9/3/2024 Item 2
Santa Clara Stadium
Authority
Action on a Response to the Santa Clara
County Civil Grand Jury Report Entitled
"Outplayed: Measure , the City or santa clara,
and the San Francisco 49ers"
SCSA September 3 & 4, 2024, Item #2
SANTA CLARA STADIUM AUTHORIT
1 Proposed Presentation, Public Comment,
Deliberation, and Council Action Process
1. Staff Introduction
2. Council Questions (on the process)
3. Public Comment
4. Staff Presentation and Council Deliberation on Each Finding and Recommendation (one by one)
5. Public Comment
6. Council Action
2 2
POST MEETING MATERIAL
1 9/3/2024 Item 2
Civil Grand Jury Report
• On June 13, 2024, the Santa Clara County Civil Grand Jury published a report entitled "Outplayed: Measure J, the City of Santa Clara, and the San Francisco 49ers" which includes various findings and recommendations. • On July 16, 2024, the Civil Grand Jury's findings and recommendations were presented to the City Council/Stadium Authority Board. No formal Council/Board action was taken; however, it was decided that staff would develop responses based on the Council/Board's general discussion. • Penal Code Section 933(c) requires that a governing body of the particular public agency or department that has been the subject of a Civil Grand Jury report to respond within 90 days on the specified findings and recommendations pertaining to matters under the control of the governing body.
SCSA 3
SANTA CLARA STADIUM ALINDRITE
3 Legally Required Responses for Findings
• Penal Code Section 933.05(a) requires the responding entity to indicate one of the following for each Civil Grand Jury finding:
1. The respondent agrees with the finding.
2. The respondent disagrees wholly or partially with the finding, in which case the response will specify the portion of the finding that is disputed and will include an explanation of the reasons therefor.
SCSA 4
SANTA CLARA STADIUM AUTHORIFE
4 2
9/3/2024 Item 2
Legally Required Responses for Recommendations
• Penal Code Section 933.05(b) requires the responding entity to report one of the following actions for each Civil Grand Jury recommendation:
1. The recommendation has been implemented, with a summary regarding the implemented action.
2. The recommendation has not yet been implemented, but will be implemented in the future, with a timeframe for implementation.
SCSA 5
SANTA CLARA STACIUM ASTHARITY
5 Legally Required Responses for Recommendations
3. The recommendation requires further analysis, with an explanation and the scope and parameters of an analysis or study, and a timeframe for the matter to be prepared for discussion by the officer or head of the agency or department being investigated or reviewed, including the governing body of the public agency when applicable. This timeframe cannot exceed six months from the date of publication of the grand jury report.
4. The recommendation will not be implemented because it is not warranted or is not reasonable, with an explanation therefor.
SCSA
SANTA CLARA STADIUM AUTHORITY
3 9/3/2024 Item 2
City/Stadium Authority Response
• Draft responses consistent with the Council/Board's July 16, 2024 discussion and Penal Code Sections 933.05(a) and 933.05(b) are presented for the City Council and Stadium Authority Board's consideration and approval. • The Civil Grand Jury report included a total of 20 findings and 13 recommendations, of which the City/Stadium Authority has been directed to respond to all of the findings and 13 recommendations.
• It should be noted that the Civil Grand Jury identified Recommendations 7a and 7b, which do not exist, for response. Recommendation 7 does exist and appears to be relevant for Stadium Authority response. Additionally, 3 of the recommendations identified for City/Stadium Authority response provide no recommendation (# 4, 5, and 11).
• The City and Stadium Authority's responses on the Civil Grand Jury report findings and recommendations are due by September 11, 2024.
SCSA
SANTA CLARA STACIUM ARTHORITY
7 Proposed
OUTPLAYED
Measure J. rhe City of Santa Clara, and the
San Francisco 49ers
Responses for Civil
Grand Jury
Findings
2023-24 Bente Clare Couary
Civil Grand Jury
A 11 2024
SCSA
SANTA CLARA STADLUM AUTHORITY
8 4
9/3/2024 Item 2
OUTPLAYED: Finding 1: From the beginning, the City
Meastire J. the City of Santa Clara, and the
San Francisco 49ers was impatient and overmatched in its negotiation posture with the 49ers to the
long-term detriment of the City/Stadium
Authority.
2023-04 Seats Clers County
Civil Grand Jury
SCSA 9
SANTA CLARA STADIUM AUTHURITY
9 Draft Response to Finding 1
The City/Stadium Authority disagrees with this finding.
