By Gil Fried, Editor-in-Chief
A long-standing dispute between the City of Santa Clara, Calif., and the San Francisco 49ers over various costs was recently resolved. The primary issues that generated the most media coverage over the dispute, that traced itself back to the 2017-18 contract year, revolved around policing and buffet costs at Levi’s Stadium. The dispute revolved around who should foot the bill as the costs have been steadily increasing.
The settlement should funnel around $20 million into the City’s general fund over the next two years. The team/stadium had paid for expenses for the police and the buffet offered to some luxury seating customers, and the City was responsible for repaying parts of those expenses. The settlement reduced the amount the City owed to $14.8 million over the covered seasons (2017-18-2023-24). The settlement also would inject $7.1 million in performance rent into the City’s general fund. Further, the agreement increased the police-cost threshold by $108,000 per game. That is the amount the team pays for NFL.
Originally, the cap was set at $170,000 per game with a 4% annual increase. From the beginning police costs exceeded thresholds by $75,514. Ever since, the costs have exceeded the threshold for every full season (not counting the Covid shut down). The cost for police presence has skyrockets over the years and the estimate for the 2023-24 season are $521,494 per game. That is $299,531 over the threshold. The new agreement increases the security cost threshold to $360,000 per game. Costs exceeding the contractual threshold were to be reimbursed by the stadium authority through payments out of the authority’s discretionary fund or as credits against what would otherwise be the stadium’s facility rent obligation. That could mean the city would be on the hook for about $3 million per year in just police costs. As an example, the team had previously paid for police overtime expenses for games such as a Christmas game in 2023. When the team said they would not pay the City was on the hook for $100,000 in overtime police costs.
The buffet part of the agreement focused on amounts the Santa Calara Stadium Authority was supposed to reimburse the stadium management company for complimentary buffet for 942 designated stadium lease holders in various sections. The agreed amount was $90,000 for every NFL game and that amount could increase 3% a year starting in 2025. The city will try to recoup some of these expenses by adding a $4 added ticket surcharge for non-NFL games. This will push that surcharge from $4 per ticket to $8 per ticket. An additional provision increased the youth /senior fee from 0.35 to 0.40 per ticket.
The key for this settlement is to examine what the added costs are for police and security presence at a major event. At a certain point the teams, leagues, venues, municipalities, and others will need to examine how to reduce such costs as the added burden will eventually fall to voters or ticket buyers who might balk at a significant increase in costs just to pay for security. Security is critical, but the question is always who will pay for it.
Fried is a Professor and Associate Dean of Academics and Accreditation for the College of Business at the University of West Florida.
