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
As the Stadium Manager of Levi’s Stadium, the Forty Niners Stadium Management Company LLC (the “Stadium Manager”) is responsible for maintaining and operating the stadium as a premier NFL venue and a multi-purpose facility for public sports, entertainment, and events. The Stadium Manager also manages Non-NFL Events on behalf of the Santa Clara Stadium Authority (Stadium Authority). This role is defined by the Stadium Management Agreement between the Stadium Authority, Forty Niners SC Stadium Company LLC (StadCo), and the Stadium Manager.
Merchandise concession services refer to the sale and distribution of team apparel, souvenirs, and other merchandise at a venue. These services include managing in-stadium retail stores, mobile kiosks, and online sales, ensuring fans have access to official team and event-related merchandise.
At Levi’s Stadium, Fanatics Retail Group Concessions, LLC (Fanatics) serves as the merchandise concessionaire at Team Stores for NFL events. The Stadium Manager seeks to formalize a business arrangement with Fanatics for Non-NFL Events at Levi’s® Stadium through the proposed Event Services Agreement (ESA) (see Attachment 1), dated April 1, 2025, which memorializes the terms under which Fanatics will operate outside of the Stadium’s Team Stores (e.g., pop-up stores in the concourses) during Non-NFL Events.
Under current Non-NFL Event protocols that are performed on an ad-hoc basis, Fanatics passes through all expenses accrued in the provision of services without any direct tie-ins to gross profits realized as part of merchandise sales to the Non-NFL Event promoter. The new terms under the ESA will incentivize Fanatics to limit its expenses by tying the concessionaire fee directly to gross profits from sales. This will also ensure Fanatics is using its best efforts to maximize gross profits since its fee will be directly correlated to profits accrued.
Fanatics currently operates within Levi’s® Stadium and has experience managing merchandise concession services for Non-NFL Events, with established building access and a dedicated secure space for merchandise storage within Tenant Exclusive Space, which is operated and maintained by Stadium Manager. Its presence provides Fanatics an understanding of stadium operations, including goods loading at the dock, security protocols, internal transport routes, and staging areas. These logistical advantages for Non-NFL Events eliminates the need for repeated setup and mobilization, which reduces operational costs, minimizes environmental impact, and enhances overall efficiency in merchandise concession services execution.
DISCUSSION
The Stadium Manager is requesting to enter into an Event Services Agreement (ESA) with Fanatics to manage merchandise concession services outside the traditional Team Store environment during Non-NFL events.
Staff conducted an analysis of the benefits of Stadium Manager’s request to enter into an ESA, the procurement process, the revenue model for merchandise concession services, the Stadium Manager’s negotiation process, and the key terms of the ESA. Below are the key summary points of the analysis:
Key benefits to the ESA:
• Expanded Sales Opportunities
The arrangement provides promoters with greater flexibility by enabling multiple sales points throughout the concourses, rather than being confined to a few Team Store locations. By allowing merchandise to be sold at various concourse locations, this increases overall revenue potential for the Stadium Authority without disrupting the established Team Store operations.
• Flexible Operational Structure
Promoters can choose between buyout options or revenue-sharing arrangements, ensuring that they can operate in a way that best suits their logistical and financial needs.
• Cost Management and Efficiency
The framework is designed to prevent unnecessary subcontracting costs by ensuring that Fanatics bears its direct operating costs, thereby protecting the economics of the Stadium’s merchandise sales.
Procurement Process:
The services were not publicly competed due to a sole source justification. Fanatics offers unique and specialized services that align with the operational and logistical needs of Levi’s® Stadium. Its existing presence at the Stadium for NFL Events provides a logistical advantage by reducing mobilization costs and environmental impacts and maintaining consistency in operations for Non-NFL events. The highly specialized nature of large-scale merchandise concessions further limits the pool of viable vendors, and Fanatics has a proven track record at Levi’s® Stadium.
Fanatics competes with several companies across different segments of the sports merchandise, collectibles, and betting industries, but these competitors do not provide the full suite of services required to efficiently operate merchandise concession services for Non-NFL events at Levi’s® Stadium, which includes full-service merchandise back-office support, customer service, inventory control, marketing and branding customization, and point of sale (POS) integration. Fanatics also has a unique competitive advantage due to its direct partnerships with major leagues (e.g., NFL, NBA, MLB, and NHL) and its vertical integration model. Fanatics’ main competitors are as follows:
• Sports Merchandise & Apparel
o Nike - Major supplier of official team jerseys and apparel.
o Adidas - Competes in licensed sportswear and footwear.
o Under Armour - Offers team apparel and performance gear.
o Lids - Sells licensed sports headwear and apparel.
o Mitchell & Ness - Specializes in nostalgic and throwback jerseys.
• Sports Collectibles & Trading Cards
o Panini America - Produces trading cards and sports memorabilia.
o Topps (Owned by Fanatics but still competes with other brands).
o Upper Deck - Major competitor in premium trading cards and memorabilia.
• Sports Betting & Gaming
o DraftKings - Online sportsbook and daily fantasy sports competitor.
o FanDuel - Major player in sports betting and fantasy sports.
o BetMGM - Sportsbook and gaming rival.
o Caesars Sportsbook - Competes in the sports betting space.
