Santa Clara, 49ers Spar Over Stadium Rent Amid Pandemic

Officials in Santa Clara say they’re ready to go to arbitration to get $2.7 million in unpaid rent from their hometown football team, the San Francisco 49ers.

The NFL team, however, argues that the city’s jumping the gun because the team plans to pay rent in full for Levi’s Stadium, where the 49ers play home games and manage events.

So, how did their wires get so crossed? The answer depends on who one asks.

Rahul Chandhok, spokesman for the team, said the city’s announcement is “just another attempt to scapegoat the 49ers.”

“While the 49ers work to support the region's economy, Mayor [Lisa] Gillmor continues a pattern of mismanagement that is costing the city critical revenue, hurting small businesses, and endangering local jobs,” he said. "This is just another attempt to scapegoat the 49ers for her incompetence, and her confusion on the terms of the lease that she supported enthusiastically when it suited her political aspirations.”

But in an announcement emailed to reporters Thursday, Santa Clara officials insist the 49ers have made “untrue personal attacks” against Gillmor, City Attorney Brian Doyle and City Manager Deanna Santana.

Doyle told San Jose Inside that the 49ers’ September rent was due in August, but hasn’t yet arrived, adding that officials had every reason to believe the money wasn’t coming.

“When it rolled around when they usually pay rent, they didn't pay it,” Doyle said. “At the same time, we're also asking their Deputy General Counsel Jihad Beauchman, ‘Are you going to pay the rent?’ and he said ‘No, we stand by our letter.’”

Speaking Legalese

The debate over rent started in July, when the 49ers wrote a letter to Santana indicating its lease allowed the team to reduce rent for “untenable conditions.”

In a letter viewed by San Jose Inside, the team quoted part of the agreement that defines those conditions as when 20 percent or more of the seats at the stadium are restricted or unusable, or when “applicable laws” prevent events from happening at the stadium.

“Presently, both of these criteria are satisfied,” the letter from 49ers Chief Financial Officer Scott Sabatino said. The lease allows rent to be reduced by 10 percent for each game not played due to those conditions, and the 49ers had already canceled two pre-season games due to the coronavirus, Sabatino added.

But Santa Clara city officials disagreed with the team’s interpretation.

“Because the cancellation of the games was due to the NFL’s decision regarding player and personnel safety, and not due to any applicable law or regulation relating to access for games or a condition of the Stadium seating, there is no basis to withhold facility rent,” Santana shot back.

Finding themselves at a stalemate, the 49ers and city were left with less than three weeks to work it out. Clearly, that didn’t happen.

In an apparent last-ditch effort to bridge the gap, Beauchman emailed Doyle on Aug. 27 to set up a call about rent, according to city documents. Doyle demurred, saying he wanted documentation from a third-party to back up the 49ers interpretation of the lease before setting up a call.

Thursday—eight days after the city sent a notice of rent default to the team—was the first time Doyle heard that the 49ers planned to pay September’s rent, he said.

“Up until I read it in the newspaper, we’d never heard that they agree with us that they have to pay their rent,” Doyle said.

This is not the first time the team and city have found themselves at odds over legalese, communication and money, in fact, the pair have a slew of active lawsuits and arbitration plans over such disputes.

The NFL team has long held that the city has stifled its ability to book money-making events and are using the disputes between the two as part of a larger political agenda.

“Mayor Gillmor is spending millions on PR consultants, advisors, and providing raises during a global pandemic to the already highest paid City Manager in the state, all while knowing the city’s budget is in disarray and has been for years,” Chandhok said.

City officials, meanwhile, say the sports team isn’t delivering on the promises made when it took over the management of the more than $1 billion stadium.

On Thursday, officials dismissed the idea that the arbitration announcement was political and said the team should “put their time and effort to paying the rent due, rather than claiming political games in the media.”

Janice Bitters is managing editor for Metro Silicon Valley. Email tips to [email protected]. Follow her on Twitter at @janicebitters.

2 Comments

  1. Boy, building this stadium was just so worth it for the city, no?

    I remember Patricia Mahan saying that the team “went study” for decades and the stadium would mean “getting married”. How that workin’ out now?

    Incidentally, the 49ers do bring up a good (if somewhat irrelevant point): just why does the city have CA’s (and presumably one of the nation’s) highest paid city managers?

  2. > Santa Clara, 49ers Spar Over Stadium Rent Amid Pandemic

    What a tragic business story:

    Two iconic brands of American business and culture discredited by nihilist activism, political stupidity and toxic local governments.

    – San Francisco Forty-Niners
    – Levi Strauss

    Homelessness, poop piles, lockdowns, Nancy Pelosi, and Black Lives Matter.

    Newsweek Magazine sold for one dollar. The book value of the Forty-Niners might even be less.