The Journal. - The Epic Battle Between the 49ers and Their Home City

Episode Date: February 9, 2024

As the 49ers contend for Super Bowl rings this Sunday, the team has another battle to fight. The 49ers are in a decadelong war with their home city of Santa Clara over whether the team's $1 billion stadium is providing the economic boost promised. WSJ’s Zusha Elinson unpacks the conflict, which has involved lawsuits and heated local elections. Further Reading: - Why the 49ers and Their Home City Are in a Decadelong Fight  Further Listening: - The Long-Last Super Bowl  Learn more about your ad choices. Visit megaphone.fm/adchoices

Would you kindly introduce yourself and tell us what you cover at The Wall Street Journal? My name is Zusha Ellenson, and I'm a national reporter based in California. Would you describe yourself as a fan of football? I'm a huge football fan. Really? Yeah, I love sports, and I'm

pulling for the 49ers this year. The 49ers are going to the Super Bowl! On Sunday, the 49ers will battle the Kansas City Chiefs in the Super Bowl. And fans are pumped that their team could bring home the trophy

for the first time since 1994. The Bay Area is absolutely lit with the 49ers. I mean, you see flags on cars when they drive down the street. Everyone feels like this is the year, this is the year we're finally getting to the Super Bowl and we're going to win the Super Bowl. the year, we're finally getting to the Super Bowl and we're going to win the Super Bowl. But even if the 49ers are able to pull off a win, the team has another battle that it's fighting. It's in a decade-long war with its home city of Santa Clara. This fight involves a $1 billion stadium, vicious local elections, and allegations of unethical behavior.

So while we are all excited about the 49ers, everyone's jazzed, everyone's got their red and gold on, the very city that they play in is super pissed at them. How could that be? It's a long, tortured story about how some of the city's leaders became the biggest enemies of this team. Welcome to The Journal, our show about money, business, and power. I'm Kate Leinbaugh. It's Friday, February 9th. Coming up on the show, the rough matchup between the 49ers and their hometown. When it comes to Smart Water Alkaline 9.5 plus pH with antioxidant, there's nothing to overthink.

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The Giants, who used to play in Candlestick Park, the baseball team, they built themselves a beautiful stadium. And the 49ers wanted to do the same thing. And they were looking around, where can we move? And they decided to pick Santa Clara, which is south of San Francisco in Silicon Valley. Santa Clara is proud to be one of America's most livable cities. People from around the globe come to Santa Clara to start a business. It's a small little suburb, about 126,000 people. They have tech companies. They got nice little houses. People drive their nice little cars or Mercedes down there. It's a very quiet, nice place to live. One of the biggest proponents for building a new stadium was Lisa Gilmore, a local politician

who's now the mayor of Santa Clara. She loves sports. She thought bringing the 49ers to town will put this city on the map. No one knows what Santa Clara is. It will not only put the city on the map, it's going to bring in additional tax revenue to our city. I mean, cities are always looking for more sources of revenue.

So she thought it would be twofold, you know, bring good publicity, bring in tax revenue, and also bring in more visitors. Along with football games, the stadium would also host concerts, which the city estimated would bring up to $5 million a year into Santa Clara's coffers. That was a big incentive for a lot of people because, you know, they wondered, are we going to get enough money for our city from this big stadium,

or are we just going to be helping them out? And so that sort of helped turn other people who weren't big sports fans, are we going to get enough money for our city from this big stadium, or are we just going to be helping them out? And so that sort of helped turn other people who weren't big sports fans, you know, maybe there's going to be some benefits for our city. In 2010, Santa Clara voters approved the new stadium. It would be built through what's called a public-private partnership. Both the team and the city would put in money, the city would own the stadium, the city would own the stadium,

the team would operate it and pay rent to the city. And the stadium was projected to create millions of dollars in economic benefits. Levi's Stadium is going to play host to many unbelievable events. Already we've locked up Super Bowl 50, the Pac-12 championship, WrestleMania, soccer games, concerts. That's 49ers CEO Jed York at the stadium's opening ceremony in 2014. And when it opened, people were very happy. Everyone was psyched.

You know, it's this big stadium with red seats. You can see it from all over. It looks very nice. So it's a win. Yeah, it seems like a huge win. Everyone's psyched. So why are we still talking about it? Okay, so about a year later, 2015,

the first signs of trouble appear. What happens? So there are these youth soccer fields right next to the stadium that the community loves. Santa Clara is super passionate about youth soccer. The 49ers had said at the beginning that they wouldn't touch those fields, which were owned by the city. But then the team changed course. So one year into their marriage, the 49ers say, wait, actually, we would like to buy those fields from you to use them as parking. The community gets pissed.

They're like, you said you'd leave these alone. They show up to city council meetings. It becomes a big local thing. Ultimately, the 49ers back down. But that was the key moment that a lot of people started to wonder, well, are all these promises that the 49ers made to us, are they going to come true? And particularly Lisa Gilmore.

The chief proponent. Yes, chief proponent. Now she's worried. She says, wait, they're not coming through. They broke their promise. I'm a little worried about that. And she starts looking into other things with the finances of the stadium. And what does she find? They want to pay less rent. They say, we came in under budget.

And that, in their agreement, allows them to ask for a rent reduction. And this is the second promise that Lisa feels like they've broken. Like, look, you're a big money-making football team. Why are you asking for a rent reduction? You can pay the rent. It's fine. Ultimately, they fight this out in court, and the city wins. These disagreements kept coming up