REPORT TO STADIUM AUTHORITY BOARD
SUBJECT
Title
Report on the Audited Santa Clara Stadium Authority Fiscal Year 2023/24 Annual Financial Statements
Report
BOARD PILLAR
Ensure Compliance with Measure J and Manage Levi’s Stadium
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 2023/24 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 role of the Audit Committee is to provide oversight of the Stadium Authority’s financial reporting processes, internal controls and independent auditors. The Audit Committee met with Stadium Authority and KPMG staff on September 3, 2024 and September 17, 2024 to review the draft Stadium Authority Fiscal Year 2023/24 Annual Financial Statements. At the September 3, 2024 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) Operating Expenses included the outcome of the public safety cost settlement, 2) Corrected audit misstatement related to the implementation of GASB 87, Leases, 3) Distinction between the financial statement audit and the Harvey Rose audit and, 4) Review and audit of contracts and agreements entered into by Forty Niners Stadium Management Company, LLC (ManCo). At the September 17, 2024 meeting, the Audit Committee voted to accept the Financial Statements and recommended that the Stadium Authority Board note and file the report at the September 24, 2024 Joint Council and Authorities Concurrent and Stadium Authority 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 2023/24 fiscal year, which spans from April 1, 2023 to March 31, 2024.
DISCUSSION
At the September 3, 2024 Audit Committee meeting, KPMG provided a summary of the methodology used to review and validate the financial statements. On September 17, 2024, KPMG completed a draft of the financial audit of the Stadium Authority which resulted in the issuance of the Stadium Authority Fiscal Year 2023/24 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, 2024 are as follows:
• The carrying value of Levi’s Stadium at March 31, 2024, net of depreciation, is $670,543,336.
• During the fiscal year, there were twelve National Football League (NFL) games, seven ticketed non-NFL events, and fifty-three smaller special events held at Levi’s Stadium.
• The Stadium Authority recognized $81,107,805 in operating revenue and $79,659,943 in operating expenses.
• Revenues from the non-NFL events were $24,935,722 and the related expenses were $16,669,037 resulting in net non-NFL event profit of $8,266,685.
• Debt service payments during the fiscal year totaled $28,683,618. Overall remaining outstanding debt was reduced by $16,606,911.
• The City of Santa Clara (City) received $495,000 for stadium ground rent and $250,000 in senior and youth fees.
Subsequent to the September 17, 2024 meeting, KPMG issued a final report on September 18, 2024 with no material changes to the draft report.
ENVIRONMENTAL REVIEW
This agenda not constitute a “project” within the meaning of the California Environmental Quality Act (“CEQA”) pursuant to CEQA Guidelines section 15060(c)(1) as the it does not involve the exercise of discretionary powers by a public agency;
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 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 <mailto: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 2023/24 Annual Financial Statements.
Staff
Reviewed by: Kenn Lee, Treasurer
Approved by: Jovan D. Grogan, Executive Director
ATTACHMENTS
1. FY 2023/24 Santa Clara Stadium Authority Financial Statements
2. Internal Controls and Compliance Letter
3. Independent Auditors’ Report (Debt Compliance Letter)