49ers in a Multi-Million-Dollar Standoff with City of Santa Clara

The San Francisco 49ers’ training camp opens in less than a week, and a new multi-million-dollar dispute between the NFL team and its host city—Santa Clara—is making a stormy relationship go from bad to worse.

As the NFL was still trying to figure out what this year’s pre-season and season will look like, the City of Santa Clara this week was already on the gridiron, standing nose-to-nose with its football team with another city’s name and refusing to give ground.

The 49ers say the city owes it $2.74 million. The city says the team owes it $1.1 million. Each side refuses to pay until the other side pays first.

On June 8, 49ers Controller Esther Chi sent the city a bill for $2.74 million, payable in just four days, to cover net losses for the “non-NFL” events at Levi’s Stadium in Santa Clara for 2019-20. Many of the losses were attributable to event and concert cancelations because of the COVID-19 pandemic.

“That was the first time we heard that number,” city Finance Director Kenn Lee told a stunned city council today. The bill, Lee said, offered few details, just “an insufficiently detailed, highly summarized profit-and-loss request.”

In his response to Chi two days later, Lee wrote: “The one-page demand provided virtually no explanation of how performance reported in February 2020 of “TBD” went to a $2.7 million loss in a matter of a few months. Consequently, we are quite skeptical of the validity of stadium manager’s new numbers. At a minimum, you will need to explain the urgency of your need for this disbursement; allowing a total of four days to review a disbursement close to $3 million is unreasonable.”

Lee told Chi: “You have to date not made payment to the City of Santa Clara for [$1.1 million in] outstanding Public Safety Costs, holding those payments hostage until the Stadium Authority pays you for the suddenly revealed net loss that has arisen from your own gross mismanagement.”

Lee shared the email exchange at a joint meeting of the council and the city Stadium Authority. “They have no right to hold the money hostage for the $2.7 million,” City Attorney Brian Doyle told the council today.

“We have public safety costs that are not reimbursed,” said Mayor Lisa Gillmor. “How long are we willing to wait until before we take action? In the real business world, they would have been fired a long time ago.”

“We know there is wage theft going on out there – there’s all kinds of things that are happening,” the mayor said. “They are charging for full staff at the stadium when there is nothing happening at the stadium.”

Lee said the 49ers have declined to provide more details for the non-NFL events deficits.

This standoff is the latest chapter in a four-year battle over transparency and accountability in the management of Levi’s Stadium.

In February, the City Council decided to end an agreement allowing the 49ers to operate the stadium for home games and other National Football League events.

But the action won’t affect the team’s operations until a lawsuit between the 49ers and the city of Santa Clara is resolved.

The team filed the suit at the start of the 2019-20 season to prevent the city from taking away stadium management responsibilities for non-football events and hire a third party to manage all non-NFL events, after years of complaints about transparency and trust.

The city has claimed it has evidence of fraud, misconduct and misappropriation of funds by the 49ers. The team this year donated $660,000 to a campaign committee to oppose Measure C, a ballot measure pushed by the council majority to change the city’s court-ordered system of district elections. The measure was soundly defeated in March, and the team says the city is retaliating for political, not economic reasons.

2 Comments

  1. > 49ers in a Multi-Million-Dollar Standoff with City of Santa Clara

    The geniuses at the NFL and the Forty-Niners are poised to lose billions of dollars in the next year from spectacular, willful management stupidity.

    Santa Clara should probably start attaching ever 49er asset they can find.

  2. Did this organization not realize that they were opening a stadium sized can of worms when they entered into an agreement with a perpetually podunk group of civic leaders to build Levi’s? They have no one to blame but themselves.

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