REPORT TO STADIUM AUTHORITY BOARD
SUBJECT
Title
Action to Delegate Authority to Executive Director to Procure, Negotiate, and Execute an Agreement for Levi’s Stadium Naming Rights Signage Assessment Services
Report
BOARD PILLAR
Ensure Compliance with Measure J and Manage Levi’s Stadium
EXECUTIVE SUMMARY
In April 2022, the Stadium Manager submitted a request to procure interim sign repairs. On May 10, 2022, the Stadium Authority Board approved the Stadium Manager’s request to execute an Amendment No. 2 to the Agreement with Bear Electrical Solutions, Inc. to increase the not to exceed amount by $420,000 for the second year of the agreement term to cover interim sign repairs. The Board also directed staff to review the available documentation as provided by the Stadium Manager to advise the Board on next steps.
This report is in response to the Board’s May 10, 2022 direction.
BACKGROUND
The Naming Rights Agreement (Agreement) between the Stadium Authority and Levi’s, the Naming Rights Sponsor, provides for Naming Rights Entitlements under Schedule 1 including but not limited to the following Exterior Stadium Signage:
• Suite Tower - Marquee Sign. One (1) primary exterior stadium identification banner sign displaying the Stadium Name in large lettering (the "West Side Lettering").
• Suite Tower - Theme Graphics. Two (2) theme graphics on either side of marquee banner shall include the Stadium Name and/or Stadium Logo.
• East Facade Marquee Sign. One (1) large centered sign across the eastfacing exterior displaying the Stadium Name in large lettering (the "East Side Lettering" and, together with the West Side Lettering, the "Stadium Name Lettering"), visible to surrounding corporate and residential areas.
• Stadium Gate Signage. Signs at each of four (4) gates displaying "Levi's Stadium" in three-dimensional metal letters across face.
Section 3(g) of the Agreement provides that except for the changes requested by the Naming Rights Sponsor pursuant to Section 5(f), all of the signage and other advertising opportunities granted to the Naming Rights Sponsor shall be designed, produced, installed, illuminated, and maintained by the Stadium Authority at the Stadium Authority's expense (except that Naming Rights Sponsor shall provide any required artwork and design, including any revisions, at Naming Rights Sponsor's cost and expense).
Section 5(f) provides that the Stadium Authority shall be responsible for the cleaning, repairing and maintenance of all signage included in the Naming Rights Entitlements; provided, that Levi’s shall be responsible, at its sole cost and expense, for the preparation of all conceptual drawings and designs and any other content for all signage in respect of the Agreement or the Naming Rights Entitlements. Section 5(f) also states that Levi’s shall be entitled, at its sole cost and expense, to replace, update, change, refresh or refurbish any such initial signage at any time and from time to time (and for any reason).
As the Stadium Manager, Forty Niners Stadium Management Company, LLC is responsible for maintaining “the Stadium in the Required Condition and operate the Stadium as a quality NFL and multi-purpose public sports, public assembly, exhibit and entertainment facility” as required by the Management Agreement between the Stadium Authority and Stadium Manager.
Below is a summary timeline of the actions related to Levi’s Naming Rights signage:
• Fiscal Year (FY) 2020/21: Levi’s Naming Rights Signage Replacement Project ($682,500) was approved as part of the FY 2020/21 Capital Expense (CapEx) Budget.
• FY 2021/22: Stadium Manager submitted a Naming Rights Signage Replacement Project ($945,000) for the FY 2021/22 CapEx Budget, which was not approved. On September 7, 2021, the Board approved a $250,000 budget amendment for a Levi’s Signage Repairs CapEx Project.
• FY 2022/23: Stadium Authority Board approved the FY 2022/23 CapEx Budget which includes line items for a Levi's Naming Rights Signage Refurbishment project ($1,260,000) and a Levi's Naming Rights Existing Signage Lighting and Driver Repair project ($420,000). The Board further directed staff to explore options for a more cost-effective way to address repairs to the Naming Rights Sponsor signage.
DISCUSSION
In August 2021, the Stadium Manager provided an assessment report dated July 9, 2021 prepared by a third-party sign vendor, Architectural Design & Signs, Inc. (AD/S) for the Levi’s Stadium Naming Rights exterior signage (Attachment 2). As part of the assessment, AD/S completed the following:
• Reviewed internal documents: 2014 original construction documents, shop drawings, structural engineering, welders certifications, warranty information, and lighting/electrical plans, proposed and completed 2018 repair work, and photos of the signs at the time.
