REPORT TO STADIUM AUTHORITY BOARD
SUBJECT
Title
Action on Stadium Manager’s Request to Execute an Event Services Agreement with Fanatics Retail Group Concessions, LLC for Merchandise Concession Services for Non-NFL Events
Report
BOARD PILLAR
Ensure Compliance with Measure J and Manage Levi’s® Stadium
BACKGROUND
The Forty Niners Stadium Management Company (the “Stadium Manager”) seeks to contract with Fanatics Retail Group Concessions, LLC (“Fanatics” or the “Contractor”) to provide merchandise concession services for Non-NFL Events at Levi’s® Stadium.
Fanatics currently serves as the merchandise provider for NFL Events at Levi’s® Stadium. The proposed Event Services Agreement (“ESA”) (see Attachment 1) dated April 1, 2025 memorializes the terms under which Fanatics will operate outside of the Stadium’s Team Stores during Non-NFL Events.
Stadium Manager has previously engaged the Contractor to perform these services at Non-NFL Events on behalf of the event promoters or licensees, but not under an event services agreement specific to Non-NFL Events.
Under the current Non-NFL Event protocols, Fanatics is paid a fixed “concessionaire fee” and passes all service-related expenses-including the concessionaire fee-through to the event promoter. In contrast, the proposed terms under the ESA introduce a tiered profit-sharing structure that ties Fanatics’ fee directly to gross profits from merchandise concessions. This approach incentivizes Fanatics to minimize pass-through expenses and generate more sales revenue as its compensation is directly linked to the profitability of its operations. These terms should increase net revenues to the Stadium Authority for Non-NFL Events.
The Stadium Manager has requested to enter into an ESA with Fanatics to manage merchandise concession services outside the traditional Team Store environment during Non-NFL Events.
This item was previously presented to the Stadium Authority Board on March 11, 2025, as part of the Consent Calendar. The motion failed with a vote of 3-3. It is now being brought back as a General Business item for further discussion and consideration, based on additional research and data to support the recommendation.
DISCUSSION
The Stadium Manager is requesting to enter into the ESA with Fanatics prior to the Metallica concert on June 20, 2025 to maximize merchandise concessions net revenues to the Stadium Authority for the full FY 2025/26 Non-NFL Event season.
Prior to the March 11, 2025 Stadium Authority Board Meeting, staff conducted a preliminary analysis of several key areas: (A) the financial and operational implications of the Stadium Manager’s request to enter into an Event Services Agreement (ESA); (B) the procurement approach and sole-source justification; (C) the proposed revenue model for merchandise concession services; and (D) a Fanatics deal term analysis with other stadiums. The following is a summary of that analysis.
(A) Financial and Operational Benefits:
• Expanded Sales Opportunities:
The agreement allows for merchandise to be sold at various concourse locations, increasing overall net revenue potential for the Stadium Authority without disrupting the established team store operations.
• Flexible Operational Structure:
Promoters can choose between buyout options, such as renting the entire venue and negotiated services under a flat-fee agreement or revenue-sharing arrangements, ensuring that they can operate in a way that best suits their logistical and financial needs. This enhances the marketability of the stadium.
• Increased Net Revenues
Under the current Fanatics agreement for Non-NFL Event merchandise sales, Fanatics deducts all expenses related to service provision from gross merchandise sales. After these deductions, Fanatics takes between 25% to 50% of the net merchandise revenue depending on the event, with the remaining portion payable to the Stadium Authority. In certain instances, the event promoter also shares in these net merchandise revenues thereby further reducing the amount payable to the Stadium Authority.
Under the proposed agreement, Fanatics will instead receive a fixed fee based on sales volume:
• For Gross Merchandise Sales of $4,000,000 or less, Fanatics will be paid 7% of Net Merchandise Revenue or $5,000, whichever is greater.
• For Gross Merchandise Sales exceeding $4,000,000, Fanatics will receive 8% of Net Merchandise Revenue.
