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