Santa Clara Claims Audit Shows NFL’s 49ers Owe Millions

SANTA CLARA, Calif. (CN) – An audit commissioned by the city of Santa Clara says the San Francisco 49ers owe taxpayers as much as $2 million in unpaid bills, prompting an angry retort from executives with the professional football team.

Santa Clara Mayor Lisa Gillmor and the 49ers have been feuding over the financial arrangements between the two entities relating to their co-management of the $1.3 billion Levi’s stadium for the past year.

The dispute has spilled into the courtroom, with the 49ers suing the city and Gillmor asking a judge to sift through the contracts and clearly stipulate the obligations of both parties.

In the meantime, the city has gone forward with an audit conducted by the firm Harvey Rose with the intent of determining whether the 49ers complied with Measure J.

A ballot initiative passed by voters in 2010, Measure J mandated Santa Clara borrowing about $850 million to construct the state-of-the-art sports facility, which the city would own and lease to the team.

Measure J also stipulated that no taxpayer funds would be used to fund stadium operations, which were the sole responsibility of the team.

But Gillmor said that provision has not been followed by the team and the audit, still in a preliminary draft form, indicates Gillmor’s complaints are valid.

“Based on a sample of 11 NFL and non-NFL events that took place between the fall of 2014 and May 2015, we estimate that $424,349 in staff costs were not reimbursed for regularly performed activities such as preparing and moving equipment to the stadium before and after events and performing stadium arrest follow-up activities after event days,” the audit says.

Auditors further say money from the construction fund was used to cover public-safety costs to the tune of approximately $894,000, and the city is owed approximately $714,000 for costs related to the use of a municipal golf course for parking by the NFL team.

Hannah Gordon, general counsel for the 49ers, sent a letter pointedly refuting the conclusions of the audit, saying the city is responsible for billing the 49ers for reimbursable costs and failure to do so rests with city officials.

“The splashiest so-called finding of the report is the ‘extrapolated’ $424K figure for administrative public safety time that the consultants argue could theoretically exist – although they can’t be sure and certainly can’t document it as fact,” Gordon wrote in the 10-page letter.  “Even if some portion of the $424K turns out to be real, it was the city’s mistake, and not a failure by the authority or the 49ers.”

Gordon also says the use of construction funds to cover public-safety costs was done in accordance with contractual obligations, and that the parking agreement relating to the golf course has been terminated and the 49ers actually overpaid for parking costs.

“The lack of business sophistication inherent in this conclusion casts a shadow over the entire exercise and all conclusions reached,” Gordon said.

The audit, which is due to be finalized in August, also recommended the city create stronger financial and budget controls to ensure city staff is properly reimbursed for time and so taxpayer funds are not used for maintenance.

Santa Clara city officials did not return requests for comment by press time.

 

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