REPORT TO STADIUM AUTHORITY BOARD
SUBJECT
Title
Action on the Proposed Santa Clara Stadium Authority Fiscal Year 2025/26 Operating, Debt Service and Capital Budget, Stadium Authority Budget, Compliance and Management Policies, and 2025 Non-NFL Events Marketing Plan
Report
BOARD PILLAR
Ensure Compliance with Measure J and Manage Levi’s Stadium
BACKGROUND
The Stadium Management Agreement (Management Agreement) defines the Stadium Operation and Maintenance Plan (SOMP) as the plan designed to achieve a safe and well-maintained Stadium and states that it should include the standards for management and operation of the Stadium, including the required security, staffing, and other required elements of hosting Stadium events. The Forty Niners Stadium Management Company LLC (ManCo or Stadium Manager) is responsible for preparing the SOMP that is presented annually to the Santa Clara Stadium Authority (Stadium Authority). The SOMP is required to include the:
1. Annual Shared Stadium Expense Budget,
2. Annual Public Safety Budget,
3. Capital Expenditure Plan,
4. Marketing Plan.
Each year, Stadium Authority staff prepares a proposed Santa Clara Stadium Authority Operating, Debt Service, and Capital Budget for the Stadium Authority’s twelve-month Fiscal Year (FY), which begins on April 1 and runs through March 31 (in accordance with Article 4 - Records, Accounts, Budgets, and Reports of the Management Agreement).
Section 4.10 of the Management Agreement requires that the Marketing Plan set forth in reasonable detail the Stadium Manager’s plans to develop, implement and monitor marketing, booking, advertising, and promotion of the Non-NFL Events for Levi’s Stadium.
DISCUSSION
This report to the Stadium Authority Board transmits the Proposed FY 2025/26 Stadium Authority Operating, Debt Service, and Capital Budget (Attachment 1), Public Safety Budget (Attachment 2), and 2025 Levi’s Stadium Events Marketing Plan (Attachment 3). It should be noted that the Public Safety Budget is included in this report for Stadium Authority Board information only, as budget appropriations for the City’s public safety departments are approved by the City Council through the City’s biennial budgeting process.
The budget document contains several key sections including the:
• Stadium Operating Budget which includes a breakdown of the Stadium Authority’s General and Administrative costs,
• Shared Stadium Manager Expenses including the total expenses and the Stadium Authority’s share of those expenses,
• Ten-Year Forecast,
• Debt Service Budget; and
• Capital Budget.
In addition, staff has included glossaries of commonly used financial terms in this proposed budget to facilitate understanding of the types of revenues, expenses, debt, and capital expenses.
In accordance with Sections 4.5 through 4.8 of the Management Agreement, ManCo prepared and submitted a proposed operating, capital, and debt budget for the FY 2025/26 Stadium Authority Budget. Staff followed the budget development process outlined in the Proposed Stadium Authority Board Budget Policy (Attachment 4) in preparing the Proposed FY 2025/26 Stadium Authority Budget.
The proposed budget was presented to the Board and the public at three meetings: Study Sessions on February 25th and March 4th, and a March 11th Public Hearing as part of its final consideration for approval.
The following summarizes the timeline of the FY 2025/26 budget process:
• In November 2024, Stadium Authority worked with ManCo to develop the annual budget plan, which included the dates that ManCo would provide all necessary documents as required by the Stadium Lease, Management Agreement, and Stadium Operations Agreement.
• In January 2025, ManCo provided annual documents as outlined in the Stadium Agreements, which were used in the Budget Development Process:
o Stadium Operations and Maintenance Plan
§ Annual Shared Expense Budget with Five-Year Projection
§ Annual Stadium Authority Operations Budget
§ Annual Public Safety Budget
§ Capital Expenditure Plan with Five Year Projection
§ Levi’s Stadium Events Marketing Plan
o Public Safety Document Updates
o NFL and Non-NFL Events Parking Plans
• In February 2025, Stadium Authority staff analyzed ManCo’s budget submission including but not limited to the number of full-time equivalents (FTEs) recommended and related personnel costs as well as non-personnel costs and calculated the budget for Stadium Authority General and Administrative (G&A) costs (such as staff costs, consulting, audit, legal, and any reasonable and necessary expenses to support the Board and Stadium Authority operations) as well as any necessary funding to be used for the Stadium Authority’s Discretionary Fund.
