” about the situation.

No representative from ManCo was present at the meeting, which has become a trend the past few months as the Board has become more strident in its criticism of it.

The marketing plan, which the Board did not approve, was also a source of friction. Santana had previously said the key performance indicators were absent in the plan and provided an example to ManCo, who in turn said it doesn’t believe the marketing plan needs to be amended.

Board Member Debi Davis was absent from the meeting. The Board meets again Tuesday, April 9 in the Council Chambers at City Hall, 1500 Warburton Ave.

 

Editor’s Note: This article has been updated to be more clear.

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