Both the Forty-Niners and the City/Stadium Authority engaged highly qualified professionals to assist with negotiations for the development and operations of the Stadium. One primary objective of the City/Stadium Authority in this was to minimize the contribution of public funds and to protect the City's general fund from liability to the maximum extent possible. This objective was achieved, as noted in the Civil Grand Jury's Finding 3. Also achieved was the inclusion of contract terms that entitle the City/Stadium Authority to share in various income streams from both NFL and Non-NFL events held at the Stadium. Clearly tradeoffs were made in these negotiations. At this point in time, however, debating who "won" these negotiations almost 15 years ago does not seem like a constructive exercise. The City prefers to continue to work with the 49ers to interpret and apply contract obligations fairly, and to operate the Stadium in a manner that is mutually beneficial, all in a manner that advances and protects the City and Stadium Authority's legitimate public interests, and the interests of Santa Clara residents. The terms of the recent settlement agreement with the 49ers are an example of how this can be done effectively, with substantial additional monies now secured for the benefit of the City's General Fund well beyond the terms of the original agreements.
SCSA 10
SANTA CLARA STADTIM AUTHORITY
10 5
9/3/2024 Item 2
Draft Response to Finding 1 Cont.
It should also be noted that by comparison to a number of other Stadium deals, negotiated at or around the time of Santa Clara's stadium deal and since, a substantially greater contribution of public funds was involved. For example, in April 2018 Clark County sold $645 million in bonds to go toward the $750 million total public contribution provided to finance Allegiant Stadium, a $2 billion total project cost, in Las Vegas, with the balance accounted for in room tax revenue before the bond sale. Because of a shortfall in room tax revenue, Clark County ended up needing to withdraw $11.55 million from a debt reserve fund to make its December 2020 scheduled $16.06 million bond payment.
In 2017, Little Caesar's Area (Detroit) opened using $324 million in public funding for a $863 million total project cost.
In 2020, Globe Life Field (Arlington, Texas) opened using $500 million in public funding for a $1.2 billion total project cost.
There are at least a dozen other publicly funded deals with similar public subsidies.
SCSA 11
SANTA CLARA STADIUM AUTHORIY
11 OUTPLAYED Finding 2: The City has not studied the
Measure J. the City of Santa Clara. and the
actual economic impact of the Stadium.
San Francisco 49ers
The 49ers have produced their own
studies, which they use to tout long-term
unverified benefits and frame all
discussions surrounding the success of the
2025-34 Santa Clan Comity Stadium.
Civil Grand Jucy
Not 2038
SCSA 12
SANTA CLARA STADIUM AUTHURLY
12 6
9/3/2024 Item 2
Draft Response to Finding 2
The City/Stadium Authority agrees that it has not conducted a comprehensive study of the full (direct and indirect) economic impact of the Stadium.
The City/Stadium Authority does have detailed information on "direct" revenues generated by Stadium operations to the City and the Stadium Authority. This information is presented to the Stadium Authority Board quarterly in the form of Stadium Authority Quarterly Financial Reports. These documents outline revenues and expenses from stadium events. Specific to revenues, the Quarterly Financial Reports outline the following revenues:
• Stadium Revenues
Rent
NFL and Non-NFL Ticket Surcharge
Stadium Builder License (SBL) Proceeds
Non-NFL Event Net Revenue
Naming Rights
STR sponsorship revenue
Interest
SCSA 13
SANTA CLARA STADIUN AISTHURIFY
13 Draft Response to Finding 2 Cont.
• General Fund
Senior and Youth Fees
Base rent
Performance rent
Sales tax
All such reports have been provided to the Grand Jury and are available to the public on the Stadium Authority's website.
To-date, the City/Stadium Authority has not invested public dollars to conduct an economic impact study that examines revenues and expenses outside of the comprehensive study of the actual economic impact of the Stadium. While there are other "indirect" economic impacts that benefit the City (e.g., hotel tax), this information has not historically been tracked and reported as "Stadium related" because it is difficult to ascribe to Stadium Authority operations based on the data the City and Stadium Authority receive.
Regarding the most recent economic impact study conducted and released by the Forty-Niners, the City/Stadium Authority has no comment as we were not consulted on any aspect of such study.
SCSA 14
SANTA CLARE STACHM ALTHORITY
14 9/3/2024 Item 2
OUTPLAYED: Finding 3: Measure J's promise to protect
Measure J, the City of Santa Clara, and the
Sau Francisco 49ers the City's General Fund has been realized.
The funding structure from the Stadium
Lease has successfully allowed the
Stadium Authority to pay off Stadium
construction loans and fund required
Waterfall reserves faster than originally
20259 3anta Slate County
Caril Graod Jury
planned.
SCSA • 15
SANTA CLARA STADIUM AUTHORITY
15 Draft Response to Finding 3
The City/Stadium Authority agrees with this finding.
SCSA 16
SANTA CLARA STADIUM AUTHORITY
16 8
9/3/2024 Item 2
OUTPLAYED: Finding 4: The City/Stadium Authority
Measure J. the City of Santa Clara, and the
San Fraucisco 49ers agreed to use ManCo, an affiliate of the 49ers, with an inherent conflict of interest to
handle the Stadium Authority's financial
interests in non-NFL events.
