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The San Francisco 49ers are upping the ante to settle a lawsuit that’s costing Santa Clara residents millions of dollars.
According to a letter obtained by San José Spotlight on Wednesday, the NFL team is now offering the city a settlement package officials say is worth $13 million when factoring in the money saved on continued litigation, interest fees and disputed public safety costs. It’s a significant increase from its offer two weeks ago to end a costly legal battle over the management of Levi’s Stadium where the team plays.
The Santa Clara City Council is expected to consider the settlement in closed session next week.
The two sides have been at war since Santa Clara policymakers voted in 2019 to remove the team as manager of the stadium during non-NFL events. The team said the decision violated its contract and reeked of political retribution.
The biggest change in the new settlement offer is a one-time payment to the city’s general fund: The team is now offering $1.3 million, up from its previous offer of $650,000.
Rahul Chandhok, 49ers spokesperson and a negotiator in the case, said in the letter the team would rather “spend money settling these disputes, not litigating them.”
“We think we are aligned on the importance of resolving the main disputes as quickly as possible,” Chandhok wrote in the letter sent Wednesday. “We have each wasted $8M in litigation costs, and we continue burning $2M a year on a case that should have been settled years ago.”
Two weeks ago, the 49ers offered a $3.3 million settlement package that included $2 million for public safety costs related to stadium events. But city officials rejected the offer last week and demanded more money to settle the lawsuit, according to the letter. Niners management said the new offer is their “best and final” one.
Santa Clara is in a shaky financial position. City administrators have until the end of this month to accept the deal or face even more litigation—and higher costs to taxpayers. Santa Clara already faces a $27 million deficit.
“The best interest of the city is for the 49ers to do well,” said longtime political observer Rich Robinson, a columnist for San José Spotlight. “The city has $1.3 million in hand and if they go to trial they risk losing a lot more—not to mention litigation costs. They’ve lost almost every time they went to court against the Niners. It would be better if the city started to work with one of their largest business tenants as opposed to continuing this ligation, which is crazy.”
Mayor Lisa Gillmor, a staunch opponent of the Niners, could not be reached for comment. Santa Clara’s interim city attorney, Jim Sanchez, declined comment.
“I cannot comment at this time as this matter is in litigation,” he said.
Growing legal fees
The city’s decision three years ago to terminate the team’s management of the $1.3 billion stadium came after officials raised concerns about dwindling revenues from events at the facility, and questioned whether the team has been transparent in its procurement procedures. The team blamed the drop in revenue on the city’s live events curfew—what they dubbed a “music ban.”
The city and its NFL team have been meeting behind closed doors for months to hammer out the settlement terms.
Santa Clara has a history of dragging out legal battles—and, in some cases, winding up on the losing end. City leaders in 2019 appealed a decision to order district elections after the city lost a lawsuit alleging its at-large voting system violated the California Voting Rights Act. The city appealed despite other cities’ unsuccessful efforts to fight similar voting rights cases. The city lost its appeal and settled the case last year—after spending an estimated $6 million in legal fees.
“You had Brian Doyle acting like William Barr for Lisa Gillmor,” Robinson quipped, referring to Santa Clara’s now-fired city attorney. “They were walking over dimes to pick up nickels.”
In its counteroffer last week, the city also demanded the 49ers’ management company pay $250,000 for a new accounting system and provide more transparency on ticket surcharges for non-NFL events. Chandhok said the team agreed to do so.
While the 49ers are offering to pay more into the general fund, there could be a larger problem looming. The two sides don’t see eye-to-eye on a technical issue. The city wants to go through a “global mediation” in September to settle its disputes with the team, including a longstanding fight over public safety costs. Santa Clara and the 49ers have publicly battled for nearly a decade now—over everything from concert curfews to the rent the team pays.
Chandhok said it makes no sense to hold up the settlement on this lawsuit over unrelated disputes. Those issues, he argued, can be dealt with separately.
“Your lawyer’s ‘global’ mediation idea does not actually resolve anything—it simply shifts all of our long-running disputes to a new forum where the litigators and mediators will continue billing at up to $1,000 per hour,” Chandhok wrote.
Former Santa Clara Mayor Pat Mahan, who served 23 years on the city council, said the key to repairing the relationship with the 49ers is communication. That was lacking in the past.
“Prior to this new council, there was very little communication and it was very acrimonious—through lawyers and lawsuits,” Mahan told San José Spotlight. “When I was on the council, we met with the 49ers. We talked about things. We own that stadium—and people forget that the money it makes goes to the city’s general fund. You have to talk to each other with respect, dignity and an open mind.”
Contact Ramona Giwargis at [email protected] or follow @RamonaGiwargis on Twitter.
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