Audit Committee
June 28, 2023

City of Santa Clara
Meeting Agenda
Audit Committee
Hybrid Meeting
Council Conference Room/Virtual
City Hall - East Wing
1500 Warburton Avenue
Santa Clara, CA 95050
2:00 PMWednesday, June 28, 2023
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CALL TO ORDER AND ROLL CALL

GENERAL BUSINESS

1. Overview of the Contracted Analysis of Past Stadium
Construction Fund and Public Safety Transactions
23-833
Accept the report from J.S. Held LLC based on their
review of construction fund and public safety
transactions for the period November 10, 2013
through October 11, 2015, and recommend that these
reports be forwarded for note and file to the full
Council at a future Joint Council and Authorities
Concurrent and Stadium Authority Meeting.

Recommendation:

2. Accept the Report on the Santa Clara Stadium Authority’s Non-NFL
Events’ Documents by JS Held, LLC and Refer the
Report to the Stadium Authority Board for Acceptance
23-669
Accept the Report on the Santa Clara Stadium
Authority’s Non-NFL Events’ for fiscal years 2018,
2019, and 2020 by JS Held, LLC and recommend that
this report be forwarded for note and file to the full
Council at a future Joint Council and Authorities
Concurrent and Stadium Authority Meeting.

Recommendation:

Audit Committee Meeting Agenda June 28, 2023

3. Accept the Report on the Review of the 2019 College Football Playoff Game Revenues and Expenses Performed by the PUN Group and Refer the Report to the Stadium Authority Board for Acceptance
23-742
Accept the report from The PUN Group based on their
review of the revenues and expenses related to the
2019 College Football National Championship Game
and recommend that the report be forwarded for note
and file to the full Council at a future joint Council and Authorities Concurrent and Stadium Authority
Meeting.

Recommendation:

ADJOURNMENT
Future Audit Committee Meetings will be scheduled at a later date.

MEETING DISCLOSURES

Audit Committee Meeting Agenda June 28, 2023
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City of Santa Clara
Agenda Report
1500 Warburton Avenue
Santa Clara, CA 95050
santaclaraca.gov
@SantaClaraCity
23-833 Agenda Date: 6/28/2023

REPORT TO AUDIT COMMITTEE

SUBJECT
Overview of the Contracted Analysis of Past Stadium Construction Fund and Public Safety Transactions

BACKGROUND
Per Section 909 of the City Charter, and SCCC Section 2.29.010, the City Auditor’s duties and responsibilities include conducting in-depth financial and performance audits, overseeing the City’s performance management system, auditing and approving all bills, invoices, payrolls, demands or charges against the City government before payment and, with the advice of the City Attorney, making reports to the City Council as to the regularity, legality and correctness of such claims, demands or charges. The City Auditor’s Office conducts its work under the auditing standards prescribed by the Institute of Internal Auditors (IIA). The IIA International Standards for the Professional Practice of Internal Auditing (Standards) requires the City Auditor to periodically report to the Audit Committee on the internal audit activity’s performance relative to the Audit Work Plan.

DISCUSSION
In July of 2016, the Stadium Authority Board retained the services of Harvey M. Rose Associates LLC to perform an audit of stadium operations to ensure compliance with Measure J. Harvey Rose presented their report to the Board in August of 2017. One of the recommendations of that report was to review the Stadium Construction Fund monies that were spent on public safety costs prior to the stadium opening. The Board authorized hiring a consultant to review these expenses.

Accordingly, the Stadium Authority engaged JS Held, LLC to perform an analysis regarding construction fund monies used for public safety and operations costs for the period between November 10, 2013 and October 11, 2015. The results of this analysis are presented in the attached report.

ENVIRONMENTAL REVIEW
The action being considered does not constitute a “project”within the meaning of the California Environment Quality Act (“CEQA”)pursuant to CEQA Guidelines section 15378(a)(4) in that it is a fiscal activity that does not involve any commitment to any specific project which may result in a potential significant impact on the environment.

FISCAL IMPACT
Costs associated with the preparation of this report were included in the Stadium Authority’s FY 2021/22 Adopted Operating Budget.

COORDINATION
This report has been coordinated with the Stadium Authority Executive Director’sOffice and Stadium City of Santa Clara Printed on 6/23/2023Page 1 of 2
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23-833 Agenda Date: 6/28/2023
Authority Counsel.

PUBLIC CONTACT
Public contact was made by posting the Council agenda on the City’s official-notice bulletin board outside City Hall Council Chambers. A complete agenda packet is available on the City’s website and in the City Clerk’s Office at least 72 hours prior to a Regular Meeting and 24 hours prior to a Special Meeting. A hard copy of any agenda report may be requested by contacting the City Clerk’s Office at (408) 615-2220, email [email protected] <mailto:[email protected]> or at the public information desk at any City of Santa Clara public library.

RECOMMENDATION
Accept the report from J.S. Held LLC based on their review of construction fund and public safety transactions for the period November 10, 2013 through October 11, 2015, and recommend that these reports be forwarded for note and file to the full Council at a future Joint Council and Authorities Concurrent and Stadium Authority Meeting.

Reviewed and Approved by: David Noce, Audit Manager

ATTACHMENTS

1. Report on the analysis of Stadium Construction Fund and Public Safety Expense Transactions Performed by J.S. Held LLC
City of Santa Clara Printed on 6/23/2023Page 2 of 2
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| Find your expert at jsheld.com
Construction | Environmental, Health & Safety | Equipment | Forensic Accounting | Forensic Architecture & Engineering | Water & Fire Restoration

October 13, 2022

David Noce
Audit Manager
City of Santa Clara
Email: [email protected]

Project:      Santa Clara Stadium Authority – Construction Fund J.S. Held Project Number:   20010651

Dear Mr. Noce,

J.S. Held LLC, a global consulting company, was retained by the Santa Clara Stadium Authority (“SCSA”) to perform an analysis regarding Construction Fund monies used for public safety and operations costs for the period between November 10, 2013 and October 11, 2015. The information contained in this report is to be used by you and your principals involved in this matter and is not intended nor may it be relied upon by any other party.  We conducted our work under guidelines established by the American Institute of Certified Public Accountants for consulting and/or forensic services.  J.S. Held is not a certified public accounting firm (“CPA firm”) and does not provide audit, attest, or any other public accounting services.

J.S. Held is not a law firm and does not provide legal advice. Our analysis is limited to the scope of work outlined by you and to the books, records and other pertinent information made available to us by you and we assume no responsibility or liability for the accuracy of completeness of such.  It did not include an  independent  audit  of  the  SCSA’s  books  and  records;  therefore,  our  findings  are  based  solely  on information summarized therefrom. Our analysis included tests and procedures deemed appropriate in the circumstances as described further herein.  The attached workbook provides an overview of the claim and our calculations and is herein made part of this report.

SCSA Construction Fund
October 13, 2022

1999 Harrison Street, Suite 1440 | Oakland, CA 94612 | 510-740-0378 | Find your expert at jsheld.com Construction | Environmental, Health & Safety | Equipment | Forensic Accounting | Forensic Architecture & Engineering | Water & Fire Restoration Summary of Findings

Period of Analysis: October 19, 2013 to October 11, 2015

Findings:

1. We documented $913,256 of development funds used to pay for public safety costs.

2. Harvey Rose stated that $894,228 of development funds were used for public safety costs in its report. However, this included $58,661 of public safety costs that were actually paid for from the operating fund. In addition, there were $83,214 of public safety costs paid for from development funds in periods outside the scope of the Harvey Rose report. Finally, there were $5,526 in development funds used for public safety costs that appear to have not been included in the Harvey Rose report due to date cutoff issues.

Background

The Santa Clara Stadium Authority (“SCSA”) is a separate entity from the City of Santa Clara (“City”).  It is governed by the Stadium Authority Board which consists of the City Council and managed by an Executive Director, the City Manager.  The SCSA was established to provide for development and operation of the Levi’s  Stadium  (“Stadium”)  which  it  now  owns  and  operates.   In  2012,  the  SCSA  and  Forty  Niners  SC Stadium Company LLC (“StadCo”) entered into a series of agreements in  connection with  the Stadium development.  The SCSA also engaged the Forty Niners Stadium Management Company LLC (“ManCo” as Stadium Manager) to provide management services for the Stadium, including overseeing the day‐to‐day operations and maintenance of the Stadium as well as the marketing and booking of Non‐NFL Events.

Stadium construction began in April 2012 and was substantially completed in July 2014.  The first ticketed event at the Stadium was a non‐NFL event on August 2, 2014.  The SCSA’s fiscal year is April 1st through March 31st whereas the City’s fiscal year is July 1st through June 30th.

The SCSA broadly defines the term public safety to include all police and fire staff, regardless of if they were  “field”  or  “non‐field”  related  positions,  and  engineering  staff  that  were  responsible  for Fund Paid From:

Description Construction Operating Total
Total Public Safety Costs 913,256 $              58,661$                971,917$ Reconciliation to Harvey Rose Report
Harvey Rose Report (Outside Scope) (83,214)                  ‐                         (83,214) Harvey Rose Report (Outside Scope ‐ Date Cutoff) 5,525                     ‐                         5,526 Harvey Rose Report (Within Scope) 835,567 $              58,661$                894,228$

SCSA Construction Fund
October 13, 2022

1999 Harrison Street, Suite 1440 | Oakland, CA 94612 | 510-740-0378 | Find your expert at jsheld.com Construction | Environmental, Health & Safety | Equipment | Forensic Accounting | Forensic Architecture & Engineering | Water & Fire Restoration transportation operations such as but not limited to traffic engineers.  When the City’s public safety staff time is used for the benefit of the Stadium that are not associated with Non‐NFL Events or NFL Football Games, these payroll costs are ultimately reimbursed by the SCSA through its Operating Fund.  However, for fiscal years ended March 31, 2015 and 2016, monies used to cover such costs were mainly drawn from the Construction Fund.

On a monthly basis, the SCSA would create and submit an invoice for the City to be reimbursed for the City’s public safety staff payroll through the Construction Fund draw process on or before the 1st of the following  month.   Due  to  the  timing  of  when  the  City’s  pay  periods  ended  and  were  paid,  this  would generally include staff time spent working on the Stadium in the second half of the prior month and the first half of the current month.  Within the first two weeks of each month, SCSA would meet with ManCo, the bank, consultants, and general contractor to walk the site and review all invoices being submitted to the draw for reimbursement.  Each of the public safety costs were rolled up in the monthly invoices; the underlying detail was tied‐out to the invoices and the invoices were reconciled to the corresponding draw.

The final disbursement instructions were reviewed with and signed off by the City Director of Finance.

SCSA would receive the wire payment from the Construction Fund draw covering the City’s public safety payroll on/around the 20th of the month and would subsequently reimburse the City within a week.

Harvey M. Rose Associates, LLC Report
Harvey  M.  Rose  Associates,  LLC  (Harvey  Rose)  issued  a  report  to  the  Stadium  Authority  Board  dated August 21, 2017.  In its report, Harvey Rose concluded that $894,228 in “construction fund monies” (i.e. development fund) were used for Public Safety Costs that had not been included in budgets. As shown above  however,  this  included  some  Public  Safety  Costs  that  were  paid  for  with  Operating  Funds.  In addition, there were other Development Funds utilized for Public Safety Costs that were not captured by Harvey Rose because they fell outside of the date scope of Harvey Rose’s analysis.

We  have  enjoyed  being  of  service  to  you  and  hope  the  enclosed  accounting  information  will  be  of assistance to you. If you have any questions or concerns pertaining to this report, please do not hesitate to contact Timothy Gillihan at (510) 740‐0386.

Regards,

Timothy Gillihan, CPA, ABV, CFF
Senior Vice President

City of Santa Clara
Agenda Report
1500 Warburton Avenue
Santa Clara, CA 95050
santaclaraca.gov
@SantaClaraCity
23-669 Agenda Date: 6/28/2023

REPORT TO AUDIT COMMITTEE

SUBJECT
Accept the Report on the Santa Clara Stadium Authority’s Non-NFL Events’ Documents by JS Held, LLC and Refer the Report to the Stadium Authority Board for Acceptance

BACKGROUND
On March 28, 2012, the Santa Clara Stadium Authority (Stadium Authority), Forty Niners SC Stadium Company, LLC (StadCo), and the Forty Niners Stadium Management Company, LLC (ManCo) entered into a Stadium Management Agreement (Management Agreement) to have ManCo act as the Stadium Manager and provide management services for the Levi’s Stadium (Stadium) on a continual, year-round basis. ManCo is responsible for overseeing the day-to-day operations, financial reporting, and maintenance of the Stadium year-round. ManCo is also responsible for marketing and booking Non-NFL Events at the Stadium. As agreed under Article 4.1, The Stadium Manager shall maintain complete and accurate books and records relating to the Net Income from Non-NFL Events, in accordance with generally accepted accounting and management practices, consistently applied.

Additionally, Article 4.12 states that:
…title to all form documents and software developed by the Stadium Manager in connection with the performance of its obligations under this Agreement shall vest in StadCo and the Stadium Authority upon their creation and will remain the property of the StadCo and the Stadium Authority; provided, that all amounts due to the Stadium Manager under this Agreement have been paid in full.

Dating back to the first year of operations (fiscal year 2014-15) there have been some concerns with the financial data and supporting documents associated with Non-NFL events. Due to these concerns, the Stadium Authority Board directed that a review be performed of the events and the underlying supporting documentation. The Stadium Authority contracted with a forensic accounting firm, JS Held, LLC (JSH) to perform an in-depth review of all the Non-NFL Events’ documents from fiscal year 2014-15 through fiscal year 2016-17. On November 20, 2020, JSH presented their report detailing their findings and analysis of Non-NFL events for the period noted above.

