City Says Financial Concerns May Require Takeover of 49ers’ Stadium

SANTA CLARA, Calif. (CN) – The Santa Clara City Council on Tuesday will decide whether to wrest control of the San Francisco 49ers’ football stadium, in an escalating dispute over financial practices.

Santa Clara Mayor Lisa Gilmore has accused the 49ers of willfully withholding financial documents that relate to the operation of Levi’s Stadium, and has threatened to commandeer management of the facility if the team persists in failing to disclose important accounting items.

“We are asking the 49ers to please provide the information that is required under the management agreement,” Gilmore said at the City Council meeting last week. “If it is not provided we are committed to taking steps to take back management of the stadium.”

The San Francisco 49ers, a National Football League team, moved its facilities from Candlestick Park in San Francisco to Levi’s Stadium in nearby Santa Clara in 2014. However, as often is the case in the NFL and other major sports, the owners of the 49ers relied on the taxpayers of Santa Clara to borrow the nearly $850 million to build the new stadium.

In order to undertake the large construction project, Santa Clara created the Stadium Authority, which would own the stadium in concert with the 49ers and potentially capitalize on revenue from the NFL games and non-NFL events such as concerts and other sporting events.

As part of the initial agreement between the NFL and the city, taxpayer funds cannot be used to pay for the stadium’s operation and maintenance. Those costs belong to the 49ers, per the contractual agreement.

In recent weeks, Gilmore and her allies on the City Council have accused the 49ers of using the city’s general fund to address minor stadium maintenance issues.

“Our auditor has already found instances where we have spent money on operations and maintenance, which is in violation of Measure J,” Gilmore said during last week’s council meeting.

The 49ers have denied using taxpayer dollars for their own purposes.

Attorney Harry O’Brien, who spoke on behalf of the team during the meeting, said if there are financial irregularities relating to public expenses, it is due to the city’s failure to account for reimbursable costs under the contract.

“It is the city’s responsibility to keep track of what costs are reimbursable and send us a bill,” O’Brien said. “The 49ers have paid every single bill and done so in accordance with contracts approved by this board.”

However, Gilmore and the city say it’s difficult for them to verify these assertions because the 49ers refuse to provide detailed accounting as required by their joint management agreement.

“We want to see the shared expense report,” Gilmore said. “We want to see what our expenses are and what are the NFL’s and we have not seen that level of detail.”

Gilmore went onto say that the NFL team had been withholding important financial documents for the better part of two and half years.

“As we sit here today we still do not have the underlying budget documents,” Gilmore said.

O’Brien said the team has complied with document requests up to a point, asserting there was certain information that was “appropriate to keep out of the public record.”

For example, the 49ers do not want to publicize contract terms and requirements of acts such as Beyonce – who performed at the Super Bowl held at the stadium earlier this year – and other major acts that O’Brien said were “sensitive to the release” of such information. Also, the 49ers do not want promoters to be able to compare contractual terms and price points as it would hinder their bargaining position.

Gilmore said the city is not interested in such items, but wants line items in the budget that relate to non-NFL events and the associated expenditures and revenues.

“Our obligation is to make sure the public is getting its fair share,” she said. “We have a right to see what the expenses and revenues are.”

O’Brien again asserted the 49ers are not withholding any information, but also needled Gilmore by saying that even if the city persists in its unhappiness with the 49ers’ compliance with the terms of the management agreement, it has no right to commandeer management of the stadium.

“If you choose to issue the notice of default, which we don’t think is appropriate, but if you choose we will do our best to comply with anything that you want,” O’Brien said. “But if at the end of 30 days you are not satisfied, you have no right to terminate the stadium management agreement.”

Gilmore and the 49ers have been at loggerheads since she was appointed mayor, after her predecessor Jamie Matthews resigned over infighting relating to the fractious stadium issue. Gilmore is widely believed to have begun her crusade against the 49ers because she believes the team broke its promise to build a youth soccer complex near the stadium.

Whatever the initial cause of the angst, the acrimonious relationship has only intensified in recent weeks and shows no signs of abating in the near future.

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