49ers bark over Levi’s Stadium rent increase

The San Francisco 49ers filed for arbitration Tueseday against Santa Clara, claiming the city is violating its lease agreement by increasing the team’s annual rent at Levi’s Stadium.

The legal action comes after multiple exchanges the 49ers had with the city on enforcing lease terms approved by the Santa Clara Stadium Authority three years ago, team officials said in a statement today.

The 49ers have exceeded the expected revenue in the team’s first two years at the stadium, but the city has increased its rent despite terms in the agreement that the amount should be reduced, team officials said.

In 2013, the Stadium Authority set the team’s rent to $24.5 million. The rate could be changed a year after the stadium opened and the lease agreement allows for a “one-time rent adjustment,” according to team officials.

Based on consultations, the 49ers determined its rent should be changed to $19 million and gave the city its analysis behind the proposed rate late last year, team officials said.

The city has since offered an adjusted rate of $20.25 million, which added $1 million than what’s required under the lease agreement to give more protection to the Stadium Authority, according to team officials.

The team has accepted the city’s offer to be “a good partner with the City” and hopes to resolve the matter outside of arbitration, team officials said.

The 49ers said in a statement:

“The team remains opens to a settlement centered on acceptance of an adjusted rent of $20.25 million despite the fact that the process of binding arbitration could result in a substantially lower rent based on the terms of the lease. … Even as adjusted in accordance with the formula in the lease, the 49ers would still pay rent more than twice that of any other NFL team in the country.”

The team’s facility rent has no effect on the city’s general fund or taxpayers, 49ers officials said.

The team received a letter on March 23 from the Stadium Authority over a dispute on the lease, but didn’t specify the conflict, 49ers officials said.

In a statement today, the Stadium Authority said it moved forward in March with a “difficult decision” to start arbitration with the team over rent adjustment:

“Since that time, a resolution has not been reached by the parties involved and as such, the arbitration process will continue. …. It is of the utmost importance to the Stadium Authority that the rent amount, when coupled with other revenue sources of the Stadium Authority, be sufficient for the operating costs, including public safety, and debt service of the stadium without the use of General Fund dollars.”