A drawn-out war between Santa Clara and the 49ers culminated this week with the city threatening to nix the team’s contract to host non-NFL events at Levi’s Stadium.
In a Wednesday morning press release, the city lobbed a host of allegations against the football team, accusing it of fraud, wage theft and flouting conflict-of-interest laws. All that, along with “mismanaged operations,” according to the statement, resulted “in declining non-NFL net revenues.”
In other words, the city hasn’t been getting its cut.
The city owns the venue and leases it to the Niners. Per the agreement, the team—in addition to playing football at the stadium—operates the property year-round, hosting concerts and other events that generate revenue for both the NFL and the city.
Net revenues from non-NFL events have reportedly declined from $6.1 million in the 2015-16 fiscal year to $18,591 for the following budget cycle. According to the city, the 49ers told the media earlier this year that they project no revenue at all for the city in the budget cycle ending in June 2020.
“When the 49ers signed on to become the stadium manager for Levi’s Stadium, they represented possessing ‘substantial experience and expertise’ to manage the stadium on behalf of a public entity,” Mayor Lisa Gillmor said in a written statement. “In the years since, their lack of the compliance, transparency and accountability expected of managers of a publicly owned facility has made it abundantly clear that this is not the case.”
So, on Tuesday, the City Council—by way of a distinct legal entity called the Santa Clara Stadium Authority—voted 6-0 to withdraw management responsibilities from the team.
“Not only are the 49ers demonstrated that they are unqualified for the role, they have engaged in egregious state law violations that have put the Stadium Authority in an untenable position,” Gillmor declared after the vote.
At the same meeting, the Stadium Authority voted to change the Niners’ procurement powers. Previously, the NFL team could charge items and services up to $250,000 without prior approval from the city. The new rule will come back to the board Oct. 8 and if approved, will take effect 30 days later, after which the 49ers will have to get approval from the Stadium Authority for those big-dollar contracts.
“This proposed change is to provide the public with assurance that public dollars are being spent correctly after it became known the the 49ers did not have expertise in public management and that they had been refusing to provide the Authority with its own financial records,” the city explained in its press release.
In news reports, the NFL franchise shot back, saying it would appeal the contract termination. “The city’s legal case, such as it is, is in direct violation of the clear language of the relevant contracts,” Niners spokesman Rahul Chandhok told the Merc. “We are entirely confident that we will prevail in this dispute.”