• E-commerce & Retail
o Amazon - Sells licensed sports gear and collectibles.
o eBay - Competes in the resale market for collectibles and apparel.
o Dick’s Sporting Goods - Offers sports apparel and gear.
o Walmart & Target - Sell licensed sports merchandise.
Merchandise Concessions Service Revenue Model:
Industry standards for revenue splits in merchandise concessions vary and are independently negotiated between Stadium Manager and the promoter. Confidential, private market research conducted by Stadium Manager and reviewed through independent, confidential analysis by staff confirmed that the proposed ESA offers a favorable concessionaire fee structure for the Stadium Authority. The ESA with Fanatics improves existing terms by capping fees, linking them to performance, and ensuring that the concessionaire fee is treated as an event cost deducted from gross merchandise profit. This structure guarantees that the promoter shares in the fee payment, rather than it being solely deducted from the Stadium Authority’s net merchandise revenue.
Stadium Manager Negotiation Process:
For Non-NFL Events, the Stadium Manager negotiates the revenue split between the Stadium Authority and the promoter early in the event planning process. Standard splits vary by event type. Adjustments may occur in special cases, such as major artists negotiating higher percentages.
Key Terms of the ESA:
The ESA includes the following integrated components:
• Term and Termination:
The Agreement is effective from April 1, 2025 through March 31, 2029, and may be extended by mutual written consent. Either party may terminate the Agreement for material breach (subject to a cure period) or, at the discretion of the Stadium Manager, without cause with sixty days' advance written notice.
• Scope of Services and Standards:
Fanatics is responsible for performing the following services, as further detailed in Exhibit A of the ESA:
o Event Planning and Coordination: Fanatics will collaborate with Stadium Manager and other event stakeholders to plan and coordinate all aspects of merchandise sales for the event, including scheduling, logistics, and technical requirements.
o Venue Management: Fanatics is responsible for the setup, maintenance, and teardown of event merchandise spaces within the Stadium premises inclusive of ancillary areas, ensuring compliance with safety regulations and Event specifications. No sales will be processed under the ESA inside the Team Store at Levi’s Stadium.
o Point of Sale Ratios: Fanatics will maintain a reasonable point of sale ratio based on estimated attendance and event type.
o Financial Management: Contractor is responsible for all financial transactions related to event merchandise sales at the Stadium, payments to third party subcontractors and suppliers as applicable, and budget management, ensuring transparency and accuracy.
o Compliance and Risk Management: Contractor will ensure compliance with all relevant Stadium Manager, Stadium, and event regulations and policies, as well as implementing measures to mitigate risks associated with Event operations.
• Specific Business Terms - Contractor Compensation and Fees:
Under the ESA, Fanatics will be paid a fee equal to 7% of net merchandise revenue or $5,000, whichever is greater, when gross merchandise sales are equal to or less than $4,000,000. When gross merchandise sales are greater than $4,000,000, Fanatics will be paid a fee equal to 8% of net merchandise revenue. Tying a merchandise concessionaire’s fee to the profits achieved from merchandise sales is industry standard, and the Stadium Manager’s research involving similar venues indicates the percentage fees are fair, reasonable, and in line with market rates.
• Roles and Responsibilities:
Fanatics, operating as an independent contractor, is solely accountable for its employees and any subcontractors, including compliance with all legal, licensing, and reporting requirements. Fanatics 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.
Overall, the ESA enhances operational flexibility and revenue potential for Non-NFL Events by expanding merchandising opportunities in the Stadium’s concourses. Based on the analysis above, staff recommends approval of the ESA with Fanatics.
The Stadium Authority Counsel’s Office has reviewed the agreement for comparison to the Stadium Authority’s customary language. Nothing in the proposed agreements changes the Stadium Authority’s rights under the Management Agreement and specifically with respect to any dispute that may arise from the Stadium Manager’s obligations under the Management Agreement.
The Stadium Authority reserves all rights to confirm and dispute charges by and payments to the Stadium Manager during a fiscal year-end reconciliation/true-up, including but not limited to changes based on improper allocation, calculation, lack of support, or failure to comply with the Parties’ contracts or California law. The Stadium Authority may raise related questions before the fiscal year-end reconciliation/true-up, which the Stadium Manager agrees to assess and respond to in good faith.
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
This agreement is of interest to the Stadium Authority as it enables merchandise sales at multiple concourse locations and incentivizes Fanatics to maximize net revenues, which is expected to have a positive fiscal impact on net revenues for the Stadium Authority.
COORDINATION
This report has been coordinated with the Stadium Authority Counsel and Treasurer’s Offices.
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
Approve the Stadium Manager’s request to execute an Event Services Agreement with Fanatics Retail Group Concessions, LLC, effective April 1, 2025, through March 31, 2029, on the terms presented. Any extensions of the Event Services Agreement will require Stadium Authority Board approval.
Staff
Reviewed by: Chuck Baker, Assistant Executive Director
Approved by: Jovan D. Grogan, Executive Director
ATTACHMENTS
1. Proposed Event Services Agreement with Fanatics Retail Group Concessions, LLC