At the direction of the Stadium Authority Board, JSH was engaged to perform a similar review of Non- NFL events for the fiscal years ending 2018, 2019, and 2020 to determine if the same concerns were demonstrated during these fiscal years.

DISCUSSION
The scope of the services was for JSH to determine if the final annual Non-NFL Events’ financial City of Santa Clara Printed on 6/23/2023Page 1 of 3
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statements and individual event financial statements for these next three fiscal years were reasonable, properly supported and had adequate documentation. JSH is responsible for reviewing and analyzing the annual financial statements for Non-NFL events and select a sample of individual events to analyze the supporting documentation. The engagement began in late 2021 and was delayed due to continued COVID restrictions at the stadium and lack of assistance from ManCo in providing documentation and responding to inquiries from JSH.

JSH’s report for fiscal years 2018, 2019, and 2020 drew the same conclusions as their initial report covering the previous fiscal years they reviewed. Overall, the underlying documentation provided by ManCo was inadequate for determining whether results for each event were reported accurately. A significant portion of the documents provided by ManCo to the SCSA as support for recorded revenues and expenses were spreadsheets prepared by ManCo accounting staff and copies of journal entries, neither of which were typically supported by third party source documents. JSH made efforts to obtain further documentation from ManCo and held the review period open through 2022 but did not receive any response to inquiries. Therefore, the report was finalized with the conclusions based on the information that was received. In order to review these matters more thoroughly, additional cooperation would be needed from ManCo.

ENVIRONMENTAL REVIEW
The action being considered does not constitute a “project” within the meaning of the California Environment Quality Act (“CEQA”) pursuant to CEQA Guidelines section 15378(a)(4) in that it is a fiscal activity that does not involve any commitment to any specific project which may result in a potential significant impact on the environment.

FISCAL IMPACT
Costs associated with the preparation of this report were included in the Stadium Authority’s FY 2021/22 Adopted Operating Budget.

COORDINATION
This report has been coordinated with the Stadium Authority Executive Director’s Office and Stadium Authority Counsel.

PUBLIC CONTACT
Public contact was made by posting the Council agenda on the City’s official-notice bulletin board outside City Hall Council Chambers. A complete agenda packet is available on the City’s website and in the City Clerk’s Office at least 72 hours prior to a Regular Meeting and 24 hours prior to a Special Meeting. A hard copy of any agenda report may be requested by contacting the City Clerk’s Office at (408) 615-2220, email [email protected] <mailto:[email protected]> or at the public information desk at any City of Santa Clara public library.

RECOMMENDATION
Accept the Report on the Santa Clara Stadium Authority’s Non-NFL Events’ for fiscal years 2018, 2019, and 2020 by JS Held, LLC and recommend that this report be forwarded for note and file to the full Council at a future Joint Council and Authorities Concurrent and Stadium Authority Meeting.

Reviewed and Approved by: David Noce, Audit Manager
City of Santa Clara Printed on 6/23/2023Page 2 of 3
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23-669 Agenda Date: 6/28/2023

ATTACHMENTS

1. Report on the Santa Clara Stadium Authority’s Non-NFL Events for Fiscal Years 2018, 2019, and 2020

2. JSH Non-NFL Event Analysis Slides
City of Santa Clara Printed on 6/23/2023Page 3 of 3
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Santa Clara Stadium Authority

Non‐NFL Events Analysis

Fiscal Years Ending March 2018 to March 2020

J.S. Held Supplemental Report

May 1, 2023

Oakland, California
2 Table of Contents

Page

I. Background                3
II. Summary of Findings                       6
III. Tasks Performed         7
IV. Findings/Observations/Questions – Ticketed Events         8 V. Analytics – Ticketed Events and Special Events        10 VI. Findings/Observations/Questions – Special Events        22

3 I. Background

This report is a supplemental report to our previous report dated November 24, 2020.

The  Santa  Clara  Stadium  Authority  (“SCSA”),  the  Forty  Niners  Stadium  Management  Company,  LLC (“ManCo”), and the Forty Niners SC Stadium Company, LLC (“StadCo”) entered into a Stadium Management Agreement  (“Agreement”)  dated  March  28,  2012.  Additionally,  the SCSA  and  StadCo  entered  into  a
Stadium Lease (“Original Lease”) dated March 28, 2012, which was amended and restated on June 19, 2013 (“Amended  Lease”).   StadCo  and  the  SCSA  selected  ManCo  to  manage  the  day‐to‐day  operations  and maintenance of Levi’s Stadium (“Stadium”) year‐round.  The SCSA also selected ManCo to market and book Non‐NFL Events at the Stadium.

On November 24, 2020, we issued a preliminary report that detailed our findings of our analysis of the Non‐NFL Events for the fiscal years ending March 2015 to 2017. We then presented our findings to the Santa Clara Stadium Authority Board at a public meeting held on December 1, 2020.

Within the report and at the presentation, we provided the following findings:

1. For  the  fiscal  years  ended  March  2015  and  2017,  J.S.  Held  identified  the  specific  year‐end adjustments  that  explain  the  difference  between  the  sum  of  the  results  for  total  Ticketed  and Special Events and the overall annual financial results reported for Non‐NFL Events.

2. For  the  fiscal  year  ended  March  2016,  documentation  that  identifies  year‐end  adjustments recorded by ManCo has not been provided.

3. Year‐end adjustments should be further investigated to determine if the entries recorded were proper,  both  in  terms  of  the  type  of  expense  paid  and  whether  it  was  recorded  in  the  correct period.

4. The documentation provided by ManCo for individual Ticketed and Special Events is inadequate for determining whether the financial results for each event were reported accurately.  This does not mean that the results reported are necessarily inaccurate; rather, it means J.S. Held cannot determine from the provided documents if the reported results are accurate or inaccurate, and additional documentation and information is needed to make that determination.

J.S. Held submitted recommendations for improving how Non‐NFL Event financial results were prepared and presented.  The presentation and recording of revenues and expenses makes it difficult to assess which events are profitable and which are not.  For transparency, presentation, and evaluation purposes of the various  events,  J.S.  Held  had  the  following  recommendations  regarding  presentation  of  the  accounting information:

1. Accounting policies, processes, and estimates should be consistent, well‐documented, and shared among the SCSA and ManCo accounting staff to mitigate any confusion between both parties.

2. Accounting  records  should  be  better  maintained,  organized,  and  easy  to  locate  when  needed; consider a shared file server, with scanned copies of all hard copy documents, so these records can be readily available to both the SCSA and ManCo. In addition, accounting data for the SCSA should
4 be  housed  separately  from  the  manager’s  books  and  records;  we  understand  this  process  is underway.

3. Revenue categories should be more descriptive and properly segmented.  For example, for Special Events,  food  &  beverage  revenues  were  recorded  as  ‘’Revenue’’,  “Rental  Revenue,”  and  ‘’F&B Revenue’’.   Since the ‘’Revenue’’ category also included many other categories of revenue (e.g., rentals,  audio/visual,  entertainment,  etc.),  it  is  extremely  difficult  to  analyze  food  &  beverage operations.  If one wanted to know the average profitability of food & beverage operations, one could not use the financial data as currently presented to do so.

4. For each event, we recommend disaggregating expenses by direct costs, indirect costs, operating expenses, and other overhead (i.e., cost of sales vs. selling, general, and administrative expenses).

Currently,  gross  profit  margin  is  undeterminable  at  the  individual  event  level  and/or  in  the aggregate.

5. Allocations of overhead expenses, whether direct, indirect, or cannot be directly traced to specific events should be presented on a clear basis and have a separate expense category line.  Allocation rates used should be evaluated periodically and updated when appropriate.

6. Expense categories should be consistent year over year.  For Special Events, for example, food & beverage  expenses  were  recorded  as  ‘’Food  &  Beverage’’  for  the  first  two  fiscal  years  and  as ‘‘Centerplate’’ and ‘’Papa John’s Pizza’’ for the third fiscal year.  This makes it difficult to compare performance year over year.

7. Revenues  and  expenses  should  not  be  combined  one  line  item  as  ‘’Partner  Payments  & Guarantees’’  or  ‘’Partner  Reimbursement’’  expense  categories.   Instead,  revenue  and  expense items should be recorded at gross in the appropriate revenue and expense categories.  A contra‐ revenue account should be used to present any shared revenue or revenue the SCSA collects on behalf of the Event Partner(s) and later remitted to Event Partner(s).  This would provide for better comparison of these revenues and expenses between events and would allow the SCSA and ManCo to easily determine how much each event netted to both the SCSA and Event Partner(s).

8. We recommend SCSA to directly oversee, perform a review, and sign‐off on the financial reporting for each Ticketed and Special Event prior to ManCo recording results.

In  addition,  J.S.  Held  had  the  following  recommendations  related  to  completing  the  scope  of  the engagement:

1. The  Ticketed  Events  analysis  should  be  completed  with  adequate  documentation  that  would confirm whether the Ticketed Events result was reported accurately.   This would include either
sampling  additional  events  or  requesting  adequate  records  for  all  events,  depending  upon  the results of an initial sample and responses to questions raised in this report.

2. The reported results of each Ticketed Event should be reconciled to the contracts for each event to ensure that the revenues and expenses were reflected in the terms.

3. The reported results of each Ticketed Event should also be compared to the Agreement and Lease to ensure that the results complied with the terms of those documents. 5 4. The  detail  of  year‐end  adjustments  for  fiscal  year  ended  March  2016  should  be  obtained  from ManCo to determine what adjustments were made and if the adjustments were appropriate.

5. Fiscal  years  ended  March  2018,  2019,  and  2020  should  be  analytically  evaluated  to  determine reasons for variations from results in prior fiscal years.  J.S. Held notes that net Non‐NFL Revenue decreased significantly in fiscal years ended March 2019 and 2020, with a loss of nearly $3,000,000 in 2020.

6. Discuss with the SCSA’s current auditor, KPMG, what level of detail of the Non‐NFL Event revenue was reviewed for the audits of fiscal years ended March 2015, 2016, and 2017, and determine if the SCSA may want KPMG to perform additional testing of Non‐NFL Event detail for those years.

Since we issued that report, we have been provided with additional documentation by the SCSA and have been asked to evaluate the Non‐NFL Events net revenue for the fiscal years ending March 2018, 2019, and 2020, which corresponds to the fifth recommendation for completing the scope of the engagement, as listed above. Specifically, we have been asked to:

1. Determine the adequacy of the documentation provided by ManCo for confirming the financial results of each specific event.

2. Perform an analytical analysis of Non‐NFL Event net revenue for the fiscal years ending March 2018 to 2020 and determine the reasons why Non‐NFL Event net revenue decreased significantly in the fiscal years ending March 2019 and March 2020.

3. Select a sample event contract and determine if the event finances comported with the terms of the event contract.

6 II. Summary of Findings

1. The documentation provided by ManCo is inadequate for determining whether the financial results for each individual Ticketed and Special Event was reported accurately.  This does not mean that the results reported are necessarily inaccurate; rather, it means J.S. Held cannot determine from the  provided  documents  if  the  reported  results  are  accurate  or  inaccurate,  and  additional documentation and information is needed to make that determination. The type of documentation provided for this updated period is consistent with the type of documentation provided for the first three fiscal years, and we reached the same finding as with the first three fiscal years.

2. There are six primary reasons why the Non‐NFL Event net revenue was significantly less in fiscal years ending March 2018 to 2020 than the fiscal years ending March 2015 to 2017. Those reasons are:

a. Number of concerts decreased.
b. Profitability of soccer matches decreased.
c. Losses for college football games increased.
d. Number of special events decreased.
e. Net revenue from special events decreased.
f. No large alternative events, such as hockey and wrestling.

3. For the event we sampled, the settlement statement with the promoter appeared to adhere to the terms of the event contact as well as the management agreement and the ground lease. However, there were differences in the revenues and expenses in the settlement agreement and the profit and loss statement for the event that we cannot reconcile without conversations with ManCo.

4. We  observe  evidence  of  capital  purchases  being  placed  in  service  and  related  depreciation calculations;  however,  we  were  not  presented  with  enough  documentation  to  determine  the treatment of the original payment for the equipment.

7 III. Tasks Performed

For the specified fiscal years indicated below, J.S. Held performed the following tasks:

1. ManCo Prepared Profit and Loss Statements (unadjusted)

 Analyzed fiscal years ended March 2018, 2019, and 2020.  Performed a math check (tie‐out) over total amounts for Ticketed Events.  Scoped 100% of the population for Ticketed Events and vouched amounts to underlying documentation as provided by ManCo to the SCSA.
 Reviewed key terms for Stadium Use/Event Partnership Agreements for Ticketed Events.  Performed analytics for Ticketed Events.

2. Non‐NFL Event Analytics

 Analyzed fiscal years ended March 2018, 2019, and 2020.  Compared results on an absolute basis, percent of revenue basis, and per attendee basis across similar types of events.
 Identified potential anomalies within expenses and revenues.  Determined the driving factors that led to less overall Non‐NFL Event net revenues for the fiscal years ending March 2019 and March 2020.

3. Contracts and Partner Payments

 Selected a sample event and compared terms per the contract with the operating results of the event.
 Compared  financial  results  per  the  settlement  statement  with  the  promoter  to  the financial results presented in the profit and loss statement.  Compared terms and results of the events to the lease and management agreement.

4. Depreciation and Capital Expenditures

 Reviewed the Management Agreement provisions regarding the treatment of depreciation and capital expenditures.
 Reviewed supporting documentation provided by ManCo related to depreciation charges and capital expenditures.
 Reviewed profit and loss statements prepared by ManCo.