The Proposed Budget is presented on an accrual basis which provides increased transparency for projected revenues and expenses, with added detail about financial transfers. The total Revenues and Expenses in the Stadium Authority Operating Budget for FY 2025/26 are $66.2 million and $60.9 million respectively.
A summary of key changes and assumptions for the Proposed Budget include:
• Net Non-NFL Events Revenue estimate for FY 2025/26 totals $5.3 million. This is budgeted lower than the actuals for FY 2023/24 and FY 2024/25, which were $8.3 million and $9.3 million (projected actuals), respectively. ManCo provided a budget estimate of $4.5 million to $5.3 million for Net-Non-NFL Event Revenue for FY 2025/26. Historically, performance has exceeded the preliminary budget estimates based on actual event profitability.
• Payments to the City’s General Fund are programmed at $6.4 million in FY 2025/26 for performance rent ($2.2 million), excess revenue distribution ($3 million), ground rent ($1.0 million), and Senior/Youth fees ($270,000).
• Non-NFL Ticket Surcharge revenue is projected to increase $2.3 million, reflecting the increase from the surcharge from $4 to a minimum of $8 for tickets sold in FY 2025/26 for certain events.
• Public Safety cost reimbursements over the agreed-upon threshold for FY2025/26 is $2.1 million; $2.0 million will be paid for from the Public Safety Cost Reserve, and $100,000 will be paid from the Discretionary Fund.
• Public Safety Costs 2024 Outstanding Balance paydown of $3 million from Excess Revenues which will leave an end balance of $2.6 million at the end of FY2025/26.
• Levi’s® Naming Rights expense of $1.7 million includes the Authority’s obligations under its Naming Rights Agreement with Levi’s® (Schedule 1, Sections 5 and 6) to provide Levi’s® a suite and tickets to the six FIFA World Cup 2026 soccer matches. The Stadium Authority will receive a $4 to $6 surcharge per ticket sold for the six FIFA World Cup 2026 events, with projected revenues (including any backfill if less than $6 is charged) of $2.1 million in FY 2026/27. These revenues will be allocated 50% to Stadium Authority general revenue and 50% to the Discretionary Fund.
• Renovation/Demolition Reserve is budgeted to have a balance of $49.2 million by the end of FY 2025/26. This reserve is ahead of schedule towards the required $70 million balance because of the contribution from excess revenues that have been generated in recent years.
• Capital Expense (CapEx) Reserve Fund Balance is budgeted to have a balance of $2.6 million by the end of FY 2025/26. Staff is proposing that the Stadium Authority contribute an additional $1.0 million to the CapEx fund above contractual requirements to provide additional resources for unanticipated expenses. Stadium Authority will continue to provide oversight and work with ManCo to ensure the projects with the highest priority and needs are addressed within the five-year CapEx plan. StadCo has conducted a Facilities Condition Assessment (FCA), funded at their expense, to help facilitate long-term financial planning, operational efficiency, and structural integrity. The FCA identifies necessary repairs, capital improvements, and compliance requirements while optimizing maintenance costs and resource allocation. The Stadium Authority will undertake a vetting of the FCA once complete. It is important to note that the current capital reserve balance is far below an appropriate level and increasing this balance should be a major focus of future budgetary and capital project planning.
• Proposed Capital Expenditures totaling $18.6 million, including general building, security, furnishings and equipment, and public safety investments. The Authority will oversee and collaborate with ManCo to prioritize projects within the five-year CapEx plan.
• General and Administrative Budget funding 8.7 full-time equivalent positions totaling $3.3 million. This is a baseline level of support necessary for Stadium Authority operations and reflects an estimate of staff time necessary for FY 2025/26 activities. This budget also included positional changes to reflect a staff reclassification that took place during the current fiscal year, conversion of an existing Assistant to the City Manager to a Deputy City Manager position.
• Total estimated Debt Service payments of $20.6 million including debt related to the Community Facilities District ($3.5 million) and Term A Loan ($17.1 million).
Key highlights for the Stadium Authority’s 2025/26 budget are as follows:
Operating Budget
Revenues
• FY 2025/26 total budgeted revenues of $66.2 million includes $24.8 million in facility rent, $5.2 million in SBL revenue, $15.0 million in NFL ticket surcharge, $8.1 million in Naming Rights revenue, $3.4 million in Non-NFL ticket surcharge, $5.3 million in Non-NFL events net revenue, $3.4 million in interest revenue, and $1.0 million in miscellaneous other revenues.
