REPORT TO STADIUM AUTHORITY BOARD
SUBJECT
Title
Report on the Audited Santa Clara Stadium Authority Fiscal Year 2024/25 Annual Financial Statements
Report
BACKGROUND
The Santa Clara Stadium Authority (Stadium Authority), the Stadium Funding Trust, and Goldman Sachs Bank USA entered into a Credit Agreement on June 19, 2013. Section 5.1(a) of the Credit Agreement requires that the Stadium Authority Annual Financial Statements be audited by independent certified public accountants within 180 days after the end of each fiscal year. On June 25, 2021, the Stadium Authority entered into a professional services agreement with KPMG, LLP (KPMG) to perform the annual financial audit of the Stadium Authority’s Fiscal Year 2024/25 Annual Financial Statements.
The Annual Financial Statements include: (1) the Independent Auditors’ Report which describes the auditors’ responsibility and their opinion of the Financial Statements, (2) Management’s Discussion and Analysis which provides an overall review of the Stadium Authority’s financial activities, (3) the Basic Financial Statements, and (4) the Notes to the Financial Statements which have additional information pertaining to the Stadium Authority’s operations and financial position.
The Audit Committee met with Stadium Authority and KPMG staff on September 22, 2025 to review the draft Stadium Authority Fiscal Year 2024/25 Annual Financial Statements. The role of the Audit Committee is to provide oversight of the Stadium Authority’s financial reporting processes, internal controls and independent auditors. At the September 22, 2025 meeting Stadium Authority staff provided an overview of the Financial Statements and KPMG discussed the audit process and the audit results. Several comments were made by the Audit Committee including: 1) Audit materiality and sampling, 2) Corrected audit misstatement related to defaulted Stadium Builder License (SBL) revenue recognition, 3) Related parties, and, 4) Access to data and backup documentation. The Audit Committee voted to accept the Financial Statements and recommended that the Stadium Authority Board note and file the report as soon as possible at a Joint Council and Authorities Concurrent and Stadium Authority Board Meeting. A finalized clean audit letter from KPMG is included in the financial statements attached to this report.
The Financial Statements being discussed with this report cover the Stadium Authority’s 2024/25 fiscal year, which spans from April 1, 2024 to March 31, 2025.
DISCUSSION
On September 22, 2025, a draft of the financial statements was presented to the Audit Committee and KPMG subsequently finalized their work which resulted in the issuance of the Stadium Authority Fiscal Year 2024/25 Annual Financial Statements (Attachment 1), Internal Controls and Compliance Letter (Attachment 2) as required per the Stadium Authority debt covenants, and Independent Auditors’ Report (Attachment 3). KPMG expressed an unmodified (i.e., “clean”) opinion on the Financial Statements. An unmodified opinion is when the auditor concludes that the financial condition, position, and operations are fairly presented, and the financial statements are free of material misstatements.
Key financial highlights for the fiscal year ended March 31, 2025 are as follows:
• The carrying value of Levi’s Stadium at March 31, 2025, net of depreciation, is $653.9 million.
• During the fiscal year, there were ten National Football League (NFL) games, eight large-scale ticketed non-NFL events, and sixty-seven smaller special events held at Levi’s Stadium.
• The Stadium Authority recognized $83.3 million in operating revenue and $62.0 million in operating expenses.
• Revenues from the non-NFL events were $23.8 million and the related expenses were $13.6 million resulting in net non-NFL event profit of $10.2 million.
• Debt service payments during the fiscal year totaled $20.3 million. Overall remaining outstanding debt was reduced by $9.1 million.
• The City of Santa Clara (City) received $1.0 million for stadium ground rent $4.6 million for performance based rent and $279,000 in senior and youth fees.
After the September 22, 2025 meeting, KPMG issued a final report on September 29, 2025 with some changes that were not material to the draft report. These changes were related to the corrected audit misstatement due to an adjustment to how defaulted Stadium Builder License (SBL) revenue is recognized. It should be noted that defaulted SBLs are remarketed and resold, resulting in additional revenue to the Stadium Authority.
The draft report included adjustments to the FY2023/24 financial statements for immaterial corrections related to the accounting for the unearned revenue on defaulted SBLs, including decreasing unearned revenue, current portion and unearned revenue, noncurrent by $799,000 and $23.2 million, respectively and increasing rents and licensing and net position - beginning of period by $841,000 and $23.1 million respectively.
After preparing and posting the materials for the September 22, 2025, Audit Committee meeting, staff received additional information and data from the Forty Niners Stadium Management Company, LLC (ManagementCo), which resulted in a minor change to the analysis behind the defaulted SBL revenue recognition adjustment. The final report includes adjustments to the FY2023/24 financial statements for immaterial corrections, including decreasing unearned revenue, current portion and unearned revenue, noncurrent by $771,000 and $22.3 million, respectively, and increasing rents and licensing and net position - beginning of period by $784,000 and $22.3 million respectively.
These changes from the draft report were incorporated into the Management Discussion and Analysis, the Financial Statements as well as the Notes to Financial Statements. Additionally, it is important to note that the changes are immaterial corrections that do not affect cash on hand, services, rates or fees. They are meant align our statements with Generally Accepted Accounting Principles (GAAP) for defaulted SBLs
As part of the audit, KPMG also considers the Stadium Authority’s internal control over financial reporting as a basis for designing audit procedures. Related to this work, the auditors issued an Internal Controls Compliance letter. As discussed at the Audit Committee meeting on September 22, 2025, when an SBL holder defaults on their SBL, the associated unearned revenue should be recognized at the time of the default. In prior years, the Stadium Authority’s accounting treatment was to amortize the unearned revenue related to the default over the remaining life of the SBL. This accounting for SBL defaults has accumulated over time, hence the correction that was made and noted above. KPMG determined this to be a deficiency in internal control that is considered to be a material weakness and recommended that staff develop a process to ensure that SBL defaults are properly assessed and appropriately recorded going forward.
Staff agrees with this recommendation and will work with ManagementCo to obtain complete and accurate SBL default records, allowing annual assessment and analysis of SBL default revenue recognition.
Lastly, KPMG issued an Independent Auditors’ Report where they note that nothing came to their attention leading them to believe there was any non-compliance with the Credit Agreement dated June 19, 2013.
ENVIRONMENTAL REVIEW
The action being considered does not constitute a “project” within the meaning of the California Environmental Quality Act (“CEQA”) pursuant to section 15378(b)(4) of Title 14 of the California Code of Regulations 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
Costs associated with the preparation of this report are included in the Stadium Authority Operating Budget.
COORDINATION
This report has been coordinated with the Executive Director 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 or at the public information desk at any City of Santa Clara public library.
RECOMMENDATION
Recommendation
Note and file the Santa Clara Stadium Authority Fiscal Year 2024/25 Annual Financial Statements.
Staff
Reviewed by: Kenn Lee, Treasurer
Approved by: Jovan D. Grogan, SCSA Executive Director
ATTACHMENTS
1. FY 2024/25 Santa Clara Stadium Authority Financial Statements
2. Internal Controls and Compliance Letter
3. Independent Auditors’ Report (Debt Compliance Letter)