8 IV. Findings/Observations/Questions – Ticketed Events

Documentation

On an overall basis, the underlying documentation provided by ManCo was inadequate for determining whether  results  for  each  event  had  been  reported  accurately.  A  significant  portion  of  the  documents provided  by  ManCo  to  the  SCSA  as  support  for  recorded  revenues  and  expenses  were  spreadsheets prepared  by  ManCo  accounting  staff  and  copies  of  journal  entries,  neither  of  which  were  typically supported by third party source documents.

This is the same conclusion we drew in our previous report for the fiscal years ending March 2015 to 2017, and the type of documentation provided by ManCo for the fiscal years ending March 2018 to 2020 was of the same kind as has been provided for the prior fiscal years.

J.S. Held analyzed the underlying documentation ManCo provided to the SCSA for 271 events that were held for the three fiscal years ending March 2018 to 2020.  J.S. Held reviewed underlying documentation for, but not limited to, relevant event dates, indication of event names, whether source documents were from third parties or prepared by ManCo, and whether there was any indication of expenses for NFL events.

Examples of adequate documentation ManCo provided included the following:
 Reports from Ticketmaster for ticket sales
 Invoices from third party vendors

Examples of inadequate documentation ManCo included the following:
 Printouts  of  spreadsheets  prepared  by  ManCo  that  summarized  source  data  such  as,  but  not limited  to,  cash  ticket  sales  on  Loomis  Logs,  credit  card  ticket  sales  on  Daily  Logs,  interbank transfers,  average  ticket  prices  used  to  determine  suite  revenue,  and  allocations  of payroll/commissions/staffing (including handwritten notes)  Invoices prepared by ManCo without proof of deposit
 Copies of journal entries without source documents attached  Screenshots of entries recorded in the accounting system  Emails between ManCo accounting staff

In reviewing the underlying documentation provided, J.S. Held identified the following:

1. Ticket  sales  were  obtained  through  various  avenues  (e.g.,  Ticketmaster,  box  office,  brokers, consignees, Groupon, StadCo, etc.).  There was not enough information for J.S. Held to verify the accuracy of total tickets sold counts per event.   J.S. Held has relied on information provided by ManCo for the purpose of this report.

2. No rent revenue was reported on ManCo Profit and Loss Statements.  Instead, rent revenue was typically  included  as  an  offsetting  line  item  netted  within  the  Event  Partner  Settlement Reconciliation.    J.S.  Held  would  want  to  understand  ManCo’s  revenue  recognition  accounting policy.

1 J.S. Held treated two‐day concerts as a single concert event; additionally, we do not include small‐scale “special” events, which includes the Stadium Links golf course and wedding fair events, in the count of Non‐NFL Events. 9 3. It was often unclear whether the SCSA collected revenues on behalf of Event Partner(s) and vice versa  or  whether  any  ticket  sales  revenue  was  shared  between  the  SCSA  and  Event  Partner(s).

Various revenue line items were netted within the Event Partner Settlement Reconciliation and the final amount due to or from Event Partner(s) was recorded as expense line item under the ‘Other’ expense category as ‘partner payments and guarantees or partner reimbursements.  Again, J.S. Held would want to understand ManCo’s revenue recognition accounting policy.  In addition, there was not enough information to measure the accuracy of expense reimbursements due from Event Partner(s).

4. Non‐seating  bowl  and  non‐suite  revenue  (e.g.,  Ticketmaster  revenue‐sharing  fees,  food  & beverage, parking, merchandise, royalties, rebates, etc.) were generally supported by third party source documents; however, J.S. Held cannot verify the accuracy of these amounts without first reviewing the contract terms to understand the rates and inputs reflected in the third party source documents.

5. A distinction cannot be made to identify the differences between total cost of sales, whether direct or indirect costs, and total operating expenses for the purpose of calculating gross profit margin.

6. Payroll and commissions are prepared and reconciled by ManCo accounting staff internally and staff resources were shared among StadCo and the SCSA.  The payroll allocation methodology was not  clear  as  a  significant  amount  of  the  underlying  documentation  did  not  include  information related to employee names and employee time tracking by employee or time sheets; rather these were summary schedules prepared in Excel.

7. Allocations for gameday staff generally obtained through Nelson staffing agency were not easy to follow and not supported with time sheets.

8. Expense allocation methodologies are not clear and typically handwritten on the vendor invoices.

10 V. Analytics – Ticketed Events and Special Events

For the three fiscal years ending March 2015 to March 2017, Non‐NFL Events netted an average of over $5,500,000  each  year.  Performance  for  the  fiscal  year  ending  March  2018  was  comparable,  with  net revenue of almost $5,200,000. However, Non‐NFL Events netted only $18,591 for the year ending March 2019 and lost over $2,700,000 for the year ending March 2020.

There are six main reasons why net Non‐NFL Event revenue decreased from over $5,000,000 a year to negative net revenue in 2020:

 Decrease in concerts: There were five concerts in 2016 and four concerts in 2017. There were only two concerts in 2018, two in 2019 and one in 2020. Since the fiscal year ending 2020 ended in March, there was little if any impact from COVID on the concert schedule in 2020.  Decrease in profitable soccer matches: The profit per soccer match averaged between $500,000 ‐ $2,000,000 from 2015 – 2018, but the soccer matches overall lost money in 2019 and 2020.  Increases in losses attributable to college football games: College football games have resulted in large  net  losses  each  year,  however,  the  losses  have  escalated  from  an  average  per  game  of $1,000,000 in 2015 up to $1,700,000 in 2018 and $1,600,000 in 2020.  Decreases in special events: The number of special events has dropped each year since the fiscal year ending 2016, decreasing from 207 events that year to only 79 in the fiscal year ending 2020.  Decrease in net revenue from each special event: Net revenue from special revenues averaged $27,000 in the fiscal year ending 2016, $26,000 in 2017, and $32,000 in 2018, before dropping to $23,500 in 2019 and $19,000 in 2020.
 Loss of additional events: In 2015, a hockey match and a WWE wrestling match were held, both of which netted over $1,200,000. Events such as those have not been held since.

11 Decrease in Concerts

There were five concerts held in the fiscal year ending 2016 and four in 2017. However, there were then only five concerts held from 2018 – 2020, an average of less than two per year. Since on average a concert nets close to $700,000, a decrease of two to three concerts each year results in a decrease in net Non‐ NFL Event revenue of approximately $1,400,000 ‐ $2,100,000 each year.

[Analysis continued on next page]

12 Decrease in Profitability of Soccer Matches

The net revenue from twelve soccer matches held over the four‐year period from 2015 to 2018 amounted to approximately $10,500,000, for an average profit of over $870,000 per match. However, in the fiscal year ending 2019, the three soccer matches combined lost nearly $350,000, and the two matches in 2020 lost $65,000.

When  we  compare  similar  matches  from  different  years,  we  can  see  the  reasons  for  the  drop  in profitability. For example, Mexico played matches in both 2018 and 2019. The net revenue in 2018 was approximately $1,800,000, while the net revenue in 2019 was a loss of over $500,000. Revenue was nearly $2,000,000 less in 2019 due mostly to fewer ticket sales: 42,259 in 2019 compared to 64,368 in 2018. In addition, the average ticket price was about $6 less in 2019 than in 2018. Despite having fewer attendees and less revenue, the total expenses were $600,000 more for the 2019 match than the 2018 match. The increased  expenses  were  attributable  to  increased  costs  for  security,  janitorial  and  stadium  operations staff, marketing expense, and a reimbursement to the promoter. We also note that the payment to the promoter of $2,500,000 was the same in 2019 as it was in 2018, despite the decrease in attendees and revenue.

13 14
It appears that the drop in profitability overall is largely due to the matches in 2019 and 2020 being less popular than the matches in earlier years. From 2015 to 2018, attendance averaged over 53,000 fans per match. For 2019 and 2020, attendance averaged less than 32,000 fans per match.

In addition, we note the following regarding specific revenue and expense line items:

 For the Earthquakes v. Manchester United match on July 22, 2018, parking revenue was unusually low at approximately $42,000, which equates to 2.6% of total revenue and $1.43 per attendee.

Parking  revenue  similarly  attended  matches  ranged
from  $74,000 ‐  $128,000  overall  and  was
typically more than 5% of total revenue and around $4‐$5 per attendee. In addition, there was no Merchandise or Other revenue for that match. Assuming parking revenue of $4 per attendee and Merchandise and Other revenue combined of $0.50 per attendee, total revenue would have been $90,000 higher.

 For  the  United  States  Women’s  National  Team  v.  South  Africa  match  on  May  12,  2019, Ticket Revenue  was  only  $5,730.  The  promoter  paid  over  $500,000,  which  resulted  in  the  match experiencing a net profit, but it is unclear why there were essentially no ticket sales for this match.

 For the Chivas v. Benfica match on July 20, 2019, Public Safety Costs totaled nearly $550,000, or almost $29 per attendee. This compares to $176,000 in public safety costs for the United States Women’s National Team v. South Africa match, which had similar attendance figures. The Mexico v. Paraguay match on March 26, 2019, had public safety costs of $456,000, but attendance was nearly 48,000, and the cost per person was $9.59. Assuming the average cost per attendee of all other matches of $7.96, the increased public safety costs reduced net revenue by over $325,000.

 Janitorial and Maintenance expense varied widely between events. It was as low as $13,204 for the Earthquakes v. Manchester United match on July 22, 2018, and as high as $270,000 for the Mexico  v.  Paraguay  match  on  March  26,  2019.  For  the  Mexico  v.  Paraguay  match, Operations/Janitorial/Maintenance combined totaled over $500,000. For comparison purposes, the Mexico match on March 23, 2018, had a combined expense of $280,000, and the similarly attended Barcelona v. AC Milan match on August 4, 2018, had a combined expense of $278,000.

This means that the increased expense for the Mexico v. Paraguay match reduced net revenue by about $220,000.

 Marketing expense also varied widely, ranging from $0 for several matches up to $186,000 for the  first  Earthquakes  match.  It  is  possible  that  the  marketing  was  paid  for  by  the teams/promoters.

Increases in Losses Attributable to College Football Games

College football games have been a
consistent loss generator for the stadium, with losses from 2015 to 2020 totaling over $18,000,000, or about $3,000,000 per year. In addition, the losses have been increasing, from $2,300,000 in 2016 to $3,500,000 in 2018, $3,400,000 in 2019, and $3,200,000 in 2020. It is unclear why the Stadium Manager continues to book college football games on similar terms given the continuing losses.

15 Each year since 2015, the stadium has hosted the Pac‐12 Championship and a bowl game (originally the Foster Farms Bowl, then the Redbox Bowl). They also hosted a University of California vs. Oregon game in 2015 and a San Jose State vs. Army game in 2019.

The payments
to the Pac‐12 Conference were at least $6,000,000 from 2015 – 2018, and they averaged over $5,400,000 from 2015 – 2020. Average revenue per game from 2015 – 2020 was only $3,800,000, and therefore  each  game  lost  $1,600,000  before  even  considering  expenses  to  operate  the  game.  Those expenses  averaged  almost  $1,400,000.  There  was  not  a  single  Pac‐12  Championship  where  revenues exceeded the amount paid to the conference.

16 Losses for the Foster Farms/Redbox Bowl were not as large. Average losses amounted to nearly $400,000 for each game. The payments to the teams and conferences appear to be remarkably high compared to revenue,  with  revenue  averaging  $3,650,000  and  payments  to  the  teams/conferences  averaging $2,800,000,  with  operating  expenses  of
almost  $1,000,000  each  game.  It  was  simply  not  possible  to generate a profit from these games with the terms given.

We recommend that the Stadium reconsider hosting college football games. Based on the average results of the last six years, this would add $3,000,000 to the bottom line just by eliminating these games.

Decreases in Special Events

Special Events, such as corporate events, have fallen significantly. There were 207 special events in 2016 and only 79 held in 2020. Special events have consistently been a generator of positive net revenue, and so the decrease in events has led directly to
a drop in overall Non‐NFL Event net revenue. Net revenue from Special Events decreased from $5,600,000 in 2016 to only $1,500,000 in 2020, a drop of $4,100,000.

Assuming the same revenue per event in 2020 ($19,000), the decrease in the number of events from 2016 levels translated to a decrease in total net revenue of $2,400,000.

17 Decrease in Average Net Revenue per Special Event

In addition to the decrease in the number of special events, the net revenue per Special Event has also decreased substantially. The net revenue per event peaked at $32,000 in 2018 and declined to $19,000 in 2020, a decrease of
41%, or $13,000 per event. Assuming the same number of events in 2020 (79), this decrease in net revenue per event translated to a decrease in total net revenue of over $1,000,000.

Decrease in Other Events

In 2015, the Stadium hosted a hockey match and a WWE Wrestling match. Each of these events netted
over $1,200,000. Since then, the Stadium has not hosted another hockey, wrestling, or any other large‐ scale  event  other  than  concerts,  soccer  matches,  motorsports,  and  college  football  games.  Given  the success of these events in 2015, it would make sense to book similar events again.

Individual Event
Analysis

J.S. Held categorized the 27 events into seven categorizes to analyze the revenue and expenses and identify anomalies within event categories.  The categories are:

1. Concerts     (five events)

2. Soccer       (eight events)

3. College Football    (seven events)

4. High School Football   (four events)

5. Motorsport   (three events)

In addition to the 27 events noted above, there were additional Non‐NFL Ticketed Events named ‘’Bay Area Wedding Fair’’, “Stadium Links” and ‘’Bacon & Beer Classic’’ which were minor in terms of revenue and profit, and which were not included in our overall analysis.

18 Concerts

In the fiscal years ending March 2017 to 2020, there were six concert events.  J.S. Held noted that Taylor Swift played two consecutive nights, and those are counted as one event.

