A nearly $5 million disparity between revenue projections from the Stadium Authority and the company managing Levi’s Stadium have left the Board considering taking drastic action.
The Forty Niners Stadium Management Company (ManCo) came under heavy fire during the Santa Clara Stadium Authority Board meeting Tuesday night. The two-part study session detailed the stadium finances and marketing plan. Both conversations saw Stadium Authority Executive Director Deanna Santana, Stadium Authority Counsel Brian Doyle and several members of the Board criticize ManCo on a variety of fronts.
Most of those criticisms are an old hat: speakers claim ManCo is not giving the Board the information it needs to paint an accurate portrait of how much money the stadium is generating, specifically for non-NFL events. One of the biggest points of contention was the massive gap between City employees’ forecast for non-NFL event revenue and those given by ManCo.
“There is no way around the fact that [ManCo’s] performance as a manager, at least in terms of non-NFL events, is terrible this year as compared to other years,” Doyle said. “Maybe their poor performance as a manager is because they are poor managers.”
Doyle said that ManCo’s failure to produce the documents the City wants “doesn’t feel like good faith” to him. Further, he added, no explanation or documentation has shown that enforcement of the 10 p.m. curfew has caused a dip in revenue.
Angie Kraetsch, the City’s Finance Director and Stadium Authority Board Treasurer, said her department was unable to determine the gross revenue because of the lack of documentation but made estimates on the net revenue based on the events scheduled and previous years.
That estimate came out to $4 million for 2018-19 and $5.8 million for 2019-20. The total to the City’s general fund revenue would be $3.3 million.
However, she said, on March 14, ManCo sent documents that estimate a $750,000 revenue in 2018-19 and a measly $175,000 net revenue in 2019-20. Additionally, it submitted an additional $2.8 million in operating costs.
Santana said the ManCo’s profit-loss statements do not jibe with the revenue it is projecting. Both she and Doyle said “reasonable” repeatedly, using it to modify almost every action the City performed with regard to ManCo.
Stadium Authority Board Chairperson Lisa Gillmor said she is “not paying a dime” of the “kitchen sink expenses” until the Board has seen the appropriate documentation substantiating them. She said she favored “serious” and “more formal” action to be taken against ManCo.
“We have a serious problem,” Gillmor said. “Nobody would manage their own personal property in this fashion, much less a billion dollar asset for the public.”
Despite the bad news about the revenue, Santana said the stadium had a “quite productive” year. She pointed to an increase in community engagement, putting in place 70 percent of audit recommendations, the rent arbitration award and the installation of noise monitoring near the stadium as just a few examples.
Another source of apparent bad blood was ManCo’s lack of willingness to simply roll over as the City criticizes its management.
In the administrative budget — roughly 3 percent of the overall budget or $2.98 million — is $500,000 for legal services, something Doyle said was necessary because the 49ers “keep suing” the City.
“They could help with this budget too if they would just stop suing us,” he said.
The marketing plan also wasn’t up to snuff in the Board’s eyes.
Santana and Doyle again focused on the word “reasonable,” this time attached to the detail lacking in the marketing strategy. Santana said key performance indicators, among other things, are absent in the plan.
Getting a handle on the reasoning for giveaway tickets will also help the board have insight into its bottom line. After the addition of a second day for the Taylor Swift concert in October 2018 resulted in the event losing more than $2 million, the Board felt entitled to understand how such giveaways benefit it. Further, the board preferred at least a cursory understanding of the multi-year contracts being entered into for non-NFL stadium.
The City doesn’t expect to have full details on finances on an event-by-event basis in the marketing plan, Santana said, but broad strokes on these points are essential.
Stadium Authority Board Member Raj Chahal suggested hiring a sports marketing firm to consult on strategies to both ManCo and the City’s benefit. However, Doyle dashed Chahal’s attempts to smooth things over, again shifting the blame onto ManCo.
“The ball is in their court to improve the relationship,” Doyle said. “If they want the relationship improved, then [they should] start improving it.”
No one from ManCo was present at the meeting. However, one slide in Santana’s slideshow claimed ManCo said “We disagree with much of what you have written.” The apparent quote is unattributed.
Santana said City employees are scheduled to meet with ManCo Thursday and plan to return to the Board March 27 with a clearer fiscal picture following that meeting. The Council’s next regularly scheduled meeting will be March 26 in Council Chambers at City Hall, 1500 Warburton Ave. in Santa Clara.
