REPORT TO STADIUM AUTHORITY BOARD
SUBJECT
Title
Action on the Santa Clara Stadium Authority Financial Status Report for Quarter Ending September 30, 2023 and Approve 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 (FY) 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’s (“City”).
This report provides information covering the Stadium Authority’s second quarter of the 2023/24 FY, which runs from July 1, 2023 - September 30, 2023.
The Adopted Stadium Authority Budget incorporates the estimated revenues and expenses for all Stadium Authority funds. The attached Financial Status Reports provide 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 reports.
DISCUSSION
The attached financial status reports provide information covering the Stadium Authority’s second quarter (July 1, 2023 - September 30, 2023) of FY 2023/24. The reports summarize National Football League (“NFL”) and Non-NFL event activity at Levi’s® Stadium and describe 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 three NFL games held in the second quarter of FY 2023/24. Levi’s® Stadium hosted two pre-season NFL games of the 2023 season on August 19th and 25th and one regular NFL season game of the 2023 season on September 21, 2023 which are detailed in the report. This resulted in $2.7 million in NFL ticket surcharge for the Stadium Authority and $69,000 of Senior and Youth Program Fees for the City. Public safety costs for NFL games totaled an estimated $1.3 million which will be fully reimbursed to the City.
Non-NFL Event Revenue and Expenses
There were 8 ticketed Non-NFL events and 25 special events which are detailed in the report. The 8 ticketed Non-NFL events generated an average net profit of $572,000 per event. Table 1 below summarizes revenues and expenditures for the 8 ticketed events.
Table 1
The Non-NFL event ticket sales generated $1.6 million in ticket surcharge revenue, half of which will fund the discretionary fund. Public safety costs for these events totaled an estimated $3.2 million which will be fully reimbursed to the City.
When combining ticketed and non-ticketed Non-NFL revenues to date, Table 2 below shows approximately $6 million in net revenue (excluding surcharge revenue) through the end of the second quarter. 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
Stadium Builder Licenses (“SBLs”)
SBLs account for 19% of the Stadium Authority’s annual budgeted revenue in FY 2023/24. There is a total of 63,655 currently active SBLs which is 96% of the 66,136 total sellable SBL seats. Through the second quarter, since inception, the value of the active SBLs amount to $549.3 million of which $524.3 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 $30.9 million representing 48% of the overall budget for revenues and total operating expenses were $11.7 million or 50% of the budget. The debt service fund was able to pay down $16 million in debt, bringing total Stadium Authority debt down to $229.3 million. Capital expenses were $4 million representing 19% of the overall CIP budget.
FY 2023/24 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 7, 2023, the Stadium Authority Board adopted the Santa Clara Stadium Authority FY 2023/24 Operating, Debt Service, and Capital Budget. As of the timing of the publication of this report, additional information from FY 2023/24 has resulted in the recommended budget adjustments as follows:
1) Beginning Fund Balance / Ending Fund Balance Adjustment for Legal Contingency Reserve - Public Safety Costs: The FY 2022/23 year-end actual was completed and fund balance adjustments totaling $845,725 is necessary to correct the allocation for the reserve to reflect the required amount in the FY 2023/24 beginning and ending fund balances. This action has a net zero impact to the fund balance by reallocating fund balance from unrestricted to Legal Contingency Reserve - Public Safety Costs based on actual year-end performance.
2) Beginning Fund Balance / Ending Fund Balance Adjustment for Operating Reserve: The FY 2022/23 year-end actual was completed and fund balance adjustments totaling $12,887 is necessary to correct the allocation for the reserve to reflect the required amount in the FY 2023/24 beginning and ending fund balances. This action has a net zero impact to the fund balance by reallocating fund balance from Operating Reserve to Unrestricted line items.
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 noted above, adjustments to the budget are required to reflect new information and align budgets with actual revenues and expenses. A technical adjustment to true up the Beginning Fund Balance for the Legal Contingency Reserve - Public Safety Costs and Operating Reserve based on actual FY 2022/23 performance is recommended. The table below summarizes the budget amendment as discussed above:
|
Operating Fund |
Current |
Increase / (Decrease) |
Revised |
|
Beginning Fund Balance - Legal Contingency Reserve - Public Safety Costs |
$3,401,000 |
$845,725 |
$4,246,725 |
|
Beginning Fund Balance - Operating Reserve |
$25,348,289 |
$(12,887) |
$25,335,402 |
|
Beginning Fund Balance - Unrestricted |
$14,713,116 |
$(832,838) |
$13,880,278 |
|
|
|
|
|
|
Ending Fund Balance - Legal Contingency Reserve - Public Safety Costs |
$5,403,500 |
$845,725 |
$6,249,225 |
|
Ending Fund Balance - Operating Reserve |
$25,948,289 |
$(12,887) |
$25,935,402 |
|
Ending Fund Balance - Unrestricted |
$15,627,796 |
$(832,838) |
$14,794,958 |
There is no fiscal impact to reallocating the Legal Contingency Reserve - Public Safety Costs and Operating Reserve within the Operating fund balance.
COORDINATION
This report was coordinated with the Stadium Manager per Section 4.6 of the Management Agreement as well as the Executive Director’s and Stadium Authority Counsel’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 <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 September 30, 2023.
2. Approve a budget amendment in the Operating Fund to increase the Beginning Fund Balance / Ending Fund Balance for Legal Contingency Reserve - Public Safety Costs in the amount of $845,725, offset by a decrease to the unrestricted fund balance.
3. Approve a budget amendment in the Operating Fund to decrease the Beginning Fund Balance / Ending Fund Balance for the Operating Reserve in the amount of $12,887, offset by an increase to the unrestricted fund balance.
Staff
Reviewed by: Kenn Lee, Treasurer
Approved by: Jovan D. Grogan, Executive Director
ATTACHMENTS
1. SCSA Financial Status Report for the Quarter Ending September 30, 2023