REPORT TO STADIUM AUTHORITY BOARD
SUBJECT
Title
Action on the Santa Clara Stadium Authority Financial Status Report for Quarter Ending December 31, 2024 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 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”) General Fund.
This report provides information covering the Stadium Authority’s third quarter of the 2024/25 fiscal year (FY), which ended on December 31, 2024.
The Adopted Stadium Authority Budget incorporates the estimated revenues and expenses for all Stadium Authority funds. 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 reports.
Additionally, staff is recommending amendments to the FY 2024/25 Stadium Authority Budget based on FY 2024/25 projected actuals reported in the proposed FY 2025/26 Operating, Debt Service, and Capital Budget. Carryover of unspent Capital Expenditure (CapEx) funds from FY 2023/24 and an increase to the CapEx budget due to unanticipated costs are also recommended.
DISCUSSION
The attached financial status report provides information covering the Stadium Authority’s third quarter (October 1, 2024 - December 31, 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 seven NFL games held in the third quarter of FY 2024/25. Overall, Levi’s® Stadium hosted one pre-season NFL game of the 2024 season on August 18th and nine regular NFL season games of the 2024 season which are detailed in the report. This resulted in $14.6 million in NFL ticket surcharge for the Stadium Authority and $279,000 of Senior and Youth Program Fees for the City over the course of the NFL season. Public safety costs for NFL games totaled an estimated $5.4 million which will be fully reimbursed to the City.
Non-NFL Event Revenue and Expenses
Cumulatively over the first three quarters of the fiscal year, there were eight ticketed Non-NFL events and 51 special events which are detailed in the report. The eight ticketed Non-NFL events generated an average net revenue of $1.1 million per event which is $300,000 higher than the average net revenue of $738,000 generated through the third quarter of last fiscal year. The soccer sporting events saw an increase in profitability in the current year, the largest driver being lower public safety and event staff related expenses. Table 1 below summarizes revenues and expenditures for the eight ticketed events.
Table 1
Non-NFL event ticket sales generated $1.4 million in ticket surcharge revenue, half of which will fund the discretionary fund. Public safety costs for these events totaled an estimated $3.1 million which will be fully reimbursed to the City by the Stadium Authority.
When combining ticketed and non-ticketed Non-NFL events to date, Table 2 below shows approximately $10.1 million in net revenue (excluding surcharge revenue) through the end of the third quarter. It should be noted the financial information provided is a draft and subject to change as additional revenues and/or expenditures are recorded.
Table 2
Stadium Builder Licenses (“SBLs”)
SBLs account for 8.1% of the Stadium Authority’s annual budgeted revenue in FY 2024/25. There is a total of 66,741 currently active SBLs. Through the third quarter, since inception, the value of the active SBLs amount to $561.1 million of which $531 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 Report. In summary, total operating revenues were $50.1 million representing 80% of the overall budget for revenues and total operating expenses were $17.9 million or 40% of the budget. The debt service fund was able to pay down $8.7 million in debt, bringing total Stadium Authority debt down to $220 million. Capital expenses were $5.1 million representing 21% of the overall CIP 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) NFL Ticket Surcharge: The Forty Niners Football Company, LLC collect a 10% ticket surcharge on the price of admission to all NFL games held at Levi’s Stadium on behalf of the Stadium Authority. The Stadium Authority received $895,000 more NFL Ticket Surcharge revenue than budgeted due to higher ticket prices and more tickets sold than budgeted. Therefore, a budget adjustment of $895,000 is needed to reflect the increase in revenue.
2) SBL Proceeds: Cash collected from annual payments from SBL holders on a payment plan and payment from sales on new SBLs and/or SBLs that were defaulted make up SBL proceeds. The Stadium Manager projects $8 million of SBL proceeds, $3.0 million more than the current budget therefore, a budget amendment of $3.0 million is needed to reflect the increase in revenues.
3) Interest: The Stadium Authority was maintaining a higher bank balance than anticipated over the first three quarters of the fiscal year. The Stadium Authority had been holding funds in a legal contingency reserve awaiting the finalization of the 2024 Settlement Agreement. The final effective date of that agreement was December 28, 2024 and subsequently in January 2025, the funds in the reserve were distributed. Additionally, spending on CapEx projects has been lower than budgeted and bank interest rates were higher than projected. The Stadium Authority projects $5.4 million in interest revenue, $1.9 million more than budgeted. A budget amendment of $1.9 million is needed to reflect the increase in revenues.
4) Net Revenues from Non-NFL Events: The Stadium Manager is responsible for booking and scheduling all Non-NFL events on behalf of the Stadium Authority. As required by the Stadium Management Agreement, Stadium Manager is also required to maintain complete and accurate books and records related to the net income from Non-NFL events. The Stadium Manager projects $9.3 million of net revenue from Non-NFL events will be collected, $3.3 million more than the current budget therefore, a budget amendment of $3.3 million is needed to reflect the increase in revenue.