Civil Grand Tury
SCSA 17
SANTA CLARA STADIUM AUTHORITY
17 Draft Response to Finding 4
The City/Stadium Authority agrees with this finding that there are inherent conflicts of interest; however also notes that there are material advantages and efficiencies to having one entity manage the Stadium for both NFL and non-NFL events, and that this arrangement is not atypical for similar venues throughout the country. Of course, care must be taken to provide proper oversight and accountability where such an arrangement exists, and City/Stadium authority is committed to provide such oversight, with critical self-assessment and improvements where needed, going forward.
SCSA 18
SANTA CLARA STADIUM AUTHORITY
18 9/3/2024 Item 2
OUTPLAYED Finding 5: The City/Stadium Authority
Measure J. the Ciry of Santa Clara, and the
Sau Francisco 49ers failed to ensure that the Management Agreement included a fair termination
clause.
2023-24 Santa Clara Conur
Civil Grand Tary
SCSA 19
SANTA CLARA STADIUM AUTHORTY
19 Draft Response to Finding 5
The City/Stadium Authority is unable to definitively agree or disagree with this finding due to a lack of any clear definition of what would constitute a "fair termination clause." Further, as pointed out in the City's response to Finding 1, above, debating the "fairness" of contract terms negotiated years ago does not seem like a useful exercise today.
Current professional staff and outside legal counsel were not involved in the negotiations of such provisions. However, as is typical for such negotiations, one would expect that the professional staff involved at the time negotiated the terms for the Management Agreement termination language with substantial interest and effort, with typical tradeoffs between the parties occurring based on competing interests and objectives, before agreement was reached on final language and terms.
SCSA 20
SANTA CLARA STADIUM ALTHORITY
20 10
9/3/2024 Item 2
OUTPLAYED Finding 6a: The City/Stadium Authority
Measure J, the City of Santa Clara, and the
Sau Francisco 49ers failed to ensure the Management
Agreement provided the Stadium Authority
with full access to financial records.
20234 saala Clara Count
Cail Gracid Jury
SCSA 21
SANTA CLARA STADIUM AUTHORITY
21 Draft Response to Finding 6a
The City/Stadium Authority partially disagrees with this finding. The Management Agreement does contain substantial terms for access to Stadium financial records. The challenge has been with historic disagreements over the extent and implementation of such access.
Using existing contract language, such access has substantially improved, particularly with the advent of the new financial Management System implemented in 2022.
SCSA 22
SANTA CLARA STABIM ASTHDRITY
22 11
9/3/2024 Item 2
OUTPLAYED: Finding 6b: ManCo's financial
Measure J. the City of Santa Clara, and the
San Francisco 49ers transparency with the Stadium Authority has improved with the implementation in
2022 of a new financial management
system.
2023-24 Santa Clera County
SCSA
23 SANTA CLARA STADIUM AUTORPITY
23 Draft Response to Finding 6b
The City/Stadium Authority agrees with this finding.
SCSA 24
SANTA CLARA STADIUM AUTHORITY
24 12
9/3/2024 Item 2
OUTPLAYED: Finding 6c: Transaction-level testing
Measure J. the City of Santa Clara, and the
San Francisco 49ers generally supports ManCo's reporting of financial results for non-NFL events.
2023-24 Senta Clara County
Civil Grend Jury
Am 11, 202
SCSA 25
SANTA CLARA STACIUM KUTHORITY
25 Draft Response to Finding 6c
The City/Stadium Authority agrees with this finding.
SCSA
26 SANTA CLARA STADIUM AUTHORITY
26 13
9/3/2024 Item 2
Finding 7a: The City/Stadium Authority
OUTPLAYED failed to ensure that the original
Measure J. the City of Santa Clara, and the Management Agreement and the 2022 San Francisco 49ers
settlement agreement contained sufficient
language requiring specific items or
methods and performance metrics to
prioritize Stadium Authority revenue
generation. This has resulted in a failure to
2023-24 Sante Cluca County
Ciril Grand Zury
hold ManCo accountable for the success of
non-NFL events.
SCSA
SANTA CLARA STADIUM ALTHORITY
27 Draft Response to Finding 7a
The City/Stadium Authority partially disagrees with this finding.
The March 28, 2012 Management Agreement includes Standards of Care and Duties terms in regard to ManCo's obligations to exercise prudent, commercially reasonable good faith efforts to maximize Stadium Authority's revenues (sections 2.9 and 2.10). The Stadium Authority agrees that the Management Agreement does not otherwise include specific methods or performance metrics in regard to generating those Stadium Authority's revenues. Further, the Stadium Authority made multiple efforts from and after 2017 to try to implement more specific methods and metrics in the Marketing Plans. The parties could not agree to the level of specificity, with ManCo ultimately relying on the operative Management Agreement terms in place. The 2022 Settlement Agreement further warrants and confirms ManCo's duty of care obligations and the prioritization to maximize Stadium Authority's revenues. By the time of the 2022 Settlement Agreement, the agreements for earlier money-losing events (like the College Football games) had ended or were ending, and ManCo prioritized booking more profitable events that Stadium Authority has held on and after 2023.
