Annual rent for the 49ers' use of Levi's Stadium was recently increased by $262,000 to $24.762MGETTY IMAGES
Much of the feud over how much rent the 49ers should have to pay the city of Santa Clara to use Levi's Stadium "stems from a bitter dispute over how the annual amount is calculated," according to Emily DeRuy of the San Jose MERCURY NEWS. An arbitrator recently said that the team "should pay $262,000 more in rent, raising the annual payment" from $24.5M to $24.762M. The increase in rent is "relatively minimal given the large overall amount, but the dispute and the bitter fallout could ultimately damage what is an already tense relationship between the team and the city." Arbitration documents show that the dispute is "centered around whether revenue, and what kind of revenue, should be a factor in determining the rent." From the outset, both the city and the team "agreed on the end goal, that the payment should cover ground rent, stadium operating expenses, debt service and capital reserves." They also "agreed that debt service estimates had decreased while operating expense estimates had increased" as of '15, when it "came time to reevaluate the lease." But initial revenue also "came in higher than expected and the 49ers argued that should be taken into account and the rent reduced." The team also "argued that interest earnings on money sitting in reserves should be included." But the city "disagreed, arguing revenue should not be considered and that the lease clearly specified only changes in debt service or operating expenses should trigger a rent adjustment." At one point, the city suggested an "annual payment" of $25.862M (San Jose MERCURY NEWS, 8/15).