All  five  of  the  concerts  showed  positive  net  income.  The  total  net  income  for  these  concerts  was $4,114,530, for
an average of $822,906 per concert.

J.S. Held made the following analytical observations which we would want to investigate further.  We noted that  these  observations  and  questions  do  not  conclude  that  specific  revenue  or  expense  items  were inaccurately recorded. We would inquire to obtain more information regarding these line items to confirm if they were recorded accurately.

1. Performer:   U2
Date:     May 17, 2017

 Ticketmaster revenue‐sharing fees comprised over 8% of total revenue.

2. Performer:   Taylor Swift
Dates:     May 11, 2018
May 12, 2018

 J.S. Held noted that Taylor Swift played two consecutive nights. o For the first concert on May 11, 29,333 tickets were sold and 49,802 attended the concert. This implies an unusual number of comped tickets. o For the second concert on May 12, 50,503 tickets were sold and 52,074 attended the concert.
o We would want to understand why there is a large amount of comped tickets. The difference in total revenue from the first to the second night was $5,351,515.

 The average cost per attendee more than doubled from $102.47 for the first night of the concert to $207.66 for the second night of the concert. This likely reflects the unusually high level of free tickets.

3. Performer:   Jay‐Z / Beyonce
Date:     September 29, 2018

 Partnerships  &  Guarantees  were  $5,785,808,  which  was  $2,241,516  higher  than  the Beyonce event in 2016.

4. Performer:   The Rolling Stones
Date:     August 18, 2019

 Total Cost Per Attendee expenses were $180.97, the highest amount out of any concert from FY15‐20.
 Partnerships & Guarantees were $8,585,714, the highest amount out of any concert from FY15‐20.

19 Soccer

Six of the eight soccer matches resulted in positive net income, with only the Earthquakes vs. Manchester United  match  in  2018  and  the  ICC  Chivas  vs.  Benfica  match  in  2019  experiencing  a  loss  based  on  the recorded values.  The total net income for these nine matches was $2,816,713, for an average of $352,089, a $417,844 decrease from the prior 3‐year period mentioned in the 2020 report.

1. Match:     USWNT vs South Africa
Date:     May 12, 2019

 There  was  a  partner  reimbursement  recorded  as  a  negative  expense  in  2019  of  over $506,000.

2. Match:     ICC: Chivas vs. Benfica
Date:     July 20, 2019

 Janitorial Expenses were $105,200 with an attendance of 15,575. The soccer event that occurred 2 months earlier, on May 12 (USWNT vs South Africa), janitorial expenses were $79,102 with an attendance of 20,464.

College Football

All seven college football events lost money, with recorded losses ranging from $214,708 up to $2,993,907.

The losses across all seven games totaled $10,083,456 as recorded. From fiscal years 2018 to 2020, college football events lost on average $1,440,000 per game.

1. Game:     Pac‐12 Championship
Dates:     December 1, 2017
November 30, 2018
December 6. 2019

 Seating  Bowl  Revenue  per  Attendee  declined  significantly,  from  almost  $69.90  in  2017 down  to  $37.70  in  2018.  Seating  Bowl  Revenue  per  Attendee  then  increased  to approximately $84.7 in 2019.
 Attendance fluctuated remarkably year to year.  These may be explainable by the teams that were playing, and it should be evaluated.
 Suite ticket revenue in 2019 was significantly low relative to the Seating Bowl Revenue.  In 2019, catering expenses were almost double the previous year expenses, despite having the lower attendance than in 2018
 The marketing expenses significantly fluctuated year to year.  Partner Payments & Guarantees were $6,000,000 in 2017 and only $3,602,535 in 2018 and $3,600,000 in 2019.

2. Game:     Foster Farms/Redbox Bowl
Dates:     December 30, 2017
December 31, 2018
December 30. 2019

20  Average ticket price declined from $100.46 in 2017 to $84.73 in 2019.  Janitorial/Maintenance expenses increased in 2019, despite attendance being significantly less than 2018.
 Marketing expenses were significantly higher in 2019 than in 2018 and 2017.  There  was  no  bowl  committee  expense  in  2019  but  $441,253  in  2017  and  $397,554  in 2018.
 Typically,  attendance  is  more  than  tickets  sold;  however,  for  all  three  bowl  games,  the attendance was remarkably less than tickets sold.

High School Football

There were four high school football events. All four of these events operated at a loss, averaging a loss of $41,287  per  event,  for  a  total  loss  of  $126,594.   While  there  are  some  anomalies  J.S.  Held  observed between events, the overall revenues and expenses are minor compared to the other events hosted at the stadium, and any anomaly would likely be immaterial.

Motorsport

There were three Monster Jam events. Overall, these three events lost a total of $685,309 for the Stadium.

1. Event:     Monster Jam
Dates:     April 22, 2017
April 28, 2018
April 13. 2019

 The  event’s  net  loss  increased  from  $(1,028)  in  2017  to  $(224,974)  in  2018  and  to $(459,309)  in  2018.  While  the  average  ticket  price  stayed  between  $30.89  and  $31.78 during this period, net income significantly decreased.  The Monster Jam event in 2017 and 2018 had a similar Field Conversion/Replacement Cost of $130,244 in 2017 and $164,019 in 2018.  For 2019, Field Conversion/Replacement Cost increased to $368,638, a 125% increase.
 Despite higher attendance in 2019 compared to 2018, Parking Operations cost was lower in 2019 than in 2018.
 Credit card fees were unusually low for all three years.  Other Game Staff Increased from $86,910 in the 2018 event to $192,435 in 2019, a 121% increase.

Observations Across All Events

The  ‘’Other  Gameday  Staff’’,  ‘‘Other  Stadium  Operations’’,  and  ‘’Transportation’’  expense  categories fluctuated widely from event to event, in terms of overall cost as well as cost per attendee.  J.S. Held would inquire  to  understand  why  these  expenses  varied  so  much  and  confirm  the  expenses  were  recorded properly.  The table below summarizes these specific expenses for all Ticketed Events.

21 In addition, the Partner Payments and Guarantees line‐item obscures all the various revenues, expenses, and adjustments that flow through this category.   The Partner Payment and Guarantees is calculated by adding all ticket revenue and deducting various charges, such as possessory tax, credit card commissions, rent and labor, among other expenses.  Since these items are presented as net amount, it is not possible from compare these expenses and revenues from event to event.

Specific Expenses per Attendee
Year Other Gameday Staff Other  Stadium Operations Transportation End Event  Date Event  Name Attendance Total Per  Attendee Total Per  Attendee Total Per  Attendee 4/22/2017 Monster  Jam 40,595           88,071              2.17                  18,264              0.45                  (1,926)              (0.05) 5/17/2017 U2 49,513           520,190           10.51                66,366              1.34                  74,831              1.51 6/24/2017 Wedemeyer 2,137             20,692              9.68                  6,040                2.83                  ‐                     ‐ 7/7/2017 ‐ 7/9/2017 Stadium  Links 2,425             5,785                2.39                  1,930                0.80                  ‐                     ‐ 7/23/2017 Real  Madrid / Man U 62,197           69,492              1.12                  27,850              0.45                  60,610              0.97 7/26/2017 Gold  Cup Final 57,179           86,173              1.51                  53,782              0.94                  62,825              1.10 9/23/2017 Friday  Night Lights 3,797             16,649              4.38                  547                   0.14                  ‐                     ‐ 10/4/2017 Coldplay 45,837           455,169           9.93                  56,231              1.23                  69,910              1.53 12/1/2017 Pac ‐12 41,446           113,931           2.75                  25,391              0.61                  63,655              1.54 12/30/2017 Foster  Farms 17,021           74,377              4.37                  35,155              2.07                  26,895              1.58 3/23/2018 Mexico  vs Iceland 64,368           83,517              1.30                  53,789              0.84                  48,990              0.76 4/28/2018 Monster  Jam 37,714           86,910              2.30                  40,976              1.09                  50,275              1.33 5/11/2018 Taylor  Swift 1 49,802           382,973           7.69                  68,607              1.38                  72,015              1.45 5/12/2018 Taylor  Swift 2 52,074           403,621           7.75                  68,354              1.31                  72,015              1.38 6/8/2018 ‐ 6/10/2018 Stadium  Links 2,425             9,679                3.99                  17,495              7.21                  ‐                     ‐ 7/22/2018 Earthquakes  vs Man U 29,342           145,711           4.97                  40,899              1.39                  50,035              1.71 8/4/2018 Barcelona  vs AC Milan 44,922           201,641           4.49                  56,574              1.26                  50,035              1.11 9/21/2018 High  School Football Series 3,701             47,634              12.87                12,451              3.36                  ‐                     ‐ 9/29/2018 Jay ‐Z/Beyonce Concert 48,806           765,968           15.69                113,297           2.32                  71,440              1.46 10/13/2018 SJSU  vs Army 9,096             60,303              6.63                  62,942              6.92                  3,170                0.35 11/30/2018 Pac ‐12 Championship 24,023           233,653           9.73                  20,634              0.86                  47,920              1.99 12/31/2018 Redbox  Bowl 22,587           179,425           7.94                  92,023              4.07                  21,238              0.94 3/26/2019 Mexico  vs Paraguay 47,549           59,399              1.25                  176,104           3.70                  ‐                     ‐ 4/13/2019 Monster  Jam 39,701           192,435           4.85                  54,649              1.38                  45,000              1.13 4/28/2019 Bay  Area Wedding Fairs 781                5,327                6.82                  3,044                3.90                  ‐                     ‐ 5/12/2019 USWNT  vs South Africa 20,464           62,303              3.04                  49,246              2.41                  25,288              1.24 7/20/2019 ICC:  Chivas vs Benfica 15,575           62,118              3.99                  59,709              3.83                  51,355              3.30 8/18/2019 The  Rolling Stones 47,442           495,048           10.43                90,164              1.90                  75,253              1.59 9/6/2019 High  School Football 4,625             23,243              5.03                  2,357                0.51                  ‐                     ‐ 12/6/2019 Pac ‐12 Championship 28,769           73,355              2.55                  (3,550)              (0.12)                 54,645              1.90 12/30/2019 Redbox  Bowl 24,021           81,219              3.38                  52,011              2.17                  5,712                0.24 FYE 03/31/18FYE 03/31/19FYE 03/31/20
22 VI. Findings/Observations/Questions – Special Events

J.S. Held analyzed the Special Events on both an individual event and overall basis for the fiscal years ending March 2018  to 2020.   In  this section, J.S. Held summarizes the findings and  observations based on our supplemental analyses.

Overall Results

Total net income from Special Events totaled $8,089,921 for the fiscal years ending March 2018 through 2020. The data is sourced from profit and loss spreadsheets prepared by ManCo and provided to the SCSA.

In  contrast,  J.S.  Held  summed  net  income  for  each  individual  Special  Event,  the  total  amounted  to $7,485,778, a difference of $604,143.

We note that we also observed a difference for the first three fiscal years (2015 to 2017), during which the sum  of  the  profit  of  each  individual  event  was  $2,818,034  greater  than  the  sum  of  the  profit  from  the annual Profit and Loss spreadsheets. Based on the records provided, J.S. Held cannot determine the reason for these differences.   J.S. Held noted that these differences were observed in fiscal years ending March 2018 and 2019, but not in the year ending March 2020. This was similar to our analysis of the first three fiscal years, when we noted differences in the first two fiscal years but not in the third.

Based on the results recorded by ManCo, Special Events revenue for the three years totaled $28,531,926.

Expenses for the same period totaled $20,442,005, resulting in net income to the SCSA of $8,089,921.

The year‐to‐year
results are summarized below:

Description
FYE March
2018
FYE March
2019
FYE March
2020 Total
Profit per ManCo P&Ls 3,873,857$      2,723,733$      1,492,331$      8,089,921$ Profit per Sum of Events 3,640,924        2,352,523        1,492,331        7,485,778 Difference 232,933 $         371,210$         0$                    604,143$ Description
FYE March
2015
FYE March
2016
FYE March
2017
FYE March
2018
FYE March
2019
FYE March
2020 Total
Attendance 56,207              106,247           54,651             64,365             35,676 33,535             350,681 Number of Events 183                   207                  130                  115                  100                  79                     814 Average Attendees per Event 307                  513                  420                  560                  357                  424                  431 Total Revenue 10,954,881       22,322,717      11,076,506      12,656,357      9,059,166        6,816,403        72,886,030 Revenue per Attendee 194.90 $           210.10$           202.68$           196.63$           253.93$           203.26$           207.84$ Revenue per Event 59,863              107,839           85,204             110,055           90,592             86,284             89,541 Total Expenses 8,162,849         13,995,791      7,752,592        8,782,499        6,335,434        5,324,072        50,353,237 Expenses per Attendee 145.23 $           131.73$           141.86$           136.45$           177.58$           158.76$           143.59$ Expenses per Event 44,606              67,613             59,635             76,370             63,354             67,393             61,859 Expenses as % of Revenue 75% 63% 70% 69% 70% 78% 69%
Net Profit 2,792,032         8,326,926        3,323,914        3,873,857        2,723,733        1,492,331        22,532,793 Net Profit per Attendee 49.67 $             78.37$             60.82$             60.19$             76.35$             44.50$             64.25$ Net Profit per Event 15,257              40,227             25,569             33,686             27,237             18,890             27,682 Net Profit as % of Revenue 25% 37% 30% 31% 30% 22% 31%
23 As shown in the table below, the number of events each month has trended down year‐over‐year.

J.S.  Held  analyzed  the  events  on  an  average  per  event  and  per  attendee  basis.  However,  the  expense categories were not consistent year to year, and therefore a year‐to‐year comparison table, as we provided for the first three fiscal years, is not useful for comparative purposes.