SCSA 28
SANTA CLARA STADIM AUTHORITY
28 14
9/3/2024 Item 2
OUTPLAYED Finding 7b: The Stadium Authority failed to
Measure J. the City of Santa Clara. and the
Sau Francisco 49ers use the prescribed Marketing Correction Plan per Article 3.3.1 of the Management
Agreement process to hold ManCo
accountable for unsuccessful non-NFL
event bookings.
2021-24 Santa Clara County
Caril Grand Jury
Aw 1X200
SCSA 29
SANTA CLAFE STADIUM AUTHORITE
29 Draft Response to Finding 7b
The City/Stadium Authority disagrees with this finding.
On December 13, 2018, Stadium Authority served ManCo a Notice to provide a Management Correction Plan, pursuant to Article 3.3.1 of the Management Agreement.
That Correction Plan Notice concerned ManCo's communications and reports to Stadium Authority regarding non-NFL Event bookings, and ManCo's procurement practices.
ManCo's non-substantive response to that Correction Plan Notice and ManCo's booking of money losing non-NFL Events became one of the bases of Stadium Authority's actions to terminate ManCo as the Stadium manager in 2019 and 2020, and claims in Stadium Authority's February 2022 Amended Cross-Complaint for Breach of Contract. The parties settled those claims with their August 31, 2022 Settlement Agreement, which included Stadium Manager's express warranties regarding booking non-NFL Events and maximizing Stadium revenues [See Settlement Agreement Section 8(c)].
SCSA 30
SANTA CLAPA STADIUM AUTHORITY
30 15
9/3/2024 Item 2
Draft Response to Finding 7b Cont.
In addition to the December 2018 Notice of Correction Plan, Stadium Authority has made multiple efforts to hold ManCo accountable for unsuccessful non-NFL event bookings throughout the years, as exemplified by public discussions of the 2018, 2019, and 2020 Marketing Plan, and Stadium Authority's hiring an independent consultant to review the 2019 and 2020 Marketing Plans. These efforts will continue.
SCSA 31
SANTA CLARA STADIUM AUTHORITY
31 OUTPLAYED: Finding 8a: There is no evidence showing
Meastire J. the City of Santa Clara. and the
San Francisco 49ers that ManCo is negotiating to maximize Stadium Authority profits for non-NFL
events.
2023-74 Sent Clara C'aunt
Civil Grand Jury
SCSA 32
SANTA CLARA STADIUM AUTHORITY
32 9/3/2024 Item 2
Draft Response to Finding 8a
The City/Stadium Authority disagrees with this finding.
The Management Agreement provides for a Stadium Marketing and Booking Fee that is performance based. This structure is purposely designed to incentivize ManCo to maximize Stadium Authority protits. As a Forty-Niner entity affiliate, ManCo is also inherently motived to ensure that the Stadium Authority is successful so that adequate funds will be available to contribute towards needed capital improvements to the venue shared with the Forty-Niners, and that Stadium Authority monies will be available, as necessary, to timely pay the Forty-Niners any entitlement they may have to reimbursement of public safety costs above the public safety cost threshold.
Also, it should be noted that Stadium Authority net revenues have increased substantially in recent years. Accordingly, City/Stadium Authority believes it is inaccurate to say that there is "no evidence" responsibilities and warrants ongoing and enhanced oversight by Stadium Authority staff and Board.
SCSA 33
SANTA CLARA STADHIM ALTHDRITY
Finding 8b: The Stadium Authority has
OUTPLAYED:
failed to ensure the Management
Measure J. the City of Santa Clara, and the
San Francisco 49ers
Agreement requires ManCo to incentivize
its staff to prioritize the Stadium Authority's
success. There is no evidence that there
are employee sales goals, metrics, or
consequences related to unprofitable non-
2023-24 Santa Clara County
Civil Grand Joy NFL events.
SCSA 34
SANTA CLARA STADIUM AUTHORITY
34 17
9/3/2024 Item 2
Draft Response to Finding 8b
The City/Stadium Authority disagrees with this finding.
The City/Stadium Authority contract and relationship is with ManCo, not its employees. It would not be typical, or we believe appropriate, for such a contract to include or require terms for how ManCo incentivizes or compensates its employees.
The contract based (and other) financial incentives for ManCo to maximize profits for Non-NFL events is discussed in the City/Stadium Authority response to Finding 8.a, above.
SCSA 35
SANTA CLARA STADIUM ANTHURITY
35 OUTPLAYED: Finding 9a: StadCo/ManCo interprets the
Measure J. the City of Santa Clara, and the
San Francisco 49ers Stadium Lease to require non-NFL ticket surcharges be applied to tickets associated
with Rental and Trophy Luxury Suites, but
failed to remit all corresponding surcharges
to the Stadium Authority.
2023-24 Samb Clare County
Cisil Grand Jury
SCSA 36
SANTA CLARA STAIN AUTHO
36 9/3/2024 Item 2
Draft Response to Finding 9a
The City/Stadium Authority agrees that this is the correct interpretation of the application of the ticket surcharge; however, we disagree in part that StadCo/ManCo failed to remit all corresponding surcharges to the Stadium Authority.