5) Senior and Youth Fee Revenue: Due to the 2024 Settlement Agreement, Senior and Youth Program Fees increased from $0.35 per NFL game ticket with a cap of $250,000 to $0.40 per ticket with a $300,000 cap starting in FY 2024/25 resulting in collection of additional Senior and Youth Program Fee Revenue. The Stadium Authority has collected $279,000 of Senior and Youth Program Fees through the end of the NFL season, which is $11,000 higher than budgeted. A budget adjustment is needed to reflect the increase in the revenue by $11,000 which in turn is paid to the City’s General Fund. (see #8 below).
6) Stadium Management Fee: The Management Performance fee owed to the Stadium Manager is outlined in the Stadium Management Agreement. The Stadium Manager receives an annual base management fee that is split 50/50 between StadCo and the Stadium Authority since the Stadium Manager manages the stadium year-round for both entities. In addition to the base management fee of $269,000 for FY 2024/25 the Stadium Manager also receives a stadium marketing and booking fee based on a tiered percentage of the net Non-NFL events revenue that exceed the Marketing and Booking Fee Benchmark. Based on projected net Non-NFL Event revenue of $9.3 million for FY2024/25, the Stadium Manager is expected to earn an additional $264,000 stadium marketing and booking fee. Therefore, a budget amendment of $264,000 is needed to reflect the increased management fee that is projected to be owed to the Stadium Manager.
7) SBL Sales and Service (SBL): The Stadium Manager provides sales and service to SBL holders on behalf of Stadium Authority. Based on projected actuals for FY2024/25 SBL Sales and Service for bonus and commissions expenses are projected to be higher than budgeted due resale activity exceeding what was anticipated. A budget adjustment is needed to reflect the increase in SBL Sales and Service of $163,000.
8) Senior and Youth Program Fees (paid to the City): Due to the 2024 Settlement Agreement, Senior and Youth Program Fees increased from $0.35 per NFL game ticket with a cap of $250,000 to $0.40 per ticket with a $300,000 cap starting in FY 2024/25 resulting in collection of additional Senior and Youth Program Fees. The Stadium Authority has collected $279,000 of Senior and Youth Program Fees through the end of the NFL season, which is $11,000 higher than budgeted (see #5 above). A budget adjustment is needed to reflect the increase in the payment to the City’s’ General Fund by $11,000.
9) Performance Rent: The Performance-Based rent owed to the City is described in the Ground Lease and the Amended and Restated Stadium 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 $9.8 million related to: (1) FY 2022/23 of $4.2 million, (2) FY 2023/24 of $3.1 million and (3) FY 2024/25 of $2.5 million (budget). FY 2024/25 net Non-NFL event net revenue is projected to be higher than budgeted resulting in an increase to Performance-Based rent owed to the City of $1.6 million. Therefore, a budget amendment of $1.6 million is needed to reflect this increase.
10) Utilities: Utility costs were higher than anticipated largely due unanticipated rate increase that was not factored into projections. A budget adjustment of $223,000 is needed to reflect the increase in Utility expenses.
11) Use of StadCo Tenant Improvements: The Stadium Authority is charged fees for the use of StadCo assets during Non-NFL events. Use of StadCo Tenant Improvements is projected to be higher than anticipated by $21,000 due to the increased Non-NFL Event activity. A budget adjustment is needed to reflect the increase in Use of StadCo Tenant Improvements of $21,000.
12) Public Safety Cost (PSC) Over Threshold: Due to the 2024 Settlement Agreement, the public safety cost threshold in FY 2024/25 will equal $360,000 per game. Based on projected actual NFL public safety costs it is estimated that the public safety costs over the threshold will be $2,312,000 which will be paid with the discretionary fund so that there are no impacts to the Performance Based Rent paid to the City. A budget adjustment is needed to reflect the payment of PSC over threshold of $2,312,000.
13) PSC 2024 Outstanding Balance: As part of the 2024 Settlement Agreement, public safety costs over the threshold for FY 2017/18 to FY 2023/24 amounting to approximately $14.8 million were redefined as “PSC 2024 Outstanding Balance.” The budgeted amount of $6.5 million for FY 2024/25 included $3.3 million from the prior Legal Contingency reserve and $3.2 million from excess revenues. Based on projected revenues and expenses, it is anticipated that an additional $3.0 million of excess revenues will be available to pay down the PSC 2024 Outstanding Balance. Therefore, a budget adjustment of $3.0 million is needed to reflect the additional payment of PSC 2024 Outstanding Balance.
