The Santa Clara Stadium Authority Board scoffed at this year’s draft marketing plan for Levi’s Stadium, claiming the stadium manager’s plan does nothing to correct the money-losing trend for non-NFL events.
At a special meeting Thursday night, the Board considered the plan before discussing the 2020/21 budget. The marketing plan is essentially a blueprint on how best to book, promote and advertise the stadium.
Several members of the Board and the Executive Director were all concerned with the plan’s inability to turn around planning at the stadium so the events generate money.
Revenue from non-NFL events plummeted to nearly nothing in 2018-19, as nine of 12 events lost money. Those events generated a measly $18,591, down roughly $5 million from just a couple years prior. Projected revenue for this year is listed only as “TBD” by ManCo.
Of the eight ticketed events in 2019-20, six lost money, for a $1.8 million loss.
“I am really concerned how they are addressing their marketing, because, to me, it doesn’t look like they are marketing much of anything,” said Board Member Debi Davis. “How are we supposed to make money? How are we supposed to right the wrong if we are not getting information so that we can, at least, make clearer decisions, policy decisions, on where the money should be or not be?”
Both ManCo and the Stadium Authority Board need to approve the marketing plan before it can be adopted.
Considering the bleak outlook for non-NFL events, Board Executive Director Deanna Santana said, the marketing plan should contain tactics that are not “business as usual” to bring money-makers to the stadium. That the marketing plan contains no such strategies should be “of grave concern” to the Board, she added.
“Any business in the area that is losing money at this rate would want to start to look at what parts of our business are viable? What do we cut off? What do we proceed and what do we invest more dollars into?” she said.
Board Member Raj Chahal suggested hiring a consultant to produce a marketing plan and compare it to ManCo’s to see “what is really going wrong.”
The rest of the Board rejected the suggestion, with Board Member Teresa O’Neill saying if an outside consultant is hired, ManCo should pay for it. O’Neill called the report very “general,” adding that it needs to be “more robust.”
Contained in the marketing plan are ManCo’s suggestions to start a newsletter and create a LinkedIn page, ideas Santana called “shallow strategies for a problem of this magnitude.”
Board Member Kathy Watanabe called starting a LinkedIn page “comical.”
“They know how to put together a successful team and market it, and yet they can’t put together a marketing plan for non-NFL events for our city?” she said.
Again, pointing to what she called “self-dealing” and “conflicts of interest,” Board Chair Lisa Gillmor said the marketing plan is just “the tip of the iceberg” should the Board allow ManCo to continue managing the stadium the way it has. The plan lacks an “urgency for a turnaround strategy,” she added.
“When they got the contract, they told us they had the expertise to manage and market our stadium. That was a false representation … it is getting worse,” Gillmor said. “I don’t know how in the world we can continue to fund this poor management.”
Nobody from ManCo attended the meeting.
Stadium Budget Too Vague for Board
Criticism from the Board and other City employees continued into the discussion about the stadium budget. Members of the Board raised several questions regarding specifics not detailed in the budget, specifically on $12 million of shared expenses.
Chahal said many of the issues the Stadium Authority is having with ManCo are because the Board did not competitively bid their contract. Now, he said, that decision is coming back to bite the Board, and undoing it requires costly and time-consuming litigation.
Santana echoed Chahal’s sentiment, at least in part.
“Part of what is problematic with this budget is, because it was a sole-sourced, no-bid contract, we don’t know whether the pricing we are getting and the shared expenses is competitive as well,” she said. “We continued to approve a budget without knowing how it benchmarks with other stadiums and whether we are cost effective.”
The operating budget for 2020-21 decreased by roughly 10 percent to $66.7 million. Projects ranging from new furniture, security and equipment make up roughly $13 million in capital improvement projects.
Both ManCo and the Board also increased salary expenses. The City is adding 6.8 positions totaling $2.1 million. Outside legal counsel and auditing are also slated to cost $1.2 million and $500,000 respectively.
Meanwhile, ManCo increased its “additional manager and operational costs” from $100,000 to $1.4 million.
“My jaw hit the floor,” said Vice Chair Karen Hardy, referring to when she saw the increase in the budget. “I was horrified.”
The Stadium Authority Board paid $42.3 million toward its debt on the stadium. Debt on the stadium decreased from $308 million to $281 million. Kenn Lee, Director of Finance, told the Board the debt — originally scheduled to be paid in 30 years — is on schedule to be paid in 18 or 19 years.
In the wake of the Redbox Bowl, the Board halted approving expenses for non-NFL events until ManCo could prove contracts meet state prevailing wage laws and were free of conflicts of interest. Rather than submit expenses to the Board, ManCo has been taking revolving loans — public money — from StadCo, the organization that manages the stadium’s NFL events.
Because of this, the Board has earmarked the $6.4 million ManCo borrowed pending the outcome of a lawsuit claiming ManCo’s actions are illegal. The Stadium Authority discretionary also fund grew to $2.4 million.
The marketing plan and updated budget will return to the Board for approval on March 24. The Stadium Authority and City Council meet again March 9 in the Council Chambers at City Hall, 1500 Warburton Ave. in Santa Clara.