The Stadium Authority staff was able to confirm that surcharges were applied to tickets associated with Rental and Trophy Luxury Suites. This conformation was possible for the last two fiscal years through the Financial Management System; however, we are not able to verify payment of such amounts for prior years before the Financial Management System was implemented.
The Stadium Authority makes no assessment of ManCo's interpretation of the Stadium Lease.
SCSA 37
SANTA CLARA STADIUM ALTHORITY
37 OUTPLAYED: Finding 9b: StadCo/ManCo interprets the
Measure J. the Ciry of Santa Clara, and the
Stadium Lease to not require non-NFL
San Francisco 49ers
ticket surcharges to be applied to Seating
Bowl complimentary tickets and Owners
Club Luxury Suite tickets.
2023-24 Santa Clers County
Civil Grand Fury
SCSA 38
SANTA CLARA STADIUM AUTHORITY
38 19
9/3/2024 Item 2
Draft Response to Finding 9b
The City/Stadium Authority agrees that this is how StadCo/ManCo interprets the existing agreements with respect to the application of the non-NFL event ticket surcharge. This matter is currently under review with Stadium Authority legal counsel to confirm, in all respects, whether or not this is the correct interpretation.
SCSA 39
SANTA CLARA STADIUM AUTHORITY
39 OUTPLAYED: Finding 9c: Suite ticket revenue submitted Measure J. the City of Santa Clara, and the
San Francisco 49ers to the Stadium Authority does not account for suite ticket revenue for certain suite
attendees.
2025-24 Santa Clara County
Cail Grand Jury
SCSA 40
SANTA CLARA STADIUM AUTHORITY
40 20
9/3/2024 Item 2
Draft Response to Finding 9c
The Stadium Authority partially disagrees with this finding.
As noted in Finding 9a, Stadium Authority staff was able to confirm that surcharges were applied to tickets associated with Rental and Trophy Luxury Suites. This conformation was possible for the last two fiscal years through the Financial Management System; however, we are not able to verify payment of such amounts for prior years betore the Financial Management System was implemented.
SCSA
SANTA CLARA STADIUM AUTHORITY
41 OUTPLAYED Finding 10a: Most revenue from non-NFL
Measure J. the City of Santa Clara, and the
Sau Francisco 49ers events goes to the promoter, which is typical. StadCo can make money on luxury
suites regardless of the event's profitability
for the Stadium Authority.
2023-24 Sants Clara County
Civil Grand Jury
Ama 13, 020
SCSA 42
SANTA CLARA STADIUN AUTHORITY
42 9/3/2024 Item 2
Draft Response to Finding 10a
The City/Stadium Authority generally agrees with this finding in that event promoters and performers generally receive most non-NFL event revenues, and that StadCo revenues from luxury suites are not contingent on the profitability of the event to the Stadium Authority.
SCSA 43
SANTA CLARA STADIUM AUTHORITY
43 OUTPLAYED: Finding 10b: The Stadium Authority is
Measure J. the City of Santa Clara, and the
San Francisco 49ers unaware of the market revenue potential for non-NFL events at the Stadium. The
Stadium Authority does not know what net
revenues should be expected for non- NFL,
ticketed and non-ticketed, events.
2023-34 Saute Clara Cousty
Citil Grand Jury
SCSA 44
SANTA CLARA STADIUM AUTHORITY
44 9/3/2024 Item 2
Draft Response to Finding 10b
The City/Stadium Authority partially disagrees with this finding. The Stadium Authority released a Request for Proposals and has awarded a contract to an independent consultant to study the market potential trends and financial performance for stadium events and concerts at publicly owned venues.
The City/Stadium Authority will attempt to obtain market-based revenue information. It is important to note that information for public facilities will be easier to attain, and while we solicit information from privately-owned stadiums, it will be up to the discretion of those facilities to release such information.
Further, it is important to note that the City/Stadium authority now has 10 years of experience with operations at the Stadium and has accumulated substantial knowledge over this time period on the large stadium market generally, and the market revenue potential for Levi's Stadium. That being said, this is an important issue, and City/Stadium Authority is committed to developing a deeper understanding of such matters, augmented by the input of industry professionals.
SCSA
SANTA CLARA STADIUM ALTHORITY
45 Finding 11: Per the Stadium Lease, the
OUTPLAYED:
Stadium Authority failed to negotiate
Measure J, the City of Santa Clara, and the
San Francisco 49ers pertinent details about buffet costs in the contract, such as parameters on cost
thresholds and alcohol. The Stadium
Authority accepted responsibility for buffet
costs but failed to follow up when the
2023•4 Santa Clate County
expense was omitted from ManCo's
Civil Grand Jory
budgets.
