Santa Clara city leaders have given the San Francisco 49ers until Nov. 15 to turn over management duties for non-NFL events at Levi’s Stadium, but what comes next may be messy.
The football team, which received notice of the city’s decision Wednesday morning, will need to decide whether or not it will put up a fight to keep its position as manager and day-to-day operator of the $1.3 billion stadium.
If the team wants to continue managing the stadium, City Attorney Brian Doyle said the next step will be arbitration, a potential situation he is “not happy about.” Even so, that may be inevitable, according to a statement by team officials Wednesday, who framed the announcement as “petty political vendetta” started years ago.
“The 49ers Management Company will continue to manage Levi’s Stadium and attract the greatest events in the world to the Bay Area,” said spokesperson Rahul Chandhok. “The city’s legal case, such as it is, is in direct violation of the clear language of the relevant contracts. We are entirely confident that we will prevail in this dispute.”
That arbitration process is by default confidential, but city leaders have encouraged the 49ers to waive that confidentiality and allow the negotiations to be public.
“The public has a right to know,” Doyle said.
If the NFL team later decides not to fight the decision, or doesn’t prevail in arbitration, then it’ll still run its own football game events at the stadium, but the city would need to find a new operator for everything else that happens in the space.
Doing that would include a public bidding process and both the city and team will need to agree on who the new operator will be — a tall order for a team and city that have been in an open battle with each other for years.
The decision to try to remove the 49ers as the managers of the stadium comes after city officials raised concerns earlier this year that the 49ers have not been transparent in its procurement procedures. The city also noted 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 on a recent contract.
The 49ers have since paid those wages to the contractor in question, called Nex Systems, who is in the process of distributing the money to employees, according to a team spokesperson. But some officials say they aren’t convinced the 49ers should remain in charge.
“For the last five years, the 49 years have shown us that they do not have the experience and the expertise to operate a public facility like our stadium,” Santa Clara Mayor Lisa Gillmor said Wednesday. “They have not managed it in the best interests of the Santa Clara residents and the Santa Clara taxpayers.”
Meanwhile, Ben Field, executive officer for the South Bay Labor Council, has asked for an independent investigation into the matter by the Attorney General. He said he’s concerned about the city’s assertion that the football team has not provided all documents needed to audit past contracts to ensure other contractors have been paid correctly.
“It leads to a strong suspicion that the Nex Systems contract is just the tip of the iceberg,” Field said. “The Attorney General needs to intervene to get those records and find out the extent of the failure to pay.”
City officials also say the football team is falling short of its revenue promises for non-NFL events at the stadium, which they say eats into the city’s budget for other services. For the last fiscal year, the team reported $18,591 in revenue, compared to a high of more than $6 million in the 2015/2016 fiscal year, according to city documents.
But the 49ers have pushed back on the assertion that they’ve not delivered financially, saying the organization has helped generate more than $41 million for the city over the past five years as well as attracted multiple high-profile events that have had economic impact and increased the city’s tax base.
“By all measures, it continues to be one of the most successful venues in sports and entertainment,” Chandhok said.
The meeting Wednesday comes after councilmembers Tuesday night also voted to also make a move that would effectively strip the 49ers of their ability to purchase anything for the stadium without first getting approval by the Stadium Authority, a body made up of city councilmembers.
The NFL team is also crying foul on that move, saying the city doesn’t have the authority to take away its power to sign such contracts or purchase orders.
“Undermining (the) Stadium Manager’s ability to obtain goods and services timely and efficiently would constitute a contractual breach, and would seriously destabilize Stadium operations,” states a letter sent from the 49ers to the city on Tuesday.
But city officials Tuesday night said the move does not interfere with the team’s ability to play games at the stadium or purchase goods, as long as the 49ers get approval first. That, they said, does not constitute a breach.
Contact Janice Bitters at [email protected] or follow @JaniceBitters on Twitter.