49ers Dispute Rent Payments At Levi's Stadium, File For Arbitration
SAN FRANCISCO (CBS SF) -- A dispute over rent payments at Levi's Stadium has prompted the San Francisco 49ers to file for arbitration to enforce a lease agreement the team says allows it to pay a lower rent.
The team announced that it filed for arbitration so that an adjustment can be made on its $24.5 million yearly rent payment to the Santa Clara Stadium Authority. The 49ers claim the contract with the stadium authority would increase the rent if the stadium's financial performance was worse than expected, and lowered if it was better than expected.
The team said based on the construction of the stadium being $136 million below budget and revenues in the first two years of operation "substantially greater than anticipated," the rent adjustment is required. "That is the nature of the agreement," the team said in a press release. "Unfortunately, that is not how it is working."
The team also said based on its analysis an adjusted rent in the range of $19 million would satisfy the requirements of the lease. Meetings between the team, the stadium authority and outside consultants resulted in the 49ers agreeing to an adjusted annual rent of $20.5 million a year.
Despite the agreement, the team said the Santa Clara City Council voted to invoke dispute resolution procedures under the lease, and force the team to seek arbitration, which the 49ers say could result in a substantially lower rent than the $20.5 million agreed upon.
Santa Clara Public Communications Manager Jennifer Yamaguma said in emailed statement to CBS San Francisco:
"The Stadium Authority made the difficult decision to initiate the process for arbitration with the Forty Niners SC Stadium Company LLC (StadCo) regarding rent adjustment at Levi's Stadium in March 2016 due to the dispute regarding the appropriate adjustment to Facility Rent required pursuant to Section 6.1.2 of the Stadium Lease. Since that time, a resolution has not been reached by the parties involved and as such, the arbitration process will continue. It is of the utmost importance to the Stadium Authority that the rent amount, when coupled with other revenue sources of the Stadium Authority, be sufficient for the operating costs, including public safety, and debt service of the stadium without the use of General Fund dollars."
The 49ers say changes in the rent payments do not affect the city's general fund or taxpayers.
Carlos E. Castañeda is Senior Editor, News & Social Media for CBS San Francisco and a San Francisco native. You can follow him on Twitter or send him an email.