According to the Stadium Manager, applying the new terms to Non-NFL event merchandise revenue from FY 23/24 would result in a +118% increase in net revenue, equating to an additional $195,956.11 in net revenue compared to the old terms (see chart below). The Stadium Authority has not yet independently verified the actual or projected data. Staff will verify the actual and projected net revenue and will continue to track all revenue sources for Non-NFL Events including revenue derived from merchandise sales.
|
Event |
Event 1 |
Event 2 |
Event 3 |
Event 4 |
Event 5 |
Event 6 |
TOTALS (FY23/24) |
|
SCSA Actual Merchandise Revenue ($) |
34,420.34 |
9,711.08 |
100,000.69 |
17,734.30 |
9,104.16 |
4,270.42 |
$175,240.99 |
|
SCSA Projected Merchandise Revenue Under New Deal Terms ($) |
74,577.40 |
32,217.40 |
199,164.16 |
40,556.82 |
17,965.33 |
6,716.00 |
$371,197.10 |
(B) Procurement Process:
The services were not publicly bid due to a sole-source justification. Staff conducted a market analysis of the sports merchandise and apparel industry to assess potential alternatives and determine whether other vendors could provide the full scope of required services. Based on the findings below, staff is recommending a sole source award to Fanatics.
• Unique, Vertically Integrated Service Model. Fanatics offers a fully integrated, end-to-end (“vertically integrated”) service model encompassing inventory management, logistics, point-of-sale (POS) systems, merchandise operations, marketing and branding support, and customer service. This vertical integration is designed to meet the unique needs of Non-NFL Event promoters. While other vendors offer individual components of these services, staff found no other vendors capable of delivering the complete end-to-end solution under one contract.
• Existing Partnership. Fanatics currently serves as the Team Store concessionaire for NFL games at Levi’s® Stadium and maintains a permanent onsite presence, which allows for seamless integration with existing stadium operations. Expanding Fanatics’ role to support Non-NFL Events would improve operational efficiency and continuity, minimizing duplicative systems and staffing. Selecting a new vendor would likely result in significant start-up and transition costs, including but not limited to:
o Technology integration and POS setup
o Staff onboarding and coordination
o Payment security compliance
o Additional shipping and storage space (by subleasing office and storage space in tenant-only areas of the stadium, Fanatics is able to reduce shipping, storage, and general administrative (G&A) costs-ultimately enhancing the efficiency and cost-effectiveness of Non-NFL Event merchandise operations)
• Competitors. Staff reviewed the following companies in the merchandise and apparel business. However, none were found to match Fanatics’ ability to deliver an end-to-end service model with the necessary infrastructure and operational compatibility at Levi’s® Stadium.
o Sports Merchandise & Apparel
§ Nike - Major supplier of official team jerseys and apparel
§ Adidas - Competes in licensed sportswear and footwear
§ Under Armour - Offers team apparel and performance gear
§ Lids - Sells licensed sports headwear and apparel
§ Mitchell & Ness - Specializes in nostalgic and throwback jerseys
o Sports Collectibles & Trading Cards
§ Panini America - Produces trading cards and sports memorabilia
§ Topps (Owned by Fanatics but still competes with other brands)
§ Upper Deck - Major competitor in premium trading cards and memorabilia
o Sports Betting & Gaming
§ DraftKings - Online sportsbook and daily fantasy sports competitor
§ FanDuel - Major player in sports betting and fantasy sports
§ BetMGM - Sportsbook and gaming rival
§ Caesars Sportsbook - Competes in the sports betting space
o E-commerce & Retail
• Amazon - Sells licensed sports gear and collectibles
• eBay - Competes in the resale market for collectibles and apparel
• Dick’s Sporting Goods - Offers sports apparel and gear
• Walmart & Target - Sell licensed sports merchandise
(C) Merchandise Revenue Model Analysis:
Revenue splits for merchandise concessions vary across the industry and are typically negotiated independently between the Stadium Manager and the event promoter. Confidential market research conducted by the Stadium Manager-validated through independent staff analysis-confirms that the proposed agreement provides a favorable fee structure for the Stadium Authority. The proposed ESA with Fanatics improves upon the existing arrangement by incentivizing Fanatics to minimize expenses, tying the merchandising fee to performance, and reclassifying the merchandising fee as an event expense deducted from gross merchandise profits thus avoiding further dilution of the net merchandise revenues payable to the Stadium Authority. This ensures that the promoter shares in the cost, rather than the entire fee being absorbed by the Stadium Authority’s net merchandise revenue.