Individual Events

We analyzed the revenues and expenses for each event and evaluated those expenses on a per attendee basis and as a percent of revenue.

The attendance for events ranged anywhere from 14 up to 12,800. The highest grossing event brought in $2,041,998, while the lowest grossing event realized only $320 of revenue. Only one event over the three
years analyzed lost money, which was an improvement over the first three fiscal years, which saw 22 events that lost money.

Contract Review and Analysis

We  reviewed  the  Stadium  Ground  Lease  between  The  City  of  Santa  Clara  and  the  Santa  Clara  Stadium Authority, the Management Agreement between the SCSA and ManCo, and a sample event contract to determine if  the results from the event were reported in accordance with  the various agreements and contract.  Based  on  the  documents  provided,  it  appears  that  the  results  of  the  event  we  sampled  were recorded in compliance with the agreements reviewed. Documentation provided by ManCo is limited as described earlier in this report.   The Stadium Ground Lease between defines Net Income from Non‐NFL Events as “…the  Non‐NFL Event Revenue for such Lease year, minus the Non‐NFL Event Expenses for such Lease Year.”

Special Events Analysis (By Month)
Month FYE  03/31/15 FYE  03/31/16 FYE  03/31/17 FYE  03/31/18 FYE  03/31/19 FYE  03/31/20 Average April 19 9 5                         7                        7                        9 May 20 13 15                       7                        5                        12 June 23 8 9                         4                        8                        10 July 3 12 6 5                         4                        2                        5 A u g u s t 1 575 5                         6                        3                        7 S e p t e m b e r 2 52 01 2 7                         7                        3                        12 O c t o b e r 3 62 21 5 1 0                       16                      5                        17 November 25 21 14 11                       8                        10                      15 December 34 30 18 20                       22                      20                      24 January 21 4 17 10                       4                        8                        11 F e b r u a r y 1 575 9                         4                        8                        8 March 9 22 8 9                         11                      12 Total Count 183                     207                    130                    115                    100                    79                      143 Average Count 20                      17                      11                      10                      8                        7                        12 24 Non‐NFL Event Expenses are defined as:

i. Direct  costs  and  expenses  incurred  in  the  conduct  of  Non‐NFL  Events,  including,  without limitation,  costs  of  utilities,  security,  and  public  safety,  and  costs  to  install  and  remove temporary facilities, and
ii. Those direct costs and expenses incurred that exceed the costs and expenses that would have been  incurred  in  operating  the  Stadium  absent  the  hosting  of  Non‐NFL  Events;  including, without limitation,

1. Expenses incurred in marketing and promoting the Stadium as a venue for  actual  or  potential  Non‐NFL  Events,  including  reasonable administrative expenses relating thereto,

2. Costs incurred to obtain or provide parking for person attending Non‐NFL Events,  including  a  parking  charge  payable  to  StadCo  pursuant  to  the Stadium Lease in the amount of $1.00 for each parking space in the Main Lot actually used for parking during each Non‐NFL Event,

3. Costs of negotiation, collection and enforcement of contracts relating to actual or potential Non‐NFL Events, and

4. Costs of Alterations, Capital Repairs (as defined in the Stadium Lease) and Compliance Work directly attributable to, or required, as a result of, Non‐ NFL  Events  (amortized,  in  the  case  of  capital  expenditures,  over  their respective useful lives).

Non‐NFL Event Expenses are intended to include the incremental portion of those costs and expenses that vary with the actual or planned nature or scope of Non‐NFL Events and related marketing efforts, but are intended to exclude the fixed portion of such costs and costs that would be incurred even if the Stadium were not operated for Non‐NFL Events.”

Section 8.3 of the lease states, “Lessee shall manage the Stadium, or cause to be managed, for Non‐NFL Events in a prudent and business‐like manner.”

Section 2.9 of the Management Agreement states that  the Stadium Manager shall, “…control  Manager
Operating Expenses, StadCo Operating Expenses and Stadium Authority Operating Expenses; and maximize Operating Revenues.”

The first amendment to the Ground Lease, dated June 19, 2013, stated that, “…Non ‐NFL Event Expenses shall exclude the amounts payable by Lessee to Stadium Tenant for the use of the Tenant Improvements
or Tenant’s Personal Property located outside Tenant’s Exclusive Facilities (as each of such terms is defined in the Stadium Lease.”

We reviewed the contract terms and recorded results of the May 17, 2017, U2 concert. ManCo entered into a contract with Live Nation UTours (USA) Inc. with an effective date of April 24, 2017.

According to the original terms of the contract, the Stadium Manager was to retain all Suite Revenue, all Concessions revenue, all  Merchandise Revenue, and all Net Parking Revenue. Live Nation  was to  pay  a 25 $200,000 stadium rental fee, $800,000 for stadium Operations Expenses, all Event Expenses, and a 3.25% credit card fee for tickets sold at the Stadium box office where no other charge was charged.

However, a “Supplemental Terms” portion of the contract stated that Live Nation was to receive 30% of Suite  Revenue,  50%  of  Concessions  revenue,  50%  of  Merchandise  Revenue,  and  50%  of  Net  Parking Revenue, unless parking expenses exceeded parking revenue, in which case the Stadium Manager would bear the entire loss. In addition, the Stadium Manager assumed 50% of the rent, less $23,000 for waste removal and utilities. These changes resulted in the SCSA receiving $610,961 less than it otherwise would have,  assuming  that  all  the  items  were  recoded  appropriately  by  ManCo.  We  also  note  that  ManCo provided Live Nation 50% of Suite Ticket Revenue rather than 30%. Based on the Settlement Statement, this was an overpayment to Live Nation of $27,555. This was offset, however, by ManCo retaining 100% of the net parking revenue, which was $153,248.

The differences in the ticket revenues per the settlement statement with Live Nation and the amounts recorded by ManCo result in the benefit of SCSA. Per the Settlement Statement, total ticket revenue was $7,162,971. This was comprised of “Event Ticket Sales” of $6,273,565, Platinum Tickets totaling $256,161, Suite  Revenue  of  $137,775,  and  Ticket  Service  Charges  totaling  $495,470.  However,  the  profit  and  loss statement provided by ManCo to the SCSA showed ticket revenue of $6,675,643, a difference of $487,328.

The ticket sales amounts included $5,829,406 for “Seating Bowl Revenue,” $626,047 for “TM Fees” and $220,190 for “Suite Ticket Revenue.” We note that the profit and loss data showed higher amounts than the  Settlement  Statement  for  Suite  Tickets  and  Ticket  Service  Charges/TM  Fees,  but  less  for  the  Event Ticket Sales and Platinum Tickets vs. Seating Bowl revenue. It is possible that there is an explanation for this, but we have not been able to discuss this with ManCo as they have not responded to our questions.

There were also differences in the Food and Beverage, Merchandise and Net Parking results between the Settlement Statement and
the Profit and Loss statement.

According to the event Profit and Loss Statement prepared by ManCo, total revenues were $7,631,429 and total  expenses,  before  the  Partner  Payment,  were  $1,962,932,  for  a  net  before  Partner  Payment  of $5,668,497.

We note that the expenses included in the profit and loss statement do appear to be, based on the category description,  incremental  expenses  that  were  incurred  to  put  on  the  event,  as  required  by  the  Stadium Ground Lease.

Of the $1,962,932 in total expenses, ManCo received reimbursement from the promoter of $1,581,575. In addition, it received $100,000 in rent, for a total of
$1,681,575. This put the net expense for the Stadium
at $297,545.

The  total  expenses  recorded  on  the  Profit  and  Loss  Statement  (excluding  parking  expenses)  were $1,771,849.  Of  this  amount,  Live  Nation  paid  $1,581,575.  This  included  $800,000  as  the  agreed  upon amount for Operating Expenses, $765,387 for Event Expenses, and $16,188 for Waste and Utilities.

26 Summary

The results of our analysis for the fiscal years ending March 2018 to 2020 were consistent with the analysis for  the  first  three  fiscal  years.  ManCo  did  not  provide  adequate  documentation  to  determine  accurate results for each event and each fiscal year. However, this does not mean that the results reported were inaccurate.

We determined that the decrease in net Non‐NFL Event revenue recorded in fiscal years ending March 2019 and 2020 were due to decreases in the number of certain types of events, as well as decreases in profitability of certain events.

Finally,  we  reiterate  our  recommendations  from
our  previous  report  (included  in  this  report).  Better reporting of financial results will facilitate better decision making for types of events to hold to maximize net revenue from Non‐NFL Events.

Sincerely,

Timothy Gillihan CPA | ABV | CFF
Senior Vice President

SSanta Clara
SStadium Authority
Audit Committee Meeting
June 28, 2023
ƒ Background
ƒ Summary of Findings
ƒ Timeline
ƒ Tasks Performed
ƒ Findings
ƒ Recommendations

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Background

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N LLC m1 57a · 7 2D7 5 l .CI
Background

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Background

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1411 :1.74 238 ''] I .77, 5)
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YoY Comparison Prior to Findings
FYE 03/31/15 FYE 03/31/16 FYE 03/31/17
Description ManCo P&L Variance SCSA Financials ManCo P&L Variance SCSA Financials ManCo P&L Variance SCSA Financials Revenue:

Seating Bowl Revenue 31,687,995 $ - $ 31,687,995$ 54,789,589 $ - $ 54,789,589$ 26,657,484 $ - $ 26,657,484$ TM Fees 1,171,724 - 1,171,724 3,637,978 - 3,637,978 2,318,523 - 2,318,523 Suite Revenue 936,123 - 936,123 2,117,436 - 2,117,436 1,592,175 - 1,592,175 F&B Revenue 4,533,163 - 4,533,163 7,083,351 - 7,083,351 5,093,523 - 5,093,523 Parking Revenue 1,932,537 - 1,932,537 2,517,284 - 2,517,284 2,291,326 - 2,291,326 Rent - - - - - - - - - Sponsorship 502,500 - 502,500 150,000 - 150,000 1,332,125 - 1,332,125 Merchandise 186,059 - 186,059 584,887 - 584,887 261,478 - 261,478 Other Revenue 9,976,463 53,956 10,030,419 18,570,544 303,012 18,873,557 12,014,351 677,777 12,692,128 Sales Tax - - - - - - (150,701) 150,701 - Total Revenue 50,926,563$ 53,956 $ 50,980,519$ 89,451,069 $ 303,012 $ 89,754,081$ 51,410,284 $ 828,478 $ 52,238,762$ Expenses:

Public Safety/Security 3,074,248 $ - $ 3,074,248$ 5,118,914 $ - $ 5,118,914$ 5,243,558 $ 181,373 $ 5,424,931$ Utilities/Solid Waste 205,456 - 205,456 385,508 - 385,508 308,623 - 308,623 Parking 2,061,550 - 2,061,550 2,878,854 - 2,878,854 2,466,020 - 2,466,020 Misc Rentals 68,604 - 68,604 88,142 274,599 362,741 149,242 - 149,242 F&B 7,261,698 - 7,261,698 12,187,832 - 12,187,832 6,955,050 - 6,955,050 Operations/Janitorial/Maintenance 4,321,913 767,285 5,089,198 7,794,599 702,030 8,496,629 6,919,623 290,064 7,209,687 Fees & Commissions 1,448,370 - 1,448,370 1,539,696 - 1,539,696 612,090 - 612,090 Transportation 286,616 - 286,616 180,363 - 180,363 (31,999) - (31,999) Marketing 948,319 - 948,319 371,248 - 371,248 493,953 - 493,953 Misc Expenses 1,219,373 228,697 1,448,070 3,045,911 1,054,185 4,100,096 1,854,262 111,632 1,965,894 Other 23,880,838 - 23,880,838 48,053,184 - 48,053,184 21,368,377 - 21,368,377 Total Expenses 44,776,984$ 995,982 $ 45,772,966$ 81,644,250 $ 2,030,814 $ 83,675,065$ 46,338,799 $ 583,069 $ 46,921,868$ Net Income (Loss) 6,149,578 $ (942,026) $ 5,207,552 $ 7,806,818 $ (1,727,802) $ 6,079,016 $ 5,071,484 $ 245,409 $ 5,316,894$ Compete
or
EE l X
. Ex
E'
Findings
Yl to Y4
Incomplete ❖ Methodology ~-~~
•:• Systems
SCSA Development
SANTA CLARA STADIUM 11urnmmY
E X
Legend E = Event
Yr= Year
I = Accounting Principles
Total Events from Yl to Y4= 660
Validate
YrX :ll3
or
Find not Valid
YrX~ ■
2 Summary of Findings: 1
ƒ Regarding the reported results of the individual
Ticketed Events, on an overall basis, the
underlying documentation provided by ManCo
is inadequate for determining whether or not
the financial results for each event were
reported accurately.
ƒ This does not mean the results reported are
necessarily inaccurate; rather, it means JSH
cannot determine from the provided records if
the reported results are accurate or inaccurate,
and additional documentation and information
is needed to make that determination.

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Summary of Findings: 2
ƒ There were six primary reasons why the NNE
revenue was significantly less in FYEs March
2018 – 2020 than FYEs ending March 2015 –
2017
ƒ Number of concerts decreased
ƒ Profitability of soccer matches decreased
ƒ Losses for college football games increased
ƒ Number of special events decreased
ƒ Net revenue from special events decreased
ƒ No large alternative events, such as
hockey/wrestling

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Summary of Findings: 3
ƒ Sampled settlement statement with promoter
appeared to adhere to terms of the event
contract, management agreement, and ground
lease.
ƒ However, there were differences between the
revenues and expenses reported on the
settlement statement and what was reported
on the profit and loss statement for the event
that we cannot reconcile without conversations
with ManCo.

