REPORT TO STADIUM AUTHORITY BOARD
SUBJECT
Title
Action on the Santa Clara Stadium Authority Financial Status Report for Quarter Ending June 30, 2024 and Related Budget Amendments
Report
BOARD PILLARS
Ensure Compliance with Measure J and Manage Levi’s® Stadium
Enhance Community Engagement and Transparency
BACKGROUND
In Fiscal Year 2014/15 the Stadium Authority Board (Board) requested that staff prepare quarterly Santa Clara Stadium Authority (Stadium Authority) Financial Status Reports. These reports provide an update on the events held at Levi’s® Stadium, Stadium Authority finances, and the impact of Stadium Authority activity on the City of Santa Clara (City).
This report provides information covering the Stadium Authority’s first quarter of the 2024/25 fiscal year (FY), which runs from April 1, 2024 to June 30, 2024.
The Adopted Stadium Authority Budget incorporates the estimated revenues and expenses for all Stadium Authority funds. As a part of the Stadium Authority policy to ensure adherence to the budget, a budget/encumbrance control system is used to ensure proper budgetary control. Budgetary appropriation control for expenditures are maintained at the fund level. The attached Financial Status Report provides the budget to actual revenue and expense summaries for the operating, debt service, and capital funds. Analysis of the financial activity through the fiscal year measures the adherence to the budget and allows the Stadium Authority to monitor and project revenues and expenses. Any significant variances are explained in the report.
DISCUSSION
The attached financial status report provides information covering the Stadium Authority’s first quarter (April 1, 2024 - June 30, 2024) of FY 2024/25. The report summarizes National Football League (NFL) and Non-NFL event activity at Levi’s® Stadium and describes the financial impact of these events on the Stadium Authority and City since FY 2014/15. The report also provides the budget to actual revenue and expense summaries for the operating, debt service, and capital funds. Analysis of the financial activity through the fiscal year measures the adherence to the budget and allows the Stadium Authority to monitor and project revenues and expenses. Any significant variances are explained in the report.
NFL Event Revenue and Expenses
There were no NFL games held in the first quarter of the FY 2024/25. Levi’s® Stadium hosted the first 49ers pre-season game of the 2024 season on August 18, 2024, which will be included in the report for the second quarter.
Non-NFL Event Revenue and Expenses
There were four ticketed Non-NFL events and 20 special events which are detailed in the report. The four ticketed Non-NFL events generated an average net profit of $664,000 per event. Table 1 below summarizes revenues and expenditures for the four ticketed events.
Table 1
The Non-NFL event ticket sales generated $635,000 in ticket surcharge revenue, half of which will fund the discretionary fund. Public safety costs for these events totaled an estimated $1.5 million which will be fully reimbursed to the City by ManCo on behalf of the Stadium Authority.
When combining ticketed and non-ticketed Non-NFL revenues to date, Table 2 below shows approximately $3.5 million in net revenue (excluding surcharge revenue) through the end of the first quarter. This is an increase of $2.1 million from the prior year Non-NFL event net revenue of $1.4 million. The main driver of the increase is related to the increase in the number of ticketed events when compared to the prior year. It should be noted the financial information provided are a draft and subject to change as additional revenues and/or expenditures are recorded.
Table 2
Levi’s Stadium
Net Revenue for Non-NFL Events
by Event Type
Historical Year-to-Date Through June 30, 2024
(1) Other Operating Income are income not attributable to a specific event. Examples are interest income and reimbursements unrelated to a specific event.
(2) Other Operating Expenses are expenses not attributable to a specific event. Examples are event selling expenses, administrative expenses and miscellaneous costs.
(3) Net Revenue from Non-NFL Events does not include Non-NFL Event Ticket Surcharge.
Stadium Builder Licenses (SBLs)
SBLs account for 8% of the Stadium Authority’s annual budgeted revenue in FY 2024/25. There is a total of 65,967 currently active SBLs which is 99.7% of the 66,156 total sellable SBL seats. Through the first quarter, since inception, the value of the active SBLs amount to $557.3 million of which $530.4 million has already been collected.
Stadium Authority Budgets
The detailed analysis of Stadium Authority budget to actual financials is provided in the attached Financial Status Reports. In summary, total operating revenues were $8.4 million representing 13% of the overall budget for revenues and total operating expenses were $6.7 million or 15% of the budget. The debt service fund was able to pay down $7.8 million in debt, bringing total Stadium Authority debt down to $220.9 million. Capital expenses were $1.4 million representing 6% of the overall Capital Expense (CapEx) budget.
FY 2024/25 Stadium Authority Budget Adjustments
From time to time, budget adjustments may be necessary to align revenues or expenditures to actual or unexpected activity during the course of a fiscal year, known after the adoption of the Stadium Authority Budget. On March 12, 2024, the Stadium Authority Board adopted the Santa Clara Stadium Authority FY 2024/25 Operating, Debt Service, and Capital Budget. As of the timing of the publication of this report, additional information from FY 2024/25 has resulted in recommended budget adjustments as follows:
Operating Budget:
1) Performance Rent - The Performance-Based rent owed to the City is described in the Ground Lease and Second Amendment to Ground Lease. As outlined in the agreements, the City can receive Performance-Based rent for each Lease Year equal to 50% of net revenue from Non-NFL events less the sum of the Performance-Based Rent Credits. Performance-Based Rent was budgeted at $9.6 million related to: (1) FY 2022/23 of $4.2 million, (2) FY 2023/24 of $2.9 million (projection) and (3) FY 2024/25 of $2.5 million (budget). FY 2023/24 Non-NFL event net revenue was higher than projected resulting an increase to performance rent owed to the City of $225,000. Therefore, a budget amendment of $225,000 is needed to reflect this increase.
2) Stadium Authority General and Administrative (G&A) - The Stadium Authority G&A expense budget of $4.2 million included $395,000 for legal expenses. Due to unanticipated legal costs, the City Attorney’s Office requests an appropriation of $100,000 bringing the total budgeted for legal expenses to $495,000.
ENVIRONMENTAL REVIEW
The action being considered does not constitute a “project” within the meaning of the California Environmental Quality Act (“CEQA”) pursuant to CEQA Guidelines section 15378(b)(5) in that it is an administrative activity that will not result in direct or indirect physical changes in the environment.
FISCAL IMPACT
As discussed, staff recommends the budget amendment detailed in the table below:
Operating Budget
|
Description |
Current |
Increase/ Decrease |
Revised |
|
Performance Rent (paid to City) |
$9,600,000 |
$225,000 |
$9,825,000 |
|
Stadium Authority G&A |
$4,188,000 |
$100,000 |
$4,288,000 |
|
Ending Fund Balance - Unrestricted |
$14,237,112 |
($325,000) |
$13,912,112 |
COORDINATION
This report was coordinated with the ManCo per section 4.6 of the Management Agreement as well as the Stadium Authority Counsel’s Office.
PUBLIC CONTACT
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 <mailto:clerk@santaclaraca.gov> or at the public information desk at any City of Santa Clara public library.
RECOMMENDATION
Recommendation
1. Note and file the Santa Clara Stadium Authority Financial Status Report for the Quarter Ending June 30, 2024; and
2. Approve a budget amendment in the Operating Budget to increase the Performance-Based Rent (paid to City) in the amount of $225,000 and Stadium Authority G&A in the amount of $100,000 offset by a decrease to Ending Fund Balance - Unrestricted.
Staff
Reviewed by: Kenn Lee, Treasurer
Approved by: Jovan D. Grogan, Executive Director
ATTACHMENTS
1. SCSA Financial Status Report for the Quarter Ending June 30, 2024