49ers File for Arbitration in Levi’s Stadium Rent Dispute

The San Francisco 49ers filed for arbitration Tuesday in their ongoing dispute with the city of Santa Clara, Calif., over rent payments at Levi’s Stadium.

In a letter posted by CSNBayArea.com, the 49ers say they want to reduce their $24.5 million rent payment to $20.25 million. The 49ers claim its contract contains a one-time “rent reset” clause after the first year of operations to adjust the rent based on changes in revenue, updated development costs and expenses.

The 49ers say revenues have been better than expected and stadium costs have been less than anticipated. The Santa Clara Stadium Authority debt service was more than $8 million lower than the amount on which the $24.5 million rent number was based, and construction costs were $136 million less than budgeted, according to the letter.

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Regarding the arbitration filing, 49ers President Al Guido told the San Jose Mercury News: “We’re disappointed that this has to be the next step but unfortunately it’s the only option we have left. It’s not the greatest use of time, money and energy.”

The 49ers and the city of Santa Clara have been in negotiations since November on a new rent payment, the newspaper reported. The 49ers withheld more than $5 million in rent payment since December, according to the newspaper’s report in March, but the 49ers have since caught up by making payments of $1.25 million and $4.25 million.

The city was not satisfied with the 49ers’ initial rent payment proposal from six months ago.

“We weren’t comfortable with the numbers that were presented, and I’m not sure all the expenses were included, including police and fire expenses,” Santa Clara Mayor Lisa Gillmor told the Mercury News. “Our council was concerned about the transparency and how we were asked to reset the rent at the 11th hour.”

The 49ers claim in its letter that its annual rent payment far exceeds that of the Minnesota Vikings, who are paying $10 million a year at the new U.S. Bank Stadium in Minneapolis, which is set to open this year.

Levi’s Stadium, site of Super Bowl 50 this past February, cost $1.2 billion and opened in 2014.

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