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Summary of Findings: 4
• We observe evidence of capital purchases being
placed into service and related depreciation
calculations; however, we were not presented
with enough documentation to determine the
treatment of the original payment for the
equipment.

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Timeline of Non-NFL Event Analysis
2018 Jun I Jul I Aug I Sep I Oct I Nov I Dec
SCSAsends
letter to I Jun 5 - Jun 5
Manco re:
documents
SCSA discuss~s docu~entation I Jun 28 _ Jun 28
issues with HSNO
HSNO meets with SCSA staff to discuss scope I Aug 23 - Aug 23 HSNO provides year-end analysis to SCSA I Sep 17 - Sep 17 HSNO meets with SCSA to discuss year-end analysis I Oct 24 - Oct 24 HSNO provides draft RFI to SCSA I Nov 1 - Nov 1
Conference calls to discuss RFI - Nov 19- Nov 27
HSNO receives authorization to contact Manco I Dec 7 - Dec 7 HSNO emails Manco I Dec 10 - Dec 10
Manco respond s to HSNO and suggests discussing week of Jan 7, 2019 1 Dec 13 - Dec 13 2018
HSNO sends RFI memo I Dec 26 - Dec 26
Timeline of Non-NFL Event Analysis
2019 Jan I Feb I Mar I Apr I May I Jun I Jul I Aug I Sep I Oct HSNO and Manco I Jan 23 _ Jan 23 phone call
JSH and Manco meet to discuss requests I Jun 10 - Jun 10 Manco provides year-end adjustment data for FYE 2017 1 Aug 28 - Aug 28 JSH emails Manco to request meeting to discuss year-end adjustments I Oct 3 - Oct 3 2019
JSH and Manco meet to discuss year-end adjustments for FYE 2017 1 ~t 31 - Oct Timeline of Non-NFL Event Analysis
2020 Feb I Mar I Apr I May I Jun I Jul I Aug I Sep
ManCo
provides
workbook
with year- I Feb 4 - Feb 4
end
adjustments
for FYE 2015
JSH follow ups on year-end adjustments Mar 24 -Aug 31
Manco terminates direct communication I Sep 1 - Sep 1
2020
Tasks Performed

1. ManCo P&L Statements (FYE March 2018, 2019, & 2020) ƒ Ticketed & Special Events
› Performed math check (tie-out) over total amounts
› Performed analytics
ƒ Ticketed Events
› Analyzed 100% of the population
› Vouched recorded amounts to underlying documentation as provided by ManCo to the SCSA
› Reviewed key terms of Stadium Use/Partnership Agreements › Performed analytics to determine reasons why NNE revenue had decreased significantly
› Compared terms of sample event to settlement statement, ground lease and management agreement
› Reviewed management agreement provisions regarding
treatment of depreciation and compared to ManCo provided documentation regarding depreciation and capital
expenditures

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Findings - Ticketed Events
Examples of Adequate Documentation
ƒ Report from Ticketmaster for ticket sales

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Remittance Summary-Fa ce Value
Client Name:332251 FORTY NINERS STADIUM MANAG EMENT
Payment Period: For Sa les Due:11I16I2014
PAYMENT DETAIL B Y EVENT :

Eve nt Code
NCAELV04 11
NCAELV04 18
lOTALAE T:

NCAELV0411U
NCAELV0<l-18U
TOTALA ET :

Act De,;cr iplion
NOCCIC
---
NON 49ERS EVENTS Pff CCIC
NCAELV0329
NCAELV0502
TOTAL FOR AET: ALL
Check Total;
EE
$7.054.603.65
$654 ,00
$2,835.00
-$304,20
$181,957.84
$7,989 .98
$3.173,62
$224.25
TM TklSales Fac e Value- Facili Fee s
16 $530.00 $64.00
40 $2,495.00 $160,00
56 $3,025.00 $224 ,00
6 $60.00 $0.00
18 $180.00 $0.00
24 $240.00 $0,00
35,395 $7,092,810 .00
1,673 $159,929 .00
-3 -$312 .00
$186.617 .00
$8,195.00
$3,255 .00
$230,00
3B,897 $7,460,264 .00 $ 141.B04.00
FV + FC CC Fees
$7.234,300.00 -$179,786.35
$654.00
$2,835.0 0
-$312 .00
$186,61 7.00
$8, 195.00
$3,255.00
$230 .00
Crodi t Card lnsid <>
Cha r es
S0.00
SO.OD
S0.00
so.co
S0.00
S0.00
-$179,786.35
-$3 ,634.65
S7.80
-$188,521.42
Dale :11/21/2014
P50D-ALL:121940
NelFac eVal
Remittance
$594.00
$2,655 .00
$3,249 .00
$60.00
$180.00
$240.00
57,054,603 .65
$156,294 .35
-$304.20
5181,957.84
$7,989.98
$3,173 .62
$224 .25
$7.413,546,58
$7,413 546.56
Findings - Ticketed Events
Examples of Adequate Documentation
ƒ Invoice from 3rd party vendor

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Invoice
FORTY IINIE R STAOI U M !al '"l\olo.GE l'I. INT OOMIPA N Y 4900 ' MARIE P DEBARTOLO WP.Y
,,,.,,._.TA. CL.ARA CA 8-5054
:S-:::r.-JC-e Locat. iC':1111:
~TY 11',EJRS S T AID I UM
,igoo MAl'U p D El 'TOLO w,r..,v
SAN T A C~RA,. CA 95o:l4
Jo # ;
T g .r;,;
o.istonn · "' CUston1 PO .,..;
lff,(OiGel N.

Seirvlce Th-'u :
l,vJOk: e- Dat e::

Invoice Due Data:

Arnounl! e::
39103000
7190650
7a256 57
1CV3 '11 ...
11 /0f.J 1 4
12'2. 4
S 91 .28 0. 8
P L 5E RE.URN OP PORTION 'WlT YOlA'C Rl!!M I ANCI!
R,arn11:11"k:!:::r.i
ve SUP V ISOR s , -"'1FF
EVEl'r LEADS
EVE SUIT=IC L UB STAEF
IEVE N!T R ESTROON S A.FF
IE'<!\EN!T C0>.1P AC T'O R S A
E'VeNT P AR.KING PJCKERS
EVEN T P A NG SU R 5 RVI SORS

PARKI N G SE
E .VENT DISP,O.TCHEIR
POST EVEl',(l'" SUPEF:V ISOR s· ... FF
POST E.VENiT LJEAD<S
POST ': \,\ENfT $UJT£.ICLUB $ T AFF
POS.T"iEViEN Rl:.S"'i .R.00 STA F
POS'T - ~ I\IT ~ 1PACT,OR STAR F
P OST EVE N T WINDOW WA.SHERS

POST E VEN T SCRIJBBE S
PO.ST EVEl<IT SUB S UPERVISORS
POST EVENT SUB OSE ,_..fASI-.ERS
POS T J:;VENT SUB CLEAKlEJRS
Evianll. Cle: fo r
OC T OBER :.:0•4
ea.oo 30,.JE.80J
1 6 .00 21 . 3100
.2ro.s ,, 2 '1 .,3,'ICO
·21"2.ao 6.;11.~QO

40.00 ::>2 ,gsoo
332 _00 2:2.9800
...0.00 22.9800

1.2~ •~50i .6800
212 _0 22.9800
1"-32.07 16-'6 1 00
Lue p.;a:,,r-.e:a-ai; s; h .all ~ DJ_bfe'cl D ii .Ill!! p.:;a ~ cturi,eo. ::111 lllll!Lo!! Ill!! o:1r I [, _ _ JJ-el" RI.Cfflh s
s
$
I',
Amount
4 -,$4 2
4,262 .O!J
7,71306
5 ,73;2 3
:t 919...Ztu
~ 4,437
,41128
$ 4-1..:l,6
613.60
$ 2:,45.$ ... 0
$ 3, 7::.0..66
$ 5,900...95
!$ 4,5 72 .:32
S 9 9 20
S 7 , 629 .36
S 919 . 0
S 3 . 819 .66
S G. 250. 6
,5 ;;i-,,, .073. 0~
Customer#":
ob a ,.

Ser..•ice Thnu :
age,
T mx
s
s
:s
::I
s
!F,
s
71906S0
~103010
C\'31114
1 o4" 1
T -c,nl I
4 .954.82

4. 262 . □ 0
7·. ne . □
5,.732.73
'9 1 '9.2 0
4 7 ,El4
1 .41'1 1.:.2S
941 36
61'.3.fiO
2 . - .4!0
3 ,750.56
5 ,900 .95
4 . 57:2 .:;12
g 1 9 20
.62-9.38
$ !w19 . .i0
S -3,819.SS
$ ,250.SS
S 24,073 . 08
S 9'11-2BD.'11B
$,
Findings - Ticketed Events
Examples of Inadequate Documentation
ƒ Printouts of spreadsheets prepared by ManCo

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Sm·v i;:;'r'~1"1ir.:,i1en 4~ri,■ - - --- - --
-------- ---
nd
------------ - . ..
- ~

61.034,5{1 J0.7.3;L50 - -
120.00 ,100 .a ~
Sl,29S.$JD ... :t6,l 9.SO
-
(300..00}
Ut-34.Et SO ~1 00'1 8.,1.63..St:
it).00
-
I 4 .0
I
-
3"ijft,
oc.,,.

OCI
OC'
OQ,J
OC-t
oc;. 1,
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oc.u oc 18
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oc,
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tJ
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l 1,cp;ny- 1n;Us~
M••
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r/ • 11 ti.Mi
'J'•ln=~
• I.rt:~
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ZIOODO I I. II
:Z.100
Event# Event Name
7357
-wnts . - Payro I Tax. Adjus.tme ·
Event. n Ev,ent Nanile
7357
Payroll! Payroll Tax,es
60-74-6005-000 6(}.~ - . 5-000
~\Ut~ ,m.87
Pavmlll Payroll Taxe,s
60-74-6005-000 0-14-603 5-000

9.50%
42,259.76,
Workers Com[P
60~ 70~16518~000
30%
113'9457
0 . AL ACCQiu nt
46,887.20 60-00-141,8-200

ADJUSTMENT
TOTAi!. Account
4,i0141t.68 60 00-1418,..200
50,901.88
Findings - Ticketed Events
Examples of Inadequate Documentation
ƒ Invoice prepared by ManCo without proof of deposit

JS IHELD
Find your expert. • FORTY NINERS STADIUM MANAGEMENT COMPANY LLC 4949 M,mt;t • e-Bartolo rv y • S.i a Clare, CA 950 4 •
Dale : August 19, .2015
lnvolce Number: SLS - 5508
Customer:-
! IT EM
Tickets & Parking

INVOICE
Less : 7% Commiss ion on Gro p Tickets
Total
Payment is due, on upon receipt.

Please, remi your payment to:

Forty Niners Stadium Man eme,1r C mpany LLC
A TTN: Accounts Rece iva ble
4949 MBde P, DeBerto lo Vay
Santa Clara, CA 950:54
A Limited Part11ershii0fFederal Tax ID
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System: 11/ 6/2017 1: 32 :54 FM
User ate: 11/ 6/ 017
Journal En y:

Fiscal ear:

Transaction te :

Source Documen· :

A d't r 11 COde:
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Fort iners St d1um Manageme t
OUR .L INQUIRY REPORT
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Findings - Ticketed Events
Examples of Inadequate Documentation
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Account 6 0 -00 -1, 19 -200
..•-•·•••_,-,.-.. ,.•-•-•• OL ,, ... o,, __ ,_ ... ---
Description __ Prepaid · N · FL Eve=n't Expen:se:s
Posting Amount__ " $7,135.86
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NOl~-NFL EVENTS I Non-t~FL Events -- i $7,135.86

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Findings - Ticketed Events
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2015 2016 2017
2015
l ■ Net non -IN FL Revenue per Year $5,.207,552
2016
$6,.079.,016
2017
$5,.316.,894
2018
2018
$5,163,329
2019
2019
$18,591
2020
$(2"7 41.,014)
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2015 2016 2017 2018 2019 2020
■ Concerts ■ Soccer ■ College Football
■ Motorspo 1rt ■ High School Football ■ Hlodkey/Wrestling 6 5
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Cost per
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Revenue
Cost per
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Revenue:

Seating Bowl Revenue 4,238,761$ 80.06% 65.85$ 2,852,047$ 79.67% 59.98$ TM Fees 287,283 5.43% 4.46 216,131 6.04% 4.55 Suite Ticket Revenue 78,042 1.47% 1.21 50,784 1.42% 1.07 F&B Revenue 333,734 6.30% 5.18 221,064 6.18% 4.65 Parking Revenue 347,341 6.56% 5.40 237,265 6.63% 4.99 Sponsorship - 0.00% - - 0.00% - Merchandise 3,287 0.06% 0.05 2,612 0.07% 0.05 Other Revenue 5,866 0.11% 0.09 - 0.00% - Sales Tax 0.00% - - 0.00% -
Total Revenue 5,294,313$ 100.00% 82.25$ 3,579,902$ 100.00% 75.29$ Expenses:

Public Safety Costs:

Public Safety Cost 255,477$ 4.83% 3.97$ 263,945$ 7.37% 5.55$ Security 118,631 2.24% 1.84 191,829 5.36% 4.03 Total Public Safety Costs 374,108 7.07% 5.81 455,774 12.73% 9.59 Utilities 20,845 0.39% 0.32 18,245 0.51% 0.38 Parking:

Parking Operations 185,293 3.50% 2.88 115,811 3.24% 2.44 Parking - 3rd Party Lot Rental 22,212 0.42% 0.35 3,038 0.08% 0.06 Total Parking 207,505 3.92% 3.22 118,849 3.32% 2.50 Misc Rentals - 0.00% - - 0.00% - Catering 35,566 0.67% 0.55 60,355 1.69% 1.27 Operations/ Janitorial/ Maint:

Janitorial / Maintenance 142,386 2.69% 2.21 269,510 7.53% 5.67 Field Conversion / Replacement - 0.00% - - 0.00% - Other Stadium Operations 53,789 1.02% 0.84 176,104 4.92% 3.70 Other Gameday Staff 83,517 1.58% 1.30 59,399 1.66% 1.25 Total Operations/ Janitorial/ Maint 279,692 5.28% 4.35 505,013 14.11% 10.62 Fees & Commissions:

Credit Card Fees 16,290 0.31% 0.25 7,389 0.21% 0.16 Ticket Sales Commissions - 0.00% - - 0.00% - Total Fees & Commissions 16,290 0.31% 0.25 7,389 0.21% 0.16 Transportation 48,990 0.93% 0.76 - 0.00% - Marketing Expense 31,246 0.59% 0.49 127,009 3.55% 2.67 Guest Service Representatives 53,143 1.00% 0.83 51,769 1.45% 1.09 Other:

Advertising - 0.00% - - 0.00% - Bowl Committee Expenses - 0.00% - - 0.00% - Partner Payments & Guarantees 2,436,989 46.03% 37.86 2,500,000 69.83% 52.58 Partner Reimbursement - 0.00% - 270,003 7.54% 5.68 Total Other 2,436,989 46.03% 37.86 2,770,003 77.38% 58.26 Total Expenses 3,504,373$ 66.19% 54.44$ 4,114,406$ 114.93% 86.53$ Net Income (Loss) 1,789,940$ (534,504)$
Description I I I I
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Nlet College !Football Losses per Fiscal Year
$ 7.,000j,00()
$6.,000.,0001
$5.,000,000
$4,000,000
$3.,000,000 1
$2.,000,000 1
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Revenue v. Partner Payments: Pac-12 Championships
2015 2016 2017 2018 2019 2020
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City of Santa Clara
Agenda Report
1500 Warburton Avenue
Santa Clara, CA 95050
santaclaraca.gov
@SantaClaraCity
23-742 Agenda Date: 6/28/2023

REPORT TO AUDIT COMMITTEE

SUBJECT
Accept the Report on the Review of the 2019 College Football Playoff Game Revenues and Expenses Performed by the PUN Group and Refer the Report to the Stadium Authority Board for Acceptance

BACKGROUND
Per Section 909 of the City Charter, and SCCC Section 2.29.010, the City Auditor’s duties and responsibilities include conducting in-depth financial and performance audits, overseeing the City’s performance management system, auditing and approving all bills, invoices, payrolls, demands or charges against the City government before payment and, with the advice of the City Attorney, making reports to the City Council as to the regularity, legality and correctness of such claims, demands or charges. The City Auditor’s Office conducts its work under the auditing standards prescribed by the Institute of Internal Auditors (IIA). The IIA International Standards for the Professional Practice of Internal Auditing (Standards) requires the City Auditor to present the results of any audits and periodically report to the Audit Committee on the internal audit activity’s performance relative to the Audit Work Plan.

DISCUSSION
Effective July 2018, the Stadium Authority approved an Assignment and Assumption Agreement between the Bay Area Host Committee (BAHC) and the Forty Niners Stadium Management Company (ManCo) related to the 2019 College Football National Championship Game held at Levi’s Stadium. The Stadium Authority approved the agreement which included the following conditions:
· The BAHC will be responsible for all costs and expenses in connection with the game, including all actual incurred public safety costs and the actual costs of other Stadium Authority and City services for planning and preparing for the event. · The agreement does not include the $4 Non-NFL Event Ticket Surcharge which will be paid to the SCSA.
· The BAHC will provide to the SCSA an initial accounting of the event and an audited financial statement by a third party of the financial statements related to game. The SCSA also retains the right to perform subsequent audits at their discretion.

These conditions were met and the SCSA Board exercised its right for a further review of the financial statements. The SCSA then entered into an agreement with The PUN Group to perform certain agreed upon procedures related to the revenues and expenses of the game. The results of this analysis are presented in the attached report from The PUN Group.

ENVIRONMENTAL REVIEW
The action being considered does not constitute a “project” within the meaning of the California Environment Quality Act (“CEQA”) pursuant to CEQA Guidelines section 15378(a)(4) in that it is a City of Santa Clara Printed on 6/23/2023Page 1 of 2
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23-742 Agenda Date: 6/28/2023
fiscal activity that does not involve any commitment to any specific project which may result in a potential significant impact on the environment.

FISCAL IMPACT
Costs associated with the preparation of this report were included in the Stadium Authority’s FY 2022/23 Adopted Operating Budget.

COORDINATION
This report has been coordinated with the Stadium Authority Executive Director’s Office and Stadium Authority Counsel.

PUBLIC CONTACT
Public contact was made by posting the Council agenda on the City’s official-notice bulletin board outside City Hall Council Chambers. A complete agenda packet is available on the City’s website and in the City Clerk’s Office at least 72 hours prior to a Regular Meeting and 24 hours prior to a Special Meeting. A hard copy of any agenda report may be requested by contacting the City Clerk’s Office at (408) 615-2220, email [email protected] <mailto:[email protected]> or at the public information desk at any City of Santa Clara public library.

RECOMMENDATION
Accept the report from The PUN Group based on their review of the revenues and expenses related to the 2019 College Football National Championship Game and recommend that the report be forwarded for note and file to the full Council at a future joint Council and Authorities Concurrent and Stadium Authority Meeting.

Reviewed and Approved by: David Noce, Audit Manager

ATTACHMENTS

1. The PUN Group - Agreed Upon Procedures applied to the Revenues and Expenses of the 2019 College Football National Championship Game

2. The PUN Group - College Football AUP Slides
City of Santa Clara Printed on 6/23/2023Page 2 of 2
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Santa Clara Stadium Authority

Santa Clara, California

Independent Accountants’ Report on
Agreed-Upon Procedures Applied to the
Bay Area Host Committee’s Revenues and Expenses
Reported in the Financial Statements Related to
the January 7, 2019 College Football Playoff National
Championship

For the year ended March 31, 2019
THE II PUNGR_OUP
ACCO UNTA N T S & ADV ISO R.S
2121 North California Blvd., Suite 290
Walnut Creek, California 94596

INDEPENDENT ACCOUNTANTS’ REPORT ON

APPLYING AGREED-UPON PROCEDURES

To the Board of Directors and Management
of the Santa Clara Stadium Authority
Santa Clara, California

We have performed the procedures enumerated below to the accompanying Bay Area Host Committee’s Revenues and Expenses Reported in the Financial Statements Related to the January 7, 2019 College Football Playoff National Championship for the year ended March 31, 2019 (“Financial Statement”) held at the stadium owned by the Santa Clara Stadium Authority, California (the “Authority”). The Bay Area Host Committee’s (“Committee”) management is responsible for the Bay Area Host Committee’s Revenues and Expenses Reported in th e Financial Statements Related to the January 7, 2019 College Football Playoff National Championship.

The Authority has agreed to and acknowledged that the pr ocedures performed are appropriate to meet the intended purpose of meeting the requirements set forth in accordan ce with Section 4e of the Assignment and Assumption Agreement with the Forty Niners Stad ium Management Company, LLP. These procedures were performed solely to assist you in meeting the requirements. This report may not be suitable for any other purpose. The procedures performed may not address all the items of interest to a user of this report and may not meet the needs of all users of this report and, as such, users are responsible for determ ining whether the procedures performed are appropriate for their purposes.

The procedures and associated findings are as follows:

1. We selected 25 revenue transactions from the general ledger for the following categories: (20) ticket sales, (5) sponsorship and suite rentals and agreed the amount, customer, date, and description to the detailed deposit and posting to the bank statements:

a. Agreed bank deposit to the posting in the general ledger for each classification.

Finding: No exceptions were found as a result of our procedures.

b. Agreed daily ticket sales report for the months May 2018 to January 2019 for the Game, to the total ticket revenue posted in the general ledger.

Finding: No exceptions were found as a result of our procedures. Ticket sales began in June 2018 therefore May 2018 is not included in the scope.

c. Obtained Game Day reconciliation for all tickets sold from in-house hosted software and external ticket sellers and agreed to the daily ticket sales report for a sample of days.

Finding: No exceptions were found as a result of our procedures.

d. For sponsorship/suite rental, we obtained the list and selected five samples. We agreed the amount to the copy of the agreement and to the detail of the customer’s account for billed and paid amounts.

Finding: No exceptions were found as a result of our procedures. (Yllll
www.pungroup.cpa g
ORANGE COUNTY • SAN DIEGO • SACRAMENTO • WALNUT CREEK • LAS VEGAS • PHOENIX 000 To the Board of Directors and Management
of the Santa Clara Stadium Authority
Santa Clara, California

e. For the 25 revenue transactions, we recomputed th e revenue collected and allocated based on the terms and conditions of the agreem ents and support provided and compared to the amount posted in the general ledger.

Finding: No exceptions were found as a result of our procedures.

f. Agree revenue reconciliation report to the Game Day event attendance report.

Finding: We were unable to obtain the Game Day event attendance report.

2. For Game Day concession sales, we obtained the game day concession report for food and beverage sales.

a. Agreed the report to the invoice from the concessionaire. b. Recomputed the revenue share based on the terms of the agreement.

Finding: Except for the following, no exceptions were found as a result of our procedures:

The CFP National Championship Game Agreement, by a nd among American Athletic Conference; Atlantic Coast Conference; The Big Ten Conference, Inc.; The Big 12 Conference, Inc.; Conference USA; Mid- American Conference; Mountain West Conference; Pac-12 Conference; Southeastern Conference; Sun Belt Conference; University of Notre Dame du Lac; C FP Administration, LLC; and Forty Niners Stadium Management Company (“Agreement”) states in Att achment I titled “Concessions and Vending” that “ The Host Committee shall provide the CFP Group with Twenty Percent (20%) of the food and beverage commission from the Venue Concessionaire”.

A tailgate event, was held outside of Levi Stadiu m, utilizing the venue concessionaire Levy, and earned revenue of $599,671 at the tailgate event. According to the Agreement, “ The Host Committee shall provide the CFP Group with Twenty Percent (20%) of th e food and beverage commission from the Venue Concessionaire.” For the tailgate event, the Bay Area Ho st Committee’s revenue share payout was $218,942 (36.5%). Under the terms and cond itions, it would appear to entitle the CFP Group with a 20% commission payout of $43,788 ($218,942*20%). We could not ag ree this amount to documentation that payment had been made by the Bay Area Host Committee to the CFP Group for the tailgate event commission and we could not locate the expense in the Financial Statemen t. We were unable to de termine from the terms and conditions of the agreement whether offsite locations utilizing the same Venue Concessionaire should be included in the CFP Group commission calculations.

3. For other revenue categories, we agreed the amount s per the Committee’s Financial Statements to the Committee’s adjusted detailed trial balance.

Finding: Except for the following, no exceptions were found as a result of our procedures:

We found that $150,000 in sponsorship revenue was cla ssified as suite rental revenue in the Revenue amounts in the Financial Statements. The total revenue agreed to the adjusted trial balance and allocations were not changed as a result of this finding.

4. We selected 25 non-payroll expenses from the genera l ledger and agreed the amount, payee, date, classification, and description to the support.

Finding: Except for the following, no exceptions were found as a result of our procedures:

One (1) of the twenty-five (25) samples selected for t esting from the general ledger for expenses was for an in-kind expense recognized by journal entry in the am ount of $1,765,500. The support provided consisted of a listing of suite tickets exchanged for the value of these services. We were unable to obtain and agree the amount recognized in the financial statements as expe nse (and related revenue) to a signed agreement with the vendor(s) for these services and we were not able to agree the amount, payee, date, and description to other support.

To the Board of Directors and Management
of the Santa Clara Stadium Authority
Santa Clara, California

5. We agreed the payroll expense amount and support for the Game to the Committee’ s payroll summary, and selected 25 employee payroll expenses from the Committee’s payroll summary and performed the following:

a. Agreed amount paid to the timesheets for the sample of employees. b. Recomputed amount paid using approved rate of pay.
c. Agreed the recomputed amount paid to the amount charged for the Game.

Finding: Except for the following, no exceptions were found as a result of our procedures:

Two (2) of the twenty-five (25) samples selected for testing, did not contain supporting documentation as follows:
 A year end performance “Bonus” payment in the amount of $25,000 was paid to an employee of ManCo in July 2019 (after the Game) and was accrue d as an expense in the Financial Statement as of March 31, 2019. The support provided for the paym ent consisted of 1) an email exchange between the employee’s manager, the Chief Financial Offi cer and the Chief People Officer authorizing a performance-based bonus payment to the employee and 2) a copy of the pay stub which agreed to the amount in the email. Based on the documentation provided, we were unable to recompute the bonus based on performance metrics as described in the email authorizing payment.

 One payment made to an employee for “Overtime/Double-time Wages” in the amount of $1,390.66 and charged as an expense in the Financial Statement did not agree to the recomputed amount of $540.90, based on hours reported on the employee’s timecard and hourly rate of pay at the time. The difference of $849.75 could not be recalculated based on the support provided.

6. Obtain a list of any adjustments made to revenue or expenses under the terms of the contract. Obtain the supporting detail for the adjustment. Compare the adju stment made to the supporting documentation for the adjustments and agree amount and date.

Finding: No exceptions were found as a result of our procedures.