(D) Fanatics Market Analysis:
Staff conducted extensive market research through public records review and confidential conversations with industry subject matter experts that are familiar with the Fanatics business model and terms.
As of 2024, Fanatics has in-venue retail partnerships with 14 NFL teams, managing both e-commerce and physical retail operations. Some of the NFL stadiums where Fanatics provides merchandise services include:
• EverBank Stadium (Jacksonville Jaguars): Fanatics is the official merchandiser, operating all Jag Pro Shops and portable kiosks throughout the stadium.
• M&T Bank Stadium (Baltimore Ravens): Fanatics operates a full suite of retail outlets, including the team's first year-round retail store at the venue
• U.S. Bank Stadium (Minnesota Vikings): Fanatics manages in-venue retail operations, contributing to a significant increase in retail sales.
• Raymond James Stadium (Tampa Bay Buccaneers): Fanatics oversees in-stadium retail spaces, enhancing the merchandise experience for fans
• Nissan Stadium (Tennessee Titans): Fanatics serves as the Titans' official end-to-end omnichannel retail partner, managing on-site merchandise and the team's e-commerce platform. This partnership will extend to the new Nissan Stadium slated for completion in 2027.
• FirstEnergy Stadium (Cleveland Browns): Fanatics expanded its partnership with the Browns to operate all physical retail outlets at FirstEnergy Stadium, alongside its existing e-commerce services. The company is investing in a redesigned Pro Shop and integrating its FanCash loyalty program.
Staff Analysis Post-March 11, 2025 Board Meeting
Following the March 11, 2025 Board meeting, staff requested the following actions to further support the recommendation: (a) an analysis of net revenue projections for Non-NFL Events in FY 2025/26; and (b) a revised, shorter term for the proposed ESA.
• Analysis of FY 2025/26 Net Revenue Projections
According to the Stadium Manager, applying the new terms to Non-NFL Event merchandise revenue for events in FY 25/2026 should result in an additional $150,000 to $250,000 in net revenue compared to the old terms. The Stadium Authority has not yet independently verified projected data. We will verify the actual and projected net revenue and will continue to track all revenue sources for Non-NFL Events including revenue derived from merchandise sales.
• Revised, Shorter Term for the Proposed ESA
The 2-year term in the proposed ESA may be extended for up to two (2) additional one (1) year periods, which represents a revised, shorter term than the previously proposed 4-year term. Any extension is subject to mutual agreement of Stadium Manager and Executive Director.
Key Terms of the Proposed ESA:
This Agreement between Stadium Manager and Contractor governs the provision of specified Services and is comprised of the following integrated components:
• Complete and Integrated Terms:
The Agreement, including Exhibits A (Scope of Services), B (Compensation and Fees), C (Insurance Requirements), and D (Levi’s® Stadium Jobsite Rules), represents the entire understanding between the parties, superseding all prior agreements or representations.
• Term and Termination:
The Agreement shall be effective as of April 1, 2025, and shall expire on March 31, 2027, unless earlier terminated in accordance with this Agreement. The Term may be extended for up to two (2) additional one (1) year periods, subject to the mutual written agreement of the Stadium Manager and the Executive Director. Any further modifications to the Term shall be set forth in a written amendment executed by authorized representatives of both Parties. Either Party may terminate this Agreement for material breach (subject to a reasonable cure period) or, upon sixty (60) days’ prior written notice, without cause at the discretion of the Stadium Manager.
• Scope of Services and Standards:
The Contractor is responsible for performing the Services as detailed in Exhibit A. All work must be conducted in accordance with the applicable professional standards, laws, and regulations, ensuring quality, technical accuracy, and proper coordination.
• Specific Business Terms:
Under the proposed ESA, Fanatics will receive a fee equal to 7% of net merchandise revenue or $5,000-whichever is greater-when gross merchandise sales are $4,000,000 or less. For gross merchandise sales exceeding $4,000,000, the fee increases to 8% of net merchandise revenue. In the event of a merchandise buyout by the event promoter (“Buyout”), Fanatics will be paid a flat fee of $5,000. Linking a merchandise concessionaire’s fee to net revenue is standard industry practice, and research by the Stadium Manager confirms that these rates are fair, reasonable, and consistent with similar venues.