SCSA 46
SANTA CLARA STADIUM AUTHORITY"
46 9/3/2024 Item 2
Draft Response to Finding 11
The City/Stadium Authority partially disagrees with this finding. Although the buffet costs language in the Stadium Lease is not extensive the understanding of the City/Stadium Authority staff at the time of negotiations for the original Stadium agreements was that buffet costs would be covered by Facility Rent paid by StadCo to the Stadium Authority. In hindsight, particularly since current City/Stadium Authority staff was not involved, it would not be fair, or useful, to now characterize this as a failure in City/Stadium Authority negotiations or "follow-up." It should be noted that any contract term ambiguity on buffet costs was ddressed under the terms of the May 2024 Settlement Agreement with revisions o the Stadium leases that now impose clear limits on buffet cost reimbursement and add provisions for Stadium Authority audits of such costs.
SCSA 47
SANTA CLARA STADIUM AL THORITY
47 OUTPLAYED: Finding 12: A Multi-Use Community
Measure J. the City of Santa Clara, and the Facility at the Stadium was one of Measure Sau Francisco 49ers
J's original promises and was memorialized
in the Stadium Lease. The current
designated space for the Community Room
at the Stadium is not easily accessible nor
is it pragmatic for most civic events.
2023-24 Santa Clara Coupry
Cant Grand hity
SCSA 48
SANTA CLARA STATUEAU THORITT
48 24
9/3/2024 Item 2
Draft Response to Finding 12
The City/Stadium Authority agrees with this finding.
SCSA 49
SANTA CLARA STADIUM RETHORITY
49 OUTPLAYED: Finding 13: The FIFA World Cup
Measure J. the Ciry of Santa Clara, and the
commitments for the City and the Stadium
San Francisco 49ers
Authority were made without consultation
with the City/Stadium Authority.
2023-24 Sauta Clara Courty
Civil Grand Jury
SCSA 50
BANTA CLARA STADIUM AUTHORITY
50 9/3/2024 Item 2
Draft Response to Finding 13
The City/Stadium Authority agrees with this finding. Current staff were not involved at the time; however, the Stadium Authority does not have a record of substantive communications between staff and StadCo/ManCo regarding terms for the FIFA World Cup event.
SCSA
51 SANTA CLARA STADIUM AUTHORITY
51 OUTPLAYED:
Proposed Responses
Measure J. the City of Santa Clara, and the
San Francisco 49ers
to Civil Grand Jury
Recommendations
2023-24 Santa Clara County
SCSA 52
SANTA CLARA STADIUM AL TAMRITY
52 26
9/3/2024 Item 2
Recommendation 1: Given the long-term
OUTPLAYED
Measure J. te City of Santa Clara, and the nature of the various agreements, the San Francisco 49ers
49ers' sophistication, and the history of
past disputes, the City/Stadium Authority
should engage advisors with specialized
knowledge to determine options to level the
playing field.
2023-24 Santa Clera Comary
SCSA 53
SANTA CLARA STADIUM AUTHORITY
53 Draft Response to Recommendation 1
The recommendation has been implemented.
The Stadium Authority has and will continue to hire consultants with specialized expertise including the following areas: legal, marketing, audit and financials, systems implementation, and security.
SCSA 54
SANTA CLARA STADIUM AUTHORITY
54 9/3/2024 Item 2
OUTPLAYED: Recommendation 2: The City should
Measure J. the City of Santa Clara, and the
San Francisco 49ers commission its own report to determine the Stadium's actual economic impact over the
last decade. This recommendation should
be implemented by July 1, 2025.
2023.34 Sants Class County
Civil Grand Jury
SCSA
SANTA CLARA STADILIN AUTHORITY
55 Draft Response to Recommendation 2
The recommendation will not be implemented because it is not warranted or reasonable.
The recommendation will not be implemented because it would be extremely difficult to effectively implement and would not be particularly useful going forward. There are clearly "indirect" economic impacts from Stadium operations that benefit the City of Santa Clara and the greater region, (likely increases in City transit occupancy taxes and sales taxes being the most obvious).
However, looking at such information in hindsight and determining the amount of such revenues that should be ascribed to Stadium Authority operations would be extremely difficult. (See also, City/Stadium Authority response to Finding 2, above) Instead, City/Stadium Authority recommends that such a study be conducted after the major events scheduled to occur at the Stadium in 2026 (Super Bowl LX and FIFA World Cup). This will give City/Stadium Authority, the opportunity to develop an appropriate methodology for measuring economic impact, and to develop and implement revenue tracking mechanisms, as needed and practically available, to facilitate an accurate measurement of "indirect" Stadium operations related revenues. This should be done in consultation with qualified experts and the Forty-Niners entities.
SCSA
56 SANTA CLARA STADIUM AUTHORITY
56 28
9/3/2024 Item 2
Recommendation 3: The May 2024 settlement
agreement gives the Board/City Council new
flexibility to divert Excess Revenue from the
OUTPLAYED
Measure J, the Ciry of Santa Clara, and the Stadium Authority to the City's General Fund.
San Francisco 49ers
When diverting Excess Revenue, the Board/City
Council should be mindful of the long-term
financial health of the Stadium Authority and
request the Treasurer to produce a long-term
plan for funding all required Stadium reserves,
2023-24 Santa Clara County
including reserves for capital improvements. This
Cisil Grand Jury
recommendation should be implemented by
October 31, 2024.