We were engaged by the Authority to perform this agreed-upon procedures engagement and conducted our engagement in accordance with attestation standards estab lished by the American Institute of Certified Public Accountants. We were not engaged to and did not conduct an audit or review engagement, the objective of which would be the expression of an opinion or conclusion, respectively, on the accompanying Revenues and Expenses Reported in the Financial Statements Related to the January 7, 2019 College Football Playoff National Championship.

Accordingly, we do not express such an opinion or conclusion. Had we pe rformed additional procedures, other matters might have come to our attention that would have been reported to you.

Attestation standards established by the Am erican Institute of Certified Public Accountants require that we request a written representation from management of the Committee stating that Revenues and Expenses Reported in the Financial Statements Related to the January 7, 2019 Co llege Football Playoff National Championship for the year ended March 31, 2019 to which we applie d procedures has been accurately measured or evaluated. We requested that management of the Committee provide such written represen tation but management of th e Committee refused to do so.

We are required to be independent of the Authority, and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements related to our agreed-upon procedures engagement.

To the Board of Directors and Management
of the Santa Clara Stadium Authority
Santa Clara, California

This report is intended solely for the information and use of the Board of Directors and management of the Authority and is not intended to be and should not be used by anyone other than those specified parties. However, this report is a matter of public record, and its distribution is not limited.

Walnut Creek, California
March 31, 2023
Santa Clara Stadium Authority
Bay Area Host Committee
Revenues and Expenses Reported in the Financial Statements Related to the January 7, 2019 College Football Playoff National Championship For the year ended March 31, 2019

3 STAITMIJ\ 1TOF ACIBTIIE S AND CHA .. ~GESIN'.'IET ASSETS BAY AREA HOST CO:\tUITIIE
OPER;\.TING REVIl\i"'UE
Sales revenue-
49ers rontrilmtion
facihanges of goods and sen~ces
Other inoome
OPER;\.TINGLU'ENSES
Program a-pemes
M=gement and general
-~T.\SSETS
W~thout donor 1estrictiom:

Beginning of year
End!ofyear
Ye-ar ended Mmrch .H 2019
TOTAL OPERUING ru:n:~u"E

TOTAL OPERUING EXPENSE
Cll-\NGES IN if.T .\SSEIS
See accompanying notes to fu!anciaJ statements
-4-
$
15,309,99)
4)7,,,:m
1,787,400
]81.,866
21,455,092
20,827,243
627,849
1,455,092
0 0
0 Santa Clara Stadium Authority
Notes to the Agreed Upon Procedures
For the Year Ended March 31, 2019

4 Note 1 – Purpose of Agreed Upon Procedures

The Bay Area Host Committee is a not-for-profit corpora tion founded to serve as the local organizing committee focused on bringing world class events to the Bay Area that drive economic v itality, civic pride and garner national and international media exposure. The Committee was crea ted initially to work with the College Football Playoff (“CFP”) to promote, organize and execute the 2019 College Football Playoff National Championship.

The Bay Area Host Committee financial statements which comprise the statement of financial position as of March 31, 2019 and the related statements of activities and changes in net assets, functional expenses and cash flows for the year then ended and related notes to the financial statements were audited by ot her auditors whose report was issued on July 31, 2019 (“Financial Statements”). The Ba y Area Host Committee management is responsible for the fair presentation of these financial statements in accord ance with accounting principles generally accepted in the United States of America.

These Agreed Upon Procedures were performed for the Sant a Clara Stadium Authority (“Authority”) solely on the Bay Area Host Committee’s Revenues and Expenses Reporte d in the Financial Statements Related to the January 7, 2019 College Football Playoff National Championship game held at the stadium owned by the Authority in order to meet the requirements set forth in accordance w ith Section 4e of the Assignment and Assumption Agreement with the Forty Niners Stadium Management Company, LLP.

Note 2 – Basis of Accounting

The revenue and expenses reported in the financial statements have been prep ared on the accrual basis of accounting, whereby revenue is recognized when earned and expense are recorded when incurred.

A MEMBER OF
Santa Clara Stadium Authority
Independent Accountants’ Report on
Agreed-Upon Procedures Applied to the
Bay Area Host Committee's Revenues and Expenses
Reported in the Financial Statements Related to the
January 7, 2019 College Football Playoff National Championship For the year ended March 31, 2019
June 28, 2023

A MEMBER OF
A\\\n\a\GLOBAL
OIRANGE COUNTY ■ SAIN DIEGO ■ BAY AREA ■ LAS VEGAS ■ PHOENIX wwvv.pungroup.com

A MEMBER OF
Agenda
About the Firm
Scope of Work
Procedures and Findings
Conclusion

A MEMBER OF
A\\\n\a\GLOBAL
wwvv.pungroup.com

A MEMBER OF
The Pun Group, LLP is a full service Certified Public Accounting Firm located in California, Nevada, and Arizona specializing in all industries, with special focus in Governmental and Not-for-Profit entities.

Our Partners Group has been providing auditing, accounting and advisory services to numerous governmental and not-for-profit entities throughout the United States since 1989.

With over 100 years of combined experience in the governmental industry, we have been a trusted business partner to our clients and have earned our reputation as one of the most respected and socially responsible accounting firms.

The Pun Group, LLP is an
independent member of Allinial
Global, an association of over
100 independent accounting
and consulting firms.

Based in North America, Allinial
Global offers international
support by connecting its
member firms to providers and
global networks of accounting
firms worldwide.

About the Firm

A MEMBER OF
A\\\n\a\GLOBAL
GLOBAL ™
An association of legally independen! firms
wwvv.pungroup.com

A MEMBER OF
Santa Clara Stadium Authority

SCOPE OF WORK

A MEMBER OF
A\\\n\a\GLOBAL
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• This agreed-upon procedures engagement was conducted in accordance with attestation standards established by the American Institute of Certified Public Accountants (AICPA). We were not engaged to and did not conduct an examination or review, the objective of which would be the expression of an opinion or conclusion, respectively, on internal controls and accordingly, we do not express such an opinion or conclusion. • We performed procedures agreed to by the Stadium Authority of Santa Clara (“Authority”) and the Pun Group, LLP (“Firm”), on the Bay Area Host Committee’s ("BAHC") Revenues and Expenses Reported in the Financial Statements Related to the January 7, 2019 College Football Playoff National Championship for the year ended March 31, 2019 (“Financial Statement”) held at the stadium owned by the Santa Clara Stadium Authority, California. • The Authority has agreed to and acknowledged that the procedures performed are appropriate to meet the requirements set forth in accordance with Section 4e of the Assignment and Assumption Agreement with the Forty Niners Stadium Management Company, LLP”. The sufficiency of these procedures is solely the responsibility of the Authority. We make no representation regarding the sufficiency of the procedures described either for the purpose for which this report has been requested nor whether they are suitable for any other purpose. • The BAHC is responsible for the Revenues and Expenses Reported in the Financial Statements Related to the January 7, 2019 College Football Playoff National Championship. • The procedures agreed to an the associated findings have been included in our report. • Had we performed additional procedures, other matters might have come to our attention that would have been reported to you.

Scope of Work

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Santa Clara Stadium Authority

PROCEDURES AND FINDINGS

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Procedure(s):

Procedure No. 1(a) – (f) Revenue Transactions

1. We selected 25 revenue transactions from the general ledger for the following categories: (20) ticket sales, (5) sponsorship and suite rentals and agreed the amount, customer, date, and description to the detailed deposit and posting to the bank statements and
a. agreed bank deposit to the posting in the general ledger for each classification, b. agreed daily ticket sales report for the months May 2018 to January 2019 for the Game, to the total ticket revenue posted in the general ledger.
c. Obtained Game Day reconciliation for all tickets sold from in-house hosted software and external ticket sellers and agreed to the daily ticket sales report for a sample of days. d. For sponsorship/suite rental, we obtained the list and selected five samples. We agreed the amount to the copy of the agreement and to the detail of the customer’s account for billed and paid amounts. e. For the 25 revenue transactions, we recomputed the revenue collected and allocated based on the terms and conditions of the agreements and support provided and compared to the amount posted in the general ledger. f. Agree revenue reconciliation report to the Game Day event attendance report.

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There was one finding as follows:

Procedure 1(f) - We were unable to obtain the Game Day event attendance report.

Findings:

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Procedure(s):

Procedure No. 2 – Game Day Concessions
For Game Day concession sales, we obtained the game d ay concession report for food and beverage sales. a. Agreed the report to the invoice from the concessionaire. b. Recomputed the revenue share based on the terms of the agreement.

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There was one finding as follows:

A tailgate event, was held outside of Levi Stadium, utili zing the venue concessionaire Levy, and earned revenue of $599,671 at the tailgate event. According to the Agreement, “The Host Committee shall provide the CFP Group with Twenty Percent (20%) of the food and beverage commission from the Venue Concessionaire.” For the tailgate event, the Bay Area Host Committee’s revenue share payout was $218,942 (36.5%). Under the terms and conditions, it would appear to entitle the CFP Group with a 20% commission payout of $43,788 ($218,942*20%). We could not agree this amount to documentation that payment had been made by the Bay Area Host Committee to the CFP Group for the tailgate event commission and we could not locate the expense in the Financial Statement. We were unable to determine from the terms and conditions of the agreement whether offsite locations utilizing the same Venue Concessionaire should be included in the CFP Group commission calculations.

Findings:

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Procedure:

Procedure No. 3 – Other Revenue Categories
For other revenue categories, we agreed the amount s per the Committee’s Financial Statements to the Committee’s adjusted detailed trial balance.

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Except for the following, no exceptions were found as a result of our procedures:

We found that $150,000 in sponsorship revenue was classified as suite rental revenue in the Revenue amounts in the Financial Statements. The total revenue agreed to the adjusted trial balance and allocations were not changed as a result of this finding.

Findings:

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Procedure:

Procedure No. 4 – Applied to Non-Payroll Expenses
We selected 25 non-payroll expenses from the general ledger and agreed the amount, payee, date, classification, and description to the support.

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Except for the following, no exceptions were found as a result of our procedures:

One (1) of the twenty-five (25) samples selected for testing from the general ledger for expenses was for an in- kind expense recognized by journal entry in the amount of $1,765,500. The support provided consisted of a listing of suite tickets exchanged for the value of these ser vices. We were unable to obtain and agree the amount recognized in the financial statements as expense (and r elated revenue) to a signed agreement with the vendor(s) for these services and we were not able to agree the amount, payee, date, and description to other support.

Findings:

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Procedure:

Procedure No. 5 – Payroll and Related Expenses
We agreed the payroll expense amount and support for the Game to the Committee’s payroll summary, and selected 25 employee payroll expenses from the Commi ttee’s payroll summary and performed the following:
a. Agreed amount paid to the timesh eets for the sample of employees. b. Recomputed amount paid using approved rate of pay.
c. Agreed the recomputed amount paid to the amount charged for the Game.

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Findings:

Two (2) of the twenty-five (25) samples selected for testing, did not contain supporting documentation as follows:
• A year end performance “Bonus” payment in the amount of $25,000 was paid to an employee of ManCo in July 2019 (after the Game) and was accrued as an expense in the Financial Statement as of March 31, 2019. The support provided for the payment consisted of 1) an email exchange between the employee’s manager, the Chief Financial Officer and the Chief People Officer authorizing a performance-based bonus payment to the employee and 2) a copy of the pay stub which agreed to the amount in the email. Based on the documentation provided, we were unable to recompute the bonus based on performance metrics as described in the email authorizing payment.
• One payment made to an employee for “Overtime/Double-time Wages” in the amount of $1,390.66 and charged as an expense in the Financial Statement did not agree to the recomputed amount of $540.90, based on hours reported on the employee’s timecard and hourly rate of pay at the time. The difference of $849.75 could not be recalculated based on the support provided.

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Procedure:

Procedure No. 6 – Adjustments to Revenues and Expenses
Obtain a list of any adjustments made to revenue or expenses under the terms of the contract. Obtain the supporting detail for the adjustment. Compare the adjustment made to the supporting documentation for the adjustments and agree amount and date.

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No exceptions were found as a result of our procedures
Findings:

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Representations – Engaging Party and Responsible Party

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Attestation standards established by the American Institute of Certified Public Accountants require that we request a written representation from management responsible for t he subject matter of the attestation engagement stating that Revenues and Expenses Reported in the Financial Statements Related to the January 7, 2019 College Football Playoff National Championship for the year ended March 31, 2019 to which we applied procedures has been accurately measured or evaluated.

The Authority has acknowledged in its representations to us that:
• BAHC is the responsible party for the subject matter in this Agreed-Upon procedures. • BAHC agreed and has provided an accounting of the Game to the Authority’s Executive Director in an “Initial Accounting” consisting of a profit and loss statement of the Game and possession of all hardcopy and softcopy supporting documentation and such additional information as may be necessary to confirm the information set forth in such profit and loss statement as outlined in accordance with Section 4e of the Assignment and Assumption Agreement.
• The Pun Group has requested written representations from management of the BAHC in connection with the Revenues and Expenses for the Game as reported in the Financial Statements, and we were unable to obtain that representation in accordance with professional standards. Such limitation has been disclosed in our report. • The supporting records are still suitable and appropriate for the intended purpose of the engagement.

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Santa Clara Stadium Authority

CONCLUSION

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Vanessa I. Burke, CPA, CPFO
Engagement Partner
[email protected]
(916) 230-7068
Kenneth H. Pun, CPA, CGMA
Managing Partner
[email protected]
(949) 777-8801
2121 North California Boulevard
Suite 290
Walnut Creek, CA 94596
“It is our commitment to only practice with
the highest professional ethics and
standards. We believe we owe that to the
profession, our clients, and ourselves.”
Contact Information

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