The San Francisco 49ers are engaged in a legal dispute with the city of Santa Clara over the nature of their stadium lease.
The 49ers are only in the fourth year of their lease of Levi’s Stadium in Santa Clara, California. The city and the NFL franchise are already engaged in legal disputes over money.
The particulars of the 40-year lease the team and city agreed to in 2013 have recently been the subjects of contention, with a dispute on one of the lease’s main tenants in arbitration. Additionally, the 49ers have filed a defamation lawsuit against city leaders.
According to John Diaz of the San Francisco Chronicle, Santa Clara mayor Lisa Gillmor summed up the city’s position on the relationship with the 49ers.
“We learned we cannot trust the 49ers,” Gillmor said. “They are our partners, but they have exploited what we’ve tried to do in the city. They recognized the fact that we were ill prepared … they were professional; they knew what they were doing.”
The first sign of trouble came in April 2015, when the city denied a proposal by the 49ers to lease land adjacent to the stadium for parking.
In the years since, it has become evident to Gillmor how outmatched the city has been in terms of legal wrangling. Tensions have risen over several matters, including but not limited to the following:
- The cost of security at Levi’s Stadium, which topped $3 million last year. The lease caps the 49ers’ contributions to $170,000 per NFL game and $1.7 million per year. The city had to pick up the rest of the tab.
- Concerts and other non-NFL events, which the lease says must conclude by 10 p.m. on weeknights. The fine for events going past 10 p.m. for the 49ers is just $750, a price that the team is probably more than willing to pay in exchange for being able to attract top events to Levi’s. There are additional costs created by events which run late, like a recent U2 concert. The late crowd release resulted in additional public transportation costs which the city got a $61,000 bill for. 49ers team president Al Guido hasn’t committed to paying any of that cost.
- A possibility that the 49ers used “dark money” channels to fund campaigns of city council members friendly to their cause to get the stadium built and lease in place before the team relocated. Additionally, it’s been suggested by Gillmor that an independent audit of the stadium finances would show that former council members illegally used the city’s general funds for stadium purposes.
- The 49ers’ refusal to turn over financial records about non-NFL events at Levi’s Stadium to the city. While the 49ers keep all NFL-related revenue, revenue from events like concerts is supposed to be shared with the city. Gillmor says that while the 49ers have been willing to show them to the city, they aren’t detailed and the refusal to hand them over to the city makes ascertaining whether or not the city is getting its contracted cut impossible.
- The 49ers want their annual lease reduced from the $24.5 million dropped to $20.5 million. They claim that the current rate, which is the highest in the NFL, is exorbitant because of the revenue that the city has received from the stadium’s presence and lower-than-expected construction costs. This matter is currently in arbitration.
These underlying tensions were made concrete in January, when the 49ers filed a brief in Santa Clara County Superior Court against the city. The suit seeks no money, but instead claims the city has maligned the reputation of the team by falsely accusing it of breaching the terms of the lease. The team wants the court to rule that the team has abided by all the terms of the lease and compel the city to issue a public statement that the team has fulfilled all of its obligations.
In fairness to the 49ers, the city has been conveniently mum throughout this process on how much revenue the stadium and team have brought. Additionally, the city has never specified exactly how the 49ers may have violated the terms of the lease, but instead engaged in the same kind of muddled posturing that the city accuses the 49ers of when discussing the finances of non-NFL events at the stadium.
That’s an example of where the city, as Gillmor stated, is out of its league when trying to take on the 49ers. If the city doesn’t specify exact breaches of contract, the 49ers can dismiss the claims easily by simply rehearsing their demand for clarification. If the city does bring up specific violations, then the 49ers’ team of lawyers will go to work destroying the case that the city has on each one. The realization of those facts is probably why the city hasn’t backed up its words with action and taken the team to court for breach of contract, yet.
Over the next 36 years, that may still happen if the city can gather the resources needed. Gillmor said that she hopes her city’s tale would become a lesson for other cities considering the same long-term relationship. The moral of the story is be prepared.