SCSA
SANTA CLARA STADIUM AUTHORITY
57 Draft Response to Recommendation 3
The City Council/Stadium Authority Board agrees with this recommendation, and it will be implemented.
The Treasurer plans will provide a report to the Stadium Authority Board showing a current projection of the long-term plan. In addition, a Facilities Condition Assessment is currently underway which will help to inform the Board and staff of the appropriate level of capital improvement reserves necessary to maintain the Stadium. A recommendation will be brought forward upon completion of the Facilities Condition Assessment and for presentation to the Board during the next Budget Study Session in early 2025.
SCSA
SANTA CLARA STADIUM AUTHORITY
58 29
9/3/2024 Item 2
Recommendation 7: The Stadium Authority
should retain the expertise needed to
OUTPLAYED
meaningfully weigh in on ManCo's Marketing
Measure J. the Ciry of Sauta Clara, and the
San Francisco 49ers Plan to ensure that the Stadium Authority's profitability is maximized. The Stadium Authority
should also establish a yearly audit procedure
to measure and analyze each season's
Marketing Plan against its outcomes, updating
2023-24 Santa Cima County future plans based on this analysis. This Civil Grand fury
SHIRTY recommendation should be implemented by
December 31, 2024.
* The Civil Grand Jury identified Recommendations 7a and 7b, which are not listed, for Stadium Authorit SCSA response; however, Recommendation 7 does exist and appears to be relevant for Stadium Authority 59 SANTA CLARA STADIUM AUTHORITY response.
59 Draft Response to Recommendation 7
The recommendation has been partially implemented. The Stadium Authority retained the services of an outside expert to review ManCo's Marketing Plan in 2021 and will do so in the future.
As noted in our response to Finding 10b, above, the Stadium Authority released a Request for Proposals and has awarded a contract to an independent consultant to study the market potential trends and financial performance for stadium events and concerts at publicly-owned venues.
The Stadium Authority will attempt to obtain market-based revenue information. It is important to note that information for public facilities will be easier to attain; while we solicit information from privately-owned stadiums, it will be up to the discretion of those facilities to release such information.
The Stadium Authority also plans to hire consultants in the future to assist with review an input for each year's Marketing Plan. Stadium Authority staff will also review the annual Marketing Plan against performance and industry baselines.
SCSA 50
SANTA CLARA STADIUM AUTHORITY
60 30
9/3/2024 Item 2
Recommendation 8: As part of the
OUTPLAYED: Marketing Plan, Stadium Authority should
Measure J, the City of Santa Clara, and the
Sau Francisco 49ers require that ManCo produce a marketing plan that maximizes profits for the Stadium
Authority and incentivizes ManCo marketing
staff to prioritize the profitability of the
Stadium Authority. This recommendation
2025-24 Santa Class Cousty should be implemented by December 31, Cail Grasid Jury
2024.
SCSA 61
SANTA CLARA STADIUM AUTHORITY
61 Draft Response to Recommendation 8
The recommendation has been partially implemented, and additional efforts will be taken to provide oversight of ManCo's marketing plan. Please see our aforementioned responses to Findings 8b and 10b, as well as Recommendation 7.
It is also important to note that the sole objective of the marketing plan is not to maximize profits. There are other considerations, such as the impact on the City's reputation and booking of events that pose significant public safety and community impact challenges.
Notwithstanding, the Stadium Authority believes that maximizing profits is an important issue and this will continue to be an ongoing matter that we address through oversight of ManCo's activities.
SCSA
SANTA CLARA STADIE AUTHORITY
62 31
9/3/2024 Item 2
Recommendation 9: The Stadium Authority
OUTPLAYED: should review and ensure that it receives all Measure J. the City of Santa Clara, and the
San Francisco 49ers a) non-NFL event ticket surcharges for all event attendees, and b) ticket revenue for all
suite attendees owed to the Stadium
Authority. This recommendation should be
implemented by October 31, 2024.
2023-24 Santa Clers County
Cail Griod Jury
SCSA 63
SANTA CLARA STADIUM AUTHORITY
63 Draft Response to Recommendation 9
The recommendation has been implemented to the extent possible and the Stadium Authority's ability to provide oversight and confirm receipt of appropriate revenue has greatly improved in the last two years since the implementation of a Financial Management System.
Stadium Authority staff has access to ManCo's Financial Management System (FMS) and currently reviews non-NFL event ticket surcharge and ticket revenue for suite tickets sold to ensure that SCSA is receiving these revenues that are owed. Stadium Authority staff will continue to review this annually as part of the year end close and review of quarterly revenue information.
SCSA 64
SANTA CLARA STADIUM AUTHORITY
64 32
9/3/2024 Item 2
Recommendation 10: The Stadium Authority should
hire a professional third-party consultant, not affiliated with the 49ers, to analyze the reasonable expectations
OUTPLAYED
for non-NFL events such as:
Measure J, the City of Santa Clara and the
San Francisco 49ers • An analysis of the market revenue potential for non-NFL events at the Stadium.