• Conducted an onsite survey in June 2021 to determine site accessibility for equipment, current conditions of the signs, existing electrical connections and day/night visibility of the signs.
• Prepared a summary of discoveries, which outlined: 1) current condition of the signs was not recommended for retrofit/reconstruction, 2) if the decision is to reuse and reconstruct the signs to complete working order, Levi’s Stadium would be without Naming Rights signage for a significantly longer timeframe than would be required for removal and replacement, 3) equipment required onsite will directly impact Stadium events, 4) repair vs. replacement costs, and 5) material and product used to fabricate these signs have evolved greatly since 2014.
• Based on the internal review of documents and onsite survey, made a recommendation to remove the existing signage and replace with new.
Within the summary of discoveries, the vendor provided cost estimates for 1) removal, retrofit, and reinstallation of all four signs (approximately $995,000), and 2) removal of existing signs and installation of new signs (approximately $1,190,850). They noted that the pricing was based off of market conditions at the time and material escalation, and that they had experienced continued increases in the price of materials used to fabricate and install such signs.
Consistent with the Board’s May 10, 2022 discussion and direction, staff reviewed the assessment report and determined that while the scope of the July 2021 assessment was comprehensive, the signs’ condition have now changed through subsequent repairs that were completed, and therefore some of the analysis/conclusions included in the report may have changed or no longer apply.
The repairs completed following the July 2021 assessment totaled $249,000 and included:
• Removal of the red fabric covering the “batwings” area of the signs.
• Replacement of the LEDs and drivers that had failed, specifically, 100% of red LEDs in the East and West signs and 50% of the red LEDs in the North and South signs.
• Original fabric was then reinstalled, which resolved the blotchy red areas in the signs.
As noted above, in May 2022, the Board also approved the procurement of additional interim signage repairs that total $420,000. Specifically, those repairs would replace 100% of the LEDs in the signs’ white lettering and replace the remaining 50% of the red LEDs in the North and South signs that were not replaced in 2021. These repairs are anticipated to be completed by early August.
Staff has concluded that without additional assistance the Stadium Authority and City do not have the internal resources or expertise necessary to advise the Board on the best next course of action: continue to repair as the need arises, refurbish the signage, or replace the signage.
Given the signs’ updated condition and potential changes to the discoveries outlined in the AD/S report, it is recommended that the Stadium Authority procure an independent assessment to evaluate the Naming Rights exterior signage, with delegated authority to the Executive Director to enter into an agreement with a third-party vendor for such services in an amount not to exceed $30,000. Staff plans to procure these services during the Council recess and return to the Board with the completed assessment in Fall 2022. The services will be procured in compliance with the Stadium Authority Procurement Policy and Santa Clara City Code Chapter 2.105.
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 a governmental organizational or administrative activity that will not result in direct or indirect changes in the environment.
FISCAL IMPACT
The Stadium Authority FY 2022/23 Operating Budget, General and Administrative Budget contains $150,000 for Board directives and Executive Director assignments. There are sufficient funds to cover the cost of the sign assessment services (not to exceed $30,000).
COORDINATION
This report has been coordinated with the City’s Public Works Department and the Treasurer 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>.
ALTERNATIVES
1. Authorize the Executive Director to procure, negotiate, and execute an agreement with a third-party vendor in an amount not to exceed $30,000 to assess the Levi’s Stadium Naming Rights exterior signs and make a recommendation on the most cost-effective long-term approach; or
2. Any other Board direction.
RECOMMENDATION
Recommendation
Alternative 1
1. Authorize the Executive Director to procure, negotiate, and execute an agreement with a third-party vendor in an amount not to exceed $30,000 to assess the Levi’s Stadium Naming Rights exterior signs and make a recommendation on the most cost-effective long-term approach.
Staff
Prepared by: Christine Jung, Assistant to the Executive Director
Reviewed by: Ruth Mizobe Shikada, Executive Director’s Office
Approved by: Rajeev Batra, Executive Director
ATTACHMENTS
1. Naming Rights Agreement Provisions
2. AD/S Report