Santa Clara approves new financial tracking for 49ers, Levi’s Stadium
Santa Clara and the 49ers cleared a hurdle on accounting. File photo.

After years of finger pointing and court battles, Santa Clara lawmakers approved a new way to keep tabs on Levi’s Stadium and the 49ers’ financials.

Most recently, the city and 49ers have clashed over who owes money to whom.

The 49ers, which manage Levi’s Stadium, say the city owes $2.74 million for losses from non-NFL events this past year, including the Pac-12 Championship and Monster Jam.

The city says the team owes $1.1 million for public safety costs for those events, and has a total of $1.9 million in outstanding invoices.

The Stadium Authority, made up of Santa Clara Mayor Lisa Gillmor and the City Council, on Oct. 13 unanimously approved a contract to provide separate financial management and tracking software for the authority and the 49ers. Since the stadium was opened in 2010, separate accounting has not existed, resulting in a mixing of city and team financials.

“Currently (the 49ers) do not have a separate management system to account for (stadium) authority’s activities,” said city Treasurer Kenn Lee. “This has caused a lack of transparency and delays in getting reports.”

The new system means city officials can keep a closer eye on the team’s financial management of Levi’s Stadium, officials said. The authority approved contracts for up to $260,000 for the project, but city staff said the 49ers should foot the bill.

“There definitely should have been a much more reasonable effort to keep separate records,” said City Attorney Brian Doyle. “There should have been an accounting system keeping their records separately from our records from the very beginning.”

Councilmember Kathy Watanabe said she’d spoken with union leaders at the South Bay Labor Council this summer after city officials last year claimed the team did not pay the appropriate hourly rates — known as prevailing wages — to employees of contractors at the stadium, resulting in $85,000 in unpaid wages.

“They said (the 49ers) had those records and they did not have access to those records,” Watanabe said. “All the more reason (the 49ers) should be responsible for paying for those systems that we should have access to.”

It’s unclear when the new accounting system will go into effect, though Lee estimated it would be in the next year. There’s no way, however, to separate the city and 49ers’ financials for the past decade, leaving many of the previous disputes about wage theft and decreased revenues to be addressed by litigation.

The 49ers and the Stadium Authority have been going back and forth over a new accounting system for more than a year.

In an email obtained by San José Spotlight, authority members were directed to consider another company, MGO, whose partners include Scott Johnson, former Santa Clara assistant finance director. Johnson is also a former colleague of City Manager Deanna Santana. The two worked together in Oakland in the city’s administration office.

MGO withdrew from the process in March of this year after admitting it could not complete the work necessary for managing the team and authority’s financials.

“I wish we had this system from day one,” said Councilmember Raj Chahal. “At least we are starting right now, that’s a good thing.”

Payroll system sparks heated debate

Also on Oct. 13, the Stadium Authority voted 5-1 to deny a request from the 49ers to purchase new payroll software for about $13,000. Before the meeting, councilmembers reproached the organization for alleged wrongdoing, including wage theft, and its “shoddy” work in creating the proposed contract. Watanabe cast the lone dissenting vote.

“Over a year ago, we discovered that the 49ers had not been complying with the State’s Prevailing Wage law,” Gillmor said. “A year later, the 49ers submit a request to purchase a software system commonly used to comply with the prevailing wage law, but they have removed from the contract their requirement to comply with California’s Ralph M. Brown Act and the Public Records Act, and any other federal or state laws that may apply. This is not acceptable.”

The Ralph Brown Act, which requires public agencies to make meetings public, does not apply to private organizations but does apply to legislative bodies.

49ers officials, however, say the city is misrepresenting the issue because the city has used the software in the past without debate.

A team spokesman said that as a private company, the 49ers are not subject to the Brown Act.

Contact Madelyn Reese at [email protected] and follow her @MadelynGReese

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