• An analysis of ManCo's Marketing Plans,
comparing successful (FY 2022-23) and
unsuccessful (FY 2017-18) bookings to
potential market revenue.
2023-24 Santa Clars County
Civil Grant fary • A plan with measurable objectives and incentives for Mando to achieve these results.
This recommendation should be implemented by
December 31, 2024.
SCSA
SANTA CLARA STADIUM AUTHORITY
65 Draft Response to Recommendation 10
A portion of this recommendation has been implemented and will continue to be a part of ongoing Stadium Authority operations and oversight; one portion of this recommendation is not warranted or reasonable, as explained below.
As noted above, the Stadium Authority has and will continue to take efforts to enhance oversight of ManCo's marketing plan. Please see our aforementioned responses to Findings 8b and 10b, as well as Recommendations 7 and 8.
In regard to attempting to conduct a comparative analysis of ManCo's Marketing Plans with regard to the successful FY 2022-23 and unsuccessful (FY 2017-18) bookings and revenue, we believe that such an effort will detract from needed ongoing oversight and Stadium Authority operations. Significant resources and time have already been spent by staff, legal counsel, and the Civil Grand Jury attempting to discern the rationales for prior year's performance with limited to no success. Given that revenues are at an all-time high and major enhancements have been made in the areas of data accessibility and oversight, we believe that future time is best spent on efforts are ongoing oversight and Stadium Authority operational issues.
SCSA 66
SANTA CLARA STADILN AUTHORITY
66 33
9/3/2024 Item 2
Recommendation 12: The Stadium is not
OUTPLAYED: an appropriate location for a Community
Measure J, the City of Santa Clara. and the
Facility. The Stadium Authority should work
San Francisco 49ers
with the 49ers to identify and procure an
alternative space for community needs. This
recommendation should be implemented by
June 30, 2025.
2023-20 Saata Clams County
Cil Grand Tary
SCSA 67
SANTA CLARE STADIUM AUTHORITY
67 Draft Response to Recommendation 12
The recommendation has not yet been implemented.
Stadium Authority staff will aim to discuss with StadCo/ManCo and identify alternatives by June 30, 2025. However, it is important to note that if the agreed-upon alternative includes relocation and/or facility modifications, it is unlikely that such changes can be made (implemented) by June 30, 2025.
SCSA 68
SANTA GLARA STADIUM AS THORITE
68 34
9/3/2024 Item 2
Recommendation 13: The Stadium
OUTPLAYED: Authority should insist on consultation and
Measure J, the City of Santa Clara, and the
Sau Francisco 49ers prior notice before any major Stadium event commitments are made. This
recommendation should be implemented by
December 31, 2024.
2023-24 Santa Clara Count
Civil Grand Jay
Joe It:W
SCSA
69 SANTA CLARA STADIUM ALTHORITY
69 Draft Response to Recommendation 13
This is a matter of ongoing discussions between Stadium Authority and ManCo., with improved communications and opportunities for input already implemented. Within the next two Non-NFL Event booking cycles Stadium Authority staff's intent is to formalizes this process, including Stadium Authority opportunities to approve certain major events in advance.
SCSA 70
SANTA CLARA STADIUM ANTHDRITY
70 35
9/3/2024 Item 2
OUTPLAYED • Recommendations 4, 5, and 11 which
Measure J. the Ciry of Santa Clara and the
San Francisco ders were identified for City/Stadium Authority response provide no recommendation.
• Recommendations 6a, 6b and 6c provide
no recommendation and were not
identified for City/Stadium Authority
2023-24 Saara Clara County
Civil Grand Jury response.
Nw21.223
SCSA 71
SANTA CLARA STADIUM AUTHORITY
71 Fiscal Impact
• There is no fiscal impact related to sending the response other than administrative staff time and expense. However, implementation of certain contemplated recommendations may result in increased expense for the City or Stadium Authority, which will be addressed by budget action, if necessary.
SCSA 72
SANTA CLARA STADIUM AUTHORITY
72 36
9/3/2024 Item 2
Recommendation
1. Discuss and approve a final response to the Civil Grand Jury Report entitled "Outplayed: Measure J, the City of Santa Clara, and the San Francisco 49ers" and direct the City Attorney/Authority Counsel to prepare the formal response consistent with City Council/Stadium Authority direction.
Authorize the Stadium Authority Chair to submit the City/Stadium Authority's response to the Civil Grand Jury Report in the form approved, subject only to finalization of response language, as directed, and any technical, conforming, non-substantive modifications approved by the City Attorney/Authority Counsel, to the Honorable Beth McGowan, Presiding Judge, Superior Court of California, County of Santa Clara, no later than September 11, 2024.
SCSA 73
SANTA CLARA STADIUM AUTHORITY
73 SCSA
Santa Clara Stadium Authority
74 37