Example (Gross Merchandise Sales ≤ $4,000,000)
o Concert with Gross Merchandise Sales of $1,000,000, sales tax of $91,250, security/bootleg fee of $2,500, and transaction fees of $35,000.
o Net Merchandise Revenue ($871,250) = Gross Merchandise Sales ($1,000,000) - Sales Tax ($91,250) - Security/Bootleg Fee ($2,500) - Transaction Fees ($35,000).
o Contractor Fee ($60,987.50) = 7% x Net Merchandise Revenue ($871,250).
Example (Gross Merchandise Sales > $4,000,000)
o Concert with Gross Merchandise Sales of $5,000,000, sales tax of $456,250, security/bootleg fee of $12,500, and transaction fees of $175,000.
o Net Merchandise Revenue ($4,356,250) = Gross Merchandise Sales ($5,000,000) - Sales Tax
o ($456,250) - Security/Bootleg Fee ($12,500) - Transaction Fees ($175,000).
o Contractor Fee ($348,500) = 8% x Net Merchandise Revenue ($4,356,250)
• Roles and Responsibilities:
The Contractor, operating as an independent contractor, is solely accountable for its employees and any subcontractors, including compliance with all legal, licensing, and reporting requirements. The Contractor also bears full responsibility for adhering to Levi’s® Stadium Jobsite Rules and all related security and access protocols.
• Intellectual Property and Confidentiality:
The Contractor is prohibited from using any of the Stadium Manager’s names, logos, or intellectual property without written consent. Both parties must maintain the confidentiality of all materials and information exchanged under the Agreement, except where disclosure is mandated by law.
• Compensation:
Detailed compensation and payment terms are provided in Exhibit B, which outlines the financial arrangements for the Services rendered.
• Prevailing Wage:
The Contractor must comply with all applicable California prevailing wage laws for public works and maintenance projects, including paying the required prevailing wage rates as dictated by relevant Labor Code sections and regulations. The Stadium Manager will supply the prevailing per diem wage rates at the start of the Agreement, and the Contractor is responsible for posting and providing copies of these rates for each worker classification at the project site upon request. Failure to comply may result in penalties.
ENVIRONMENTAL REVIEW
The actions being considered do not constitute a “project” within the meaning of the California Environmental Quality Act (“CEQA”) pursuant to CEQA Guidelines section 15378(a) as it has no potential for resulting in either a direct physical change in the environment, or a reasonably foreseeable indirect physical change in the environment or pursuant to CEQA Guidelines section 15378(b)(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 ESA is projected to increase net revenues for Non-NFL Events, boosting revenue for the Stadium Authority. The proposed terms under the ESA introduce a tiered profit-sharing structure that ties Fanatics’ fee directly to gross profits from merchandise concessions.
COORDINATION
This report has been coordinated with the Stadium Authority Counsel and Treasurer’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.
RECOMMENDATION
Recommendation:
Staff presents three options for Board consideration and approval:
1. Option 1: Approve the Stadium Manager’s request to execute an Event Services Agreement with Fanatics Retail Group Concessions, LLC under the terms presented; or
2. Option 2: Direct the Stadium Manager to issue a Request for Proposal (RFP) for a vendor to operate full-service merchandise concessions for Non-NFL Events at Levi’s® Stadium, and in the interim, authorize the Stadium Manager’s to execute a one-year Event Services Agreement with Fanatics Retail Group Concessions, LLC under the terms presented, to allow for the initiation and completion of an RFP process; or
3. Option 3: Direct the Stadium Manager to issue a Request for Proposal (RFP) for a vendor to operate full-service merchandise concessions for Non-NFL Events at Levi’s® Stadium, and in the interim, continue with the current Non-NFL Event protocol in which Fanatics passes through all service-related expenses, including the concessionaire fee, to the event promoter.
Staff
Reviewed by: Chuck Baker, Assistant Executive Director
Approved by: Jovan D. Grogan, Executive Director
ATTACHMENTS
1. Proposed Event Services Agreement between Forty Niners Stadium Management Company LLC and Fanatics Retail Group Concessions, LLC