• Non-NFL Events Ticket surcharge revenues are projected to increase by $2.0 million or 146%, from $1.4 million in FY 2024/25 Budget to $3.4 million in FY 2025/25 Budget. As a part of the 2024 settlement agreement, Non-NFL event ticket surcharge will increase from $4 per ticket to a minimum of $8 per ticket starting in FY 2025/26. This incremental surcharge revenue will be used to reimburse public safety costs that exceed the threshold.
• ManCo provided Net-Non-NFL Event Revenue between $4.5 million and $5.3 million for FY 2025/26. The Stadium Authority used the higher estimate of $5.3 million as the anticipated Net Non-NFL Event Revenue for FY 2025/26. This is based on a projection of eight major events (six concerts and two soccer events) and non-ticketed events.
Expenses
• The proposed Operating Budget equals $60.9 million and includes the Stadium Authority’s share of expenses covered under the Management Agreement in the amount of $14.0 million, along with monies sufficient to fulfill the Stadium Authority’s administrative oversight of the Stadium in the amount of $4.7 million, SBL sales and services of $2.3 million, buffet costs of $927,000, utility costs of $1.8 million, ground rent of $1.0 million, performance rent paid to the City of $2.2 million, naming rights expense of $1.7 million, public safety cost over threshold of $2.1 million, pay down of public safety cost 2024 outstanding balance of $3.0 million, transfer to the City general fund of $3.0 million and other miscellaneous expenses of $1.4 million.
• Total transfers out of $22.8 million include a $5.2 million transfer to the Capital Fund for future Stadium capital improvements and $17.6 million to the Debt Service Fund.
Reserves
• Total operating reserves are expected to be $78.0 million at the end of FY 2025/26. This is composed of a Renovation/Demolition Reserve of $49.1 million, an Operating Reserve of $27.7 million and a Discretionary Fund Reserve of $1.2 million.
Debt Service Budget
• The proposed 2025/26 Debt Service Budget of $20.6 million (principal of $9.9 million and interest of $10.7 million) is based on the required debt service payments. Total outstanding debt is projected to decrease by $9.9 million from $219.7 million to $209.8 million.
Capital Expense Budget
• The FY 2025/26 Capital Expense Budget totals $18.6 million. Of this total, $13.4 million of prior year appropriations are carried over into FY 2025/26. New capital improvement appropriations equal $5.2 million
Subsequent Revisions to the Stadium Authority’s FY 2025/26 Budget
Study Sessions were held on February 25 and March 4, 2025, to discuss the Proposed Santa Clara Stadium Authority Fiscal Year 2025/26 Operating, Debt Service, and Capital Budget and Stadium Authority Budget, Compliance, and Management Policies. The following key items were discussed:
• 2024 Settlement Agreement implementation terms
• Workplan supporting Super Bowl LX and FIFA World Cup 2026
• Projected $5.3 million of Net Revenues from Non-NFL Events was low compared to the trend
• Public Safety Costs (PSC) reimbursement funded through the PSC Reserve and Discretionary Fund
• PSC 2024 Outstanding Balance funded through excess revenues
• Direct payments to the General Fund from Performance Rent, Ground Rent, Senior & Youth Fees and Projected Excess Revenue
• Non-NFL Ticket Surcharge revenue is projected to increase due to the increase of surcharge from $4 to a minimum of $8 for tickets sold for certain events
• The need for an additional $1.0 million in funding to the CapEx Reserve above the contractual requirements for potential additional CapEx expenses to maintain the facility
• Levi’s Naming Rights expense of $1.6 million to cover the Authority’s obligations under the Naming Rights Agreement with Levi’s to provide suites and tickets to six World Cup 2026 soccer matches.
• SBL Sales and Service costs
• Stadium Manager’s proposal for partial reimbursement of their new offsite leased office space costs
• Marketing Plan consultant and forward approach
• Exhibit J and a comparison of General Fund revenues forecasted over the next ten years
The Board asked questions and discussed the Proposed Budget at the February 25th Study Session. At the March 4th Study Session, staff provided responses to questions raised at the prior Study Session. Additional questions were posed by the Board. While most of the questions were answered at the Study Session, there were three topics where additional information was requested. The following provides additional information.
SBL Sales and Service Expenses
First, in reference to the SBL Sales and Service expenses, there was a request to break out the complementary buffet costs from the SBL Sales and Service expenses. This adjustment has been made to the proposed budget. The SCSA’s cost for complementary buffet costs to SBL holders is budgeted at $927,000 in the proposed budget. There were also additional questions about what is included in the SBL Sales and Service expenses.
