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STADIUM
FORTY NINERS STADIUM MANAGEMENT COMPANY

January 6, 2017
VIA PERSONAL DELIVERY
Rajeev Batra
Acting Executive Director
Santa Clara Stadium Authority
1500 Warburton Avenue
Santa Clara, CA 95050
Re: Stadium Management Agreement by and among Santa Clara Stadium
Authority, Forty Niners Stadium Management Company, LLC, and Forty Niners
SC Stadium Company, LLC, dated March 28,2012, as amended
("Agreement")
Mr. Batra:
I write to follow up on our correspondence dated November 23, 20 16; December
6, 2016; December 20, 2016; December 22, 20 16; December 23, 2016; and January 3,
2017 concerning the Stadium Management Agreement by and among Santa Clara
Stadium Authority ("SCSA"), Forty Niners Stadium Management Company, LLC
("Manager"), and Forty Niners SC Stadium Company, LLC ("StadCo"), dated March 28,
2012 (the "Agreement").
Manager made all documents requested by you available to you and your staff in
a meeting on November 18, 20 16. In addition, Manager offered numerous times, in our
correspondence, by phone, and in public meetings, to make all requested documents
available to any member of the Board or any designated staff member in a manner that
satisfies all ofthe SCSA' s requests for information, while protecting SCSA' s interests.
Manager requested meetings with staff, Board members and/or counsel to SCSA for the
purpose of resolving any issues as to the nature of the document production. SCSA has
not accepted any of the dates that Manager offered or offered any other dates.
Nonetheless, news reports indicate that the Authority Board met in closed session earlier

4900 Marie P. DeBartolo Way I Santa Clara, CA 95054

Letter to Rajeev Batra, Santa Clara Stadium Authority

January 6, 2017
Page2

this week to discuss the possibility of seeking to terminate the Agreement. 1 In fact,
Manager is not in breach of the Agreement, no notice of breach has been given to
Manager, and no grounds for termination exist. Board's continuing actions and public
statements over the last two months indicate the Board is acting in bad faith.
In an effort to resolve any miscommunication, Manager delivered to SCSA on
December 6, 2016, a request for an estoppel certificate pursuant to Section 14.3.1 of the
Agreement. SCSA failed to return the signed estoppel certificate within fifteen business
days as required under the Agreement. This letter constitutes notice under Sections
10.5, 11.1.2, and 11.3 that SCSA is in breach of the Agreement. Please cure this breach
promptly by returning the signed estoppel certificates.
In an effort to return to the spirit of partnership we can and should have, we are
delivering copies of the documents attached to this letter. The documents we are
delivering with this letter generally fall into two categories: (1) courtesy copies of
documents that we noted in our December 6, 2016letter are already publicly available,
many of which are available on the City's website, and (2) copies of documents that the
Agreement does not require Manager to deliver but that are being provided nonetheless
as an act of outreach and compromise. To facilitate the explanation of what is attached,
I am copying below the enumerated sections from my December 6, 2016letter, with
new annotations in italics below each section that note if there is a corresponding
attachment. Such attachments appear behind numbered cover sheets
1. Stadium Operations Agreement (Section 2.4.3).
The Stadium Lease between the SCSA and StadCo provided that the parties
would enter into a Stadium Operations Agreement to provide additional detail regarding
certain operational issues. The final, executed Stadium Operations Agreement, dated
1 The

published agenda for the Board's January 3 meeting indicates that either the City Council or the
SCSA Board would conference with legal counsel regarding anticipated, but unidentified litigation. If
news reports are accurate, it appears that the Stadium Authority improperly disclosed to the media that this
item referred to possible litigation regarding the Stadium Management Agreement.

Letter to Rajeev Batra, Santa Clara Stadium Authority

January 6, 2017
Page 3

August 18, 2014, is posted on the City's website at:

http://www .santaclaraca. Qov/home/showdocument?id=46859.

A copy of the fully executed Stadium Operations Agreement is attached.

2. User Policies and Procedures for Non-NFL Events (Section 2.4.4).
Manager has developed policies and procedures governing Non-NFL Events,
including standard form contracts, insurance requirements, rates and fees, and rules and
regulations. The Agreement does not require that these documents be submitted to the
Stadium Authority; it only requires that they be developed and put in place. These
policies and procedures were put in place prior to the opening of the Stadium, and are
regularly updated. Copies of documents evidencing these pol icies and procedures were
made available to the SCSA staff on November 18, 2016.

Please see attachment for standard form contracts, which includes insurance
requirements and rules and regulations.
3. Personnel Policies and Procedures (Section 2.4.5).
Manager has developed, and it maintains, an employee handbook. The
Agreement does not require that Manager's personnel policies and procedures be
submitted to the Stadium Authority; it only requires that they be developed and put in
place. Manager's personnel policies and procedures were estab lished prior to the
opening of the Stadium, and are regularly updated. Copies of documents evidencing
these policies and procedures were made available to SCSA staff on November 18,
20 16.
4. Chart of Accounts. Accounting Policies and Accounting Controls (Sections 2.4.7 and
2.4.8).
See response to the fo llowing item .

Letter to Rajeev Batra, Santa Clara Stadium Authority

January 6, 20 17
Page4

5. Effective Internal Accounting Controls (Section 2.4.8).

Manager maintains books and records of Stadium operations in accordance with
generally accepted accounting practices and accounting controls. Manager has
established proper accounting policies and effective internal accounting controls. The
Agreement does not require that these policies and controls be submitted to the Stadium
Authority; it only requires that they be developed and put in place. Copies of documents
evidencing these policies and controls were made available to SCSA staff on
November 18, 20 16.
The Stadium Authority's financial statements have been subject to audit each
year by the public accounting firm of KPMG, one of the largest accounting firm s in the
world. Each audit has resulted in a clean audit opinion. The financial statements,
including KPMG's audit opinion, are available on the City's website at:
http://santaclaraca.gov/home/showdocument?id=46641

Copies of the audited financial statements are altached.

6. Preventative Maintenance Policies, Procedures and Systems (Section 2.4.11).
Manager has developed detailed maintenance policies and procedures, which are
collected in the Stadium Operations and Maintenance Plan. The Stadium Operations
and Maintenance Plan was reviewed with representatives of the SCSA following
completion of the Stadium. Copies of the maintenance policies and procedures were
made available to SCSA staff on November 18, 2016.
The detailed maintenance policies and procedures in the Stadium Operations and
Maintenance Plan include sensitive information, the confidentiality of which is critical
to the security of the Stadium. For this reason, and consistent with Section 15. 12 of the
Management Agreement, Manager has not historically distributed copies of this
document, although the Stad ium Operations and Maintenance Plan is and has been
available for review by SCSA staff or Board members in Manager's office. Should

Letter to Rajeev Batra, Santa Clara Stadium Authority

January 6, 20 17
Page 5

Manager receive a written req uest from the SCSA, a copy of the document will be
provided to the Executive Director of the SCSA. We remind the SCSA of its contractual
obligations to the Manager and StadCo, and its obl igations to the public attending
Stadium events, to protect the sensitive information contained in this document.

A copy of the maintenance policies and proceduresfiom the Stadium Operations

and Maintenance Plan is attached, with certain sections redacted to address security
concerns. We renew our suggestion that a meeting be scheduled to jointly review and
discuss the redacted sections to ensure, as provided in Section 15.12 of the Management
Agreement, that proprietmy information is not improperly disclosed.
7. Safety Policies For A ll Users ofThe Stadium (Section 2.4. 12).
Detailed security policies have been developed in consu ltation with the City's
Police and Fire Departments. The security policies are publicly available on the Levi's
Stadium website at: http://www.levisstadium.com/security-po licies/.
We are proud that Levi's Stadium is the first sports venue in California to be
awarded a Safety Act designation by the U.S. Department of Homeland Security,
following a rigorous review of the security policies and procedures developed and
implemented by Manager.

A copy of the security policies is attached.

8. Develop and Implement Pre-Opening Promotional Materials.
Pre-opening marketing, public relations, and promotional materials were
developed in consultation with SCSA staff and marketing professionals. These included
marketing materials in support of the marketing of SBLs, naming rights, and Non-NFL
Events. Manager also developed public relations materials and organized and
implemented the groundbreaking ceremony.

Letter to Rajeev Batra, Santa Clara Stadium Authority

January 6, 20 17
Page 6

The Agreement does not require that these materials be submitted to the Stadium
Authority; it only requires that they be developed and put in place. Copies of documents
evidencing these pre-opening marketing, public relations, and promotional materials
were made available to SCSA staff on November 18, 2016.

Copies ofpre-opening promotional materials are allached.

9. Initial Public Safety Plan (Section 2.4.17).
Manager worked closely with the Santa Clara Police Department in the
development of the initial Public Safety Plan for the Stadium. The Plan was presented
to and approved by the SCSA Board at its March 13, 2012 meeting. The staff report and
plan presented at the meeting are available on the City's website. See Agenda Item
3.A.l at:
http:/I sireweb. santaclaraca. gov/sirepub/m tg vi ewer.aspx?meeti d= 1149&doctype= A G EN
DA

A copy ofthe initial Public Safety Plan is attached

10. Statement of Stadium Operations (Section 4.2).
The Agreement does not require Manager to prepare a Statement of Stadium
Operations. Instead, the Agreement provides that a third-party certified public
accounting firm, selected by StadCo and the SCSA, will prepare such a statement.
Manager's only obligation under Section 4.2 of the Agreement is to deliver such a
statement, once prepared by that accounting firm, to StadCo and the SCSA.
StadCo and the SCSA have not designated a third-party certified public
accounting firm to prepare these Statements, though the SCSA and its Lenders have
approved KPMG as its auditor generally. At the direction of StadCo and the SCSA,
Manager has worked with SCSA staff to provide all required information in an agreed
format to allow SCSA staff to prepare annual financial statements as well as quarterly

Letter to Raj eev Batra, Santa Clara Stadium Authority

January 6, 2017
Page 7

performance updates. These reports are regularly presented to the SCSA Board and are
avai lable on the SCSA's website at: http://santaclaraca.gov/government/stadiumauthority/public-safety-cost-and-reimbursement-summary.
The annual financial statements, which are prepared by the SCSA staff, with the
assistance of the Manager, are subject to audit by KPMG, the SCSA-approved certified
public accounting firm. As noted above, the annual audit reports are also avai lable on
SCSA's website. Under the provisions of the Stadium Lease, the SCSA is required to
de liver the Statement of Stadium Operations to StadCo. StadCo has, in the past,
accepted the financial statements audited by KPMG as fulfilling the Stadium Authority's
obligation to deliver that Statement.

Copies of the auditedflnancial statements are attached.

II . Stadium Operation and Maintenance Plan, including Annual Shared Stadium
Expense Budget. Annual Public Safety Budget and Annual Capital Expenditure
Plan (Section 4.5).
As discussed in item 6 above, Manager has developed detailed majntenance
policies and procedures, whjch are collected in the Stadium Operations and Maintenance
Plan. The Stadium Operations and Maintenance Plan was reviewed with representatives
of the SCSA following completion ofthe Stadium. The Plan was al so made available to
SCSA staff on November 18, 20 16.
Once adopted each year, the Annual Operating Budget, Shared Stadium
Ex penses Budget, Annual Public Safety Budget, and Capital Expenditure Plan are also
elements of the Stadium Operations and Maintenance Plan. These are discussed in items
12, 13, and 14below.
A ll ached per paragraph 6 above.

Letter to Rajeev Batra, Santa Clara Stadium Authority

January 6, 20 17
Page 8

12. Operating Budget including Stadium Operations Budget, Stadium A uthority

Budget and StadCo Budget (Section 4.6).
Manager, in cooperation with SCSA staff, has developed a Stadium Authority
Operating Budget for each year of Stadium operations. The Annual Stadium Authority
Budget has been presented to, and approved by, the SCSA Board each year. The Annual
Stadium Authority Budget for each year is available on the City's website at:
http://santaclaraca.gov/government/stadium-authority/public-safety-cost-andreimbursement-summary
As discussed further below with respect to Shared Stadium Expenses, the
development of the Stadium Authority Operating Budget requires close coordination
between Manager and SCSA staff. Supporting information, including detail of projected
Shared Stadium Expenses and Public Safety Costs, is provided to SCSA staff. The
Shared Stadium Expenses Budget and Annual Public Safety Costs Budget have been
approved by the SCSA as part of the overall Stadium Authority Budget.

Copies of!he Annual Stadium Authority Budget fo r each year ofStadium

opera/ions are attached.
13. Shared Stadium Expenses Budget, including a five-year proj ection (Section 4.7).
As provided in Section 4.7 of the Agreement, Shared Stadium Expenses are an
element of the overall Stadium A uthority Budget. As noted above, the Annual Stadium
Authority Budget has been presented to, and approved by, the SCSA Board each year,
and is available on the City's website. Each Annual Stadium Authority Budget has been
prepared in the format determined by SCSA staff. Supporting information, including
detail of Shared Stadium Expenses, has been provided to SCSA staff each year. The
Shared Stadium Expenses Budget has been approved by the SCSA as part of the overall
Stadium Authority Budget. Copies of relevant documents were also made available to
the SCSA staff on November 18, 2016.

Letter to Rajeev Batra, Santa Clara Stadium Authority

January 6, 20 17
Page 9

Projections of Shared Stadium Expenses (as well as all other Stadium expenses)
have been prepared and reviewed with SCSA and its consultant, Keyser Marston
Associates. These projections, which cover the full 40-year initial term of the Stadium
Lease, were presented to the SCSA Board as part of the discussion of the required rent
adjustment, and are available on the City's website. See Agenda Item 16.B at:
http://sireweb .santaclaraca.gov/sirepub/mtgviewer.aspx?meetid= 1745&doctype=AGEN
DA
Copies of the Annual Stadium Authority Budget for each year ofStadium
operations and projections ofStadium Expenses for the 40-year intial term of the
Stadium Lease are attached.
14. Capital Expenditure Plan (Section 4.8).
Manager has developed a Capital Expenditure Plan for the Stadium. The Capital
Expenditure Plan for the cunent fiscal year, and a five-year projection, were presented to
and approved by the SCSA Board at its hearing on March 22, 2016. These documents
are available on the City's website at:
http://santaclaraca.gov/home/showdocument?id= 18519
During the first two years after Stadium opening, when punchlist work and the
cost allocation process were both ongoing and the Design-Build Agreement remained in
place, the SCSA and StadCo agreed that no Capital Expenditures were required .
Consequently, no Capital Expenditure Plan was required for those years.
A copy of the approved Capital Expenditure Plan is attached.
15. Marketing Plan for Non-NFL Events (Section 3.2 First Amendment and
Section 4.1 0).
Manager has developed and successfully implemented a Marketing Plan for
Non-NFL Events. In the last fiscal year, Levi's Stadium hosted 17 full-stadium Non-

Letter to Rajeev Batra, Santa Clara Stadium Authority

January 6, 20 17
Page 10

NFL Events and 204 corporate events. Net income from Non-NFL Events has exceeded
projections in each year of Stadium operations. Manager has met with SCSA staff
regularly to update the staff on marketing efforts. Manager has developed and maintains
a website for the Stadium which supports the marketing effort:
http://www. levisstadium.com/.
Documents comprising the Marketing Plan were reviewed with SCSA staff on
November 18, 2016. Manager would be pleased to make a complete presentation on the
Marketing Plan and the successful marketing effort to the SCSA Board at your
convenience.

Copies ofprior marketing plans are attached. In addition, Manager has

prepared the 2017 Marketing Plan and would like to coordinate a date to present it at a
Stadium Authority Board Meeting.

***
We hope that we can put this matter behind us and focus our energies on keeping
Levi's Stadium in the top echelon of entertainment venues around the world. We have
done great things together and, with a working partnership, can continue to do so.

Sincerely,
Forty Niners Stadium Management Company, LLC

Attachments