14) Transfer to City General Fund from Excess Revenues: Under the 2024 Settlement Agreement the terms of the Stadium Lease has been amended, restructuring the distribution of excess revenues originally to be deposited to the Renovation/Demolition Reserve to instead allocate 25% to the City’s General Fund. The transfer of $3.1 million in excess revenues to the City’s General Fund is budgeted for FY2024/25. Based on projected actuals, $6.2 million is expected to be transferred to the City’s General Fund. Therefore, a budget amendment of $3.1 million is needed to reflect the increased payment.
15) Ending Fund Balance - Discretionary Reserve: Due to the 2024 Settlement Agreement, the public safety cost threshold in FY 2024/25 will equal $360,000 per game. Based on projected actual NFL public safety costs it is estimated that the public safety costs over the threshold will be $2,312,000 which will be paid with the discretionary fund so that there are no impacts to the Performance Based Rent paid to the City. A budget adjustment is needed to reflect the payment of PSC over threshold of $2,312,000 from the discretionary reserve.
16) Ending Fund Balance - Renovation/Demolition Reserve: Due to the 2024 Settlement Agreement, excess revenues that would fund the renovation/ demolition reserve will now receive 50% of the remaining revenues. With the other 50%, half will go towards paying off the PSC 2024 Outstanding Balance and the other half will be distributed to the City’s General Fund. Based on anticipated excess revenues, the Ending Fund Balance - Renovation/ Demolition Reserve is expected to be $43.8 million, an increase of $6.2 million from budget. Therefore, a budget amendment of $6.2 million is needed to reflect the increase in the Ending Fund Balance Renovation/Demolition Reserve.
17) Ending Fund Balance - Stadium Funding Trust Reserve: The Stadium Funding Trust Reserve is required to have sufficient funds to cover the stadium’s operating and maintenance expenses for the first three months of the following fiscal year. Based on projected expenses for the first three months of FY 2025/26 the Ending Fund Balance - Stadium Funding Trust Reserve is anticipated to increase by $1.6 million therefore, a $1.6 million budget amendment is needed to reflect the increase in the reserve.
18) Ending Fund Balance - Unrestricted: The Ending Fund Balance - Unrestricted is anticipated to decrease by $7.2 million due to the actions taken above. A budget amendment of $7.2 million is needed to reflect the decrease in the Ending Fund Balance - Unrestricted.
Debt Service Budget:
1) Contribution from Community Facilities District (CFD): Due to a continued improvement in the economy post COVID, hotel stays have been higher than anticipated, therefore CFD revenue is projected to be higher which allows for additional debt payment on the CFD Advance. A budget adjustment of $675,000 is needed to reflect the increase in Contribution from CFD and the paydown of the CFD Advance.
2) CFD Advance Expense: The CFD Advance Expense is anticipated to increase by $675,000 to reflect the additional debt payment of the CFD Advance due to higher CFD revenues. A budget amendment of $675,000 is needed to reflect the increase in CFD Advance Expense.
Capital Budget:
1) Equipment - Kawasaki ATV (2021/22 Carryover): This project funds the purchase of a new Kawasaki ATV (All-Terrain Vehicle) for Police Department use at the Stadium. The ATV was purchased in FY 2023/24. It was anticipated that this project would be completed by the end of the FY 2023/24 so the remaining funds were not requested to be carried over to FY 2024/25. Due to unanticipated delays with the upfitting, a budget adjustment of $11,000 is needed to include additional costs related to properly equip the ATV in FY 2024/25. Labor required by the City’s fleet department was also more than initially projected and delayed beyond the anticipated billing cycle.
2) Equipment - Kawasaki ATV (2021/22 Carryover): This project funds the purchase of a new Kawasaki ATV for Police Department use at the Stadium. The ATV was purchased in FY 2023/24. It was anticipated that this project would be completed by the end of FY 2023/24 so the remaining funds were not requested to be carried over to FY 2024/25. Due to unanticipated delays with the upfitting, a budget adjustment of $10,000 is needed to include additional costs related to properly equip the ATV in FY 2024/25. Labor required by the City’s fleet department was also more than initially projected and delayed beyond the anticipated billing cycle.
3) Construction - Stadium Event Power Upgrades & Switchgear Electrical (2019/20 Carryover): The project will establish capability to monitor and report the Switch Gear Event Mode Status through the building Schneider Power Monitoring Expert (PME) system for remote monitoring. The plans and specifications required will include any electrical and communication wiring, as well as any controls upgrades necessary to complete the project. The project was originally scheduled to be completed in FY 2023/24 however, delays in the equipment configuration pushed back the timeline. The final installation is expected to be completed in FY2024/25. A budget amendment of $30,000 is needed to complete the final work.
4) Equipment - Kawasaki ATVs (2023/24 Carryover): This project replaces 5 Kawasaki ATVs originally purchased in 2014 that are at the end of the 10-year useful life. The 5 ATV’s have been purchased in FY 2024/25. Due to unanticipated costs related to upfitting the vehicles a budget adjustment of $14,000 is needed for additional costs in FY 2024/25. Labor required by the City’s fleet department was also more than initially projected.
5) Ending Fund Balance: The Ending Fund Balance is anticipated to decrease by $65,000 due to the actions taken above. A budget amendment of $65,000 is needed to reflect the decrease in the Ending Fund Balance - Unrestricted.
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 amendments detailed in the tables below:
Operating Budget
|
Description |
Current |
Increase/ Decrease |
Revised |
|
SOURCE OF FUNDS: |
|
NFL Ticket Surcharge Revenue |
$13,700,000 |
$895,000 |
$14,595,000 |
|
SBL Proceeds Revenue |
$5,057,000 |
$2,912,000 |
$7,969,000 |
|
Interest Revenue |
$3,534,000 |
$1,901,000 |
$5,435,000 |
|
Net Revenues from Non-NFL Events Revenue |
$6,000,000 |
$3,250,000 |
$9,250,000 |
|
Senior & Youth Program Fees Revenue |
$268,000 |
$11,000 |
$279,000 |
|
TOTAL SOURCE OF FUNDS |
$28,559,000 |
$8,969,000 |
$37,528,000 |
|
|
|
|
|
|
USE OF FUNDS: |
|
Stadium Management Fee |
$269,000 |
$264,000 |
$533,000 |
|
SBL Sales and Service Expense |
$3,348,000 |
$163,000 |
$3,511,000 |
|
Senior & Youth Fees (Paid to City) |
$268,000 |
$11,000 |
$279,000 |
|
Performance Rent (Paid to City) |
$9,825,000 |
$1,625,000 |
$11,450,000 |
|
Utilities |
$1,488,000 |
$223,000 |
$1,711,000 |
|
Use of StadCo TI |
$151,000 |
$21,000 |
$172,000 |
|
PSC Over Threshold |
$0 |
$2,312,000 |
$2,312,000 |
|
PSC 2024 Outstanding Balance |
$6,473,000 |
$3,014,000 |
$9,487,000 |
|
Transfer Out - Transfer to City General Fund from Excess Revenues |
$3,073,000 |
$3,093,000 |
$6,166,000 |
|
Ending Fund Balance - Discretionary Reserve |
$2,789,323 |
($2,312,000) |
$477,323 |
|
Ending Fund Balance - Renovation/Demolition Reserve |
$37,548,576 |
$6,224,000 |
$43,772,576 |
|
Ending Fund Balance - Stadium Funding Trust Reserve |
$4,183,645 |
$1,567,000 |
$5,750,645 |
|
Ending Fund Balance - Unrestricted |
$13,912,112 |
($7,236,000) |
$6,676,112 |
|
TOTAL USE OF FUNDS |
$83,328,656 |
$8,969,000 |
$92,297,656 |
Debt Service Budget
|
Description |
Current |
Increase/ Decrease |
Revised |
|
SOURCE OF FUNDS: |
|
Contribution from CFD Revenue |
$2,782,000 |
$675,000 |
$3,457,000 |
|
|
|
|
|
|
USE OF FUNDS: |
|
CFD Advance Expense |
$2,754,000 |
$675,000 |
$3,429,000 |
Capital Budget
|
Description |
Current |
Increase/ Decrease |
Revised |
|
USE OF FUNDS: |
|
Equipment - Kawasaki ATV (2021/22 Carryover) |
$0 |
$11,000 |
$11,000 |
|
Equipment - Kawasaki ATV (2021/22 Carryover) |
$0 |
$10,000 |
$10,000 |
|
Construction - Stadium Event Power Upgrades & Switchgear Electrical (2019/20 Carryover) |
$0 |
$30,000 |
$30,000 |
|
Equipment - Kawasaki ATV (2023/24 Carryover) |
$139,125 |
$14,000 |
$153,125 |
|
Ending Fund Balance |
$1,393,109 |
($65,000) |
$1,328,109 |
|
TOTAL USE OF FUNDS |
$1,532,234 |
$0 |
$1,532,234 |
COORDINATION
This report was coordinated with the Stadium Manager 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 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 December 31, 2024; and
2. Approve the FY 2024/25 Budget Amendments in the Operating Budget in the amount of $8,969,000 to reflect increases in projected revenues and expenses; amendments to the Debt Service Budget in the amount of $675,000 to reflect an increase in projected CFD collections and resulting CFD debt service payments; and amendments to the Capital Budget to increase expenses in the amount of $65,000 offset by a reduction in Ending 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 December 31, 2024