The FY 2025/26 SBL Revenue Budget Target includes $5.156 million in SBL cash collections, with 91% ($4.678 million) coming from the amortization table and 9% ($0.478 million) from new SBL sales. Additionally, there is a target of $4.5 million in new SBL sales. Here’s a table:
|
Category |
Amount (in Millions) |
|
Collections From Amortization Table |
$ 4.68 |
|
Collections From New SBL Sales |
$ 0.48 |
|
Total SBL Cash Collections |
$ 5.16 |
|
|
|
|
New SBL Sales |
$ 4.50 |
In response to the Board’s questions, the Stadium Manager provided the following information:
The SBL Sales team is made up of ten (10) individuals, and the SBL Service team is made up of nine (9) individuals who work on SBL invoicing and collections and general SBL customer service support.
For SBL Service Responsibilities, 100% of time spent on SBL invoicing and collections is charged to the Stadium Authority. Other responsibilities, such as game/event days, face-to-face or virtual meetings, and general customer service, are each 50% charged to SCSA. General customer service, covering various account management tasks, takes up the largest share at 25% of time allocation. Meanwhile, 49ers season ticket invoicing and collections, which make up 30% of the workload, are not charged to the Stadium Authority. Here’s a table that breaks out the service responsibility and time allocation percentages:
|
Service Responsibility |
|
Time Allocation |
|
SBL Invoicing and Collections (100%) |
|
20% |
|
Game/Event Days and SBL Member Events (50%) |
|
10% |
|
Face-to-Face / Virtual Meetings (50%) |
|
15% |
|
General Customer Service (50%) |
|
25% |
|
49ers Season Ticket Invoicing and Collections (0%) |
|
30% |
Stadium Authority staff are continuing to discuss appropriate levels of SBL Sales and Service staffing with ManCo Sales, the roles and functions of such staffing as well as the extent to which the costs of such staffing should be allocated to the Stadium Authority. Accordingly, Stadium Authority staff recommends that the Board’s budget approval reserves the right to modify this budget line item based on these discussions and further assessment.
Off-site Leased Office Space
Secondly, there were questions about a new expense that the Stadium Manager is proposing to include in the budget for the Stadium Authority’s share of off-site leased office space being used by Stadium Manager staff. This was included in the Other Expenses line of their proposed budget. Based on feedback provided at the Study Session and staff review of these costs, the Stadium Authority recommends the exclusion of the office space cost ($620,000) from the proposed budget as conversations between Stadium Authority staff and Stadium Manager on this topic are still ongoing.
Additional Contribution to the CapEx Reserve Account
The proposed budget includes an allocation of $1 million above contractual requirements to provide additional funding to the Stadium’s CapEx (capital expenditure) Reserve account. Staff is working with ManCo on the mechanism to implement this additional funding. Staff recommends that this allocation be a contingent budget allocation in the adopted budget. This funding will only be implemented upon reaching an agreement with ManCo on the appropriate legal mechanism. Under consideration is whether or not an amendment to the Stadium Lease will be required for additional CapEx reserves out of general operating revenues.
Additionally, subsequent to finalizing the budget for the Study Sessions, several additional changes were made to the proposed budget. ManCo updated the Naming Rights Expense for the Stadium Authority’s obligation under the Naming Rights Agreement for suite and ticket expenses to the FIFA World Cup 2026 soccer matches. This expense increases by $25,000 for a total of $1.625 million. In addition, a correction is included to Stadium Operations Shared Stadium Expense for outside services, reflecting a decrease of $10,000.
In conjunction with these changes, there is $605,000 of additional excess revenue available to contribute to the Renovation/Demolition Reserve ($302,500), to pay down the PSC 2024 Outstanding Balance ($151,250) and to transfer to the General Fund ($151,250).
As a result of these changes, total expenses in the Stadium Operating Budget decreased from $61.2 million to $60.9 million.
The table below outlines the changes to the expense lines of the FY 2025/26 proposed budget from the study session ($ in thousands).
|
Line Item |
Study Session |
Current |
Change |
|
SSE Stadium Ops |
$3,499 |
$3,489 |
($10) |
|
SBL Sales and Service |
$3,251 |
$2,324 |
($927) |
|
Buffet Costs |
$0 |
$927 |
$927 |
|
Naming Rights Expense |
$1,699 |
$1,724 |
$25 |
|
Other Expenses |
$1,383 |
$763 |
($620) |
|
PSC 2024 OS Balance |
$2,820 |
$2,972 |
$152 |
|
Transfer to GF |
$2,820 |
$2,972 |
$152 |
|
Total Changes to Expenses |
|
|
($301) |
Lastly, the FY 2024/25 projected PSC Over Threshold was increased by $252,000 to $2.3 million based on actual public safety costs to date. In conjunction with this increase, the Ending Fund Balance for the Discretionary Fund Reserve was decreased by the same amount. Due to the all the aforementioned adjustments, the Ending Fund Balance - Stadium Funding Trust Reserve and Unrestricted were also adjusted.
The Proposed Santa Clara Stadium Authority Fiscal Year 2025/26 Operating, Debt Service, and Capital Budget (Attachment 1) reflects these changes.
Levi’s Stadium Marketing Plan
The Marketing Plan (Attachment 3) is submitted by ManCo and included in the report. The Stadium Authority staff has reviewed the marketing plan and believes that there are areas for improvement. A consultant has been selected to conduct an evaluation of the 2025 Levi’s Stadium Marketing Plan. This review will assess current marketing strategies, offer recommendations to enhance the Stadium Authority’s strategic oversight, ensure consistency and impact across marketing and branding elements, analyze media plans, and interpret performance data to identify trends and areas for improvement. The process will commence in March 2025, with multiple deliverables, including a final report expected by July 2025. The findings will guide both the ongoing oversight of the 2025 Marketing Plan and the development of the 2026 Marketing Plan. Consequently, staff recommends that the Board authorize the Executive Director to finalize the review of and approve the Levi’s Stadium Events Marketing Plan and work in collaboration with the Stadium Manager to implement appropriate changes upon completion of the marketing consultant’s work.
ENVIRONMENTAL REVIEW
The action being considered does not constitute a “project” within the meaning of the California Environment Quality Act (“CEQA”) pursuant to CEQA Guidelines section 15378(a)(4) in that it is a fiscal activity that does not involve any commitment to any specific project which may result in a potential significant impact on the environment.
FISCAL IMPACT
The Proposed FY 2025/26 Budget includes $60.9 million for operating costs (includes transfers out to Debt Service and Capital Funds), $20.6 million for debt service, and $18.6 million for capital (includes a $13.4 million carryover from the prior year).
COORDINATION
This report has been coordinated with the Executive Director and Stadium Authority Counsel’s Offices.
PUBLIC CONTACT
On February 26, 2025, a notice of the public hearing was published in the Santa Clara Weekly and the Proposed Budget (Attachment 1) was available to the public on the City’s website and in the City Clerk’s Office.
Public contact was made by posting the Council agenda on the City’s official-notice bulletin board outside City Hall Council Chambers. A complete agenda packet is available on the City’s website and in the City Clerk’s Office at least 72 hours prior to a Regular Meeting and 24 hours prior to a Special Meeting. A hard copy of any agenda report may be requested by contacting the City Clerk’s Office at (408) 615-2220, email clerk@santaclaraca.gov, or at the public information desk at any City of Santa Clara public library.
RECOMMENDATION
Recommendation
1. Adopt the Santa Clara Stadium Authority Fiscal Year 2025/26 Operating, Debt Service, and Capital Budget on the terms presented, including (1) a $1 million contingent allocation of revenues to the CapEx Reserve Fund, with direction to staff to implement this allocation once an appropriate legal mechanism is identified, and (2) a reservation of rights to modify the SBL Sales and Service budget line item based on further discussions with the Stadium Manager and future Board action;
2. Authorize the Executive Director to finalize the review of and approve the Levi’s Stadium Events Marketing Plan and work in collaboration with the Stadium Manager to implement appropriate changes upon completion of the marketing consultant’s work;
3. Adopt the Stadium Authority Board Budget Policy; and
4. Adopt the Stadium Authority Board Compliance and Management Policy.
Staff
Reviewed by: Kenn Lee, Treasurer
Approved by: Jovan Grogan, Executive Director
ATTACHMENTS
1. Santa Clara Stadium Authority Proposed Fiscal Year 2025/26 Operating, Debt Service, and Capital Budget
2. Fiscal Year 2025/26 Annual Public Safety Budget
3. 2025 Levi’s Stadium Events Marketing Plan
4. Stadium Authority Board Budget Policy
5. Stadium Authority Board Compliance and Management Policy