49ers Headed to Arbitration over Rent Dispute with City
San Francisco’s NFL franchise team the 49ers have filed for arbitration with the city over negotiations related to the rent for Levi’s Stadium. The team wants the city to reduce the amount of money it has to pay to play in the building. Negotiations began in November 2015 to discuss changes to the lease contract. The team believes it is entitled to a reduction of more than $4 million under its contract because of a better financial performance than expected.
Team officials stated they are disappointed the negotiations have been forced into arbitration and believe it is not the best use of energy or money for anyone involved.
In 2013, the team agreed to pay $24.5 million for their first year in the stadium. After that, they could negotiate a one-time rent reset and adjust the cost based on changes in revenue, costs, and expenses. After months of negotiations, the two sides were unable to agree on an amount going forward. The team proposed $19 million a year in rent six months ago, but city officials did not approve the offer, stating they were concerned it would not be enough to cover future debt obligations. They also stated they did not like the fact the team asked them to reset the rent “at the eleventh hour.”
Once rejected, the team increased its offer to $20.25 million a year, but the city wouldn’t budget. It’s demanding the rent be the original amount and seem unwilling to negotiate toward anything other than the first year’s rent. Now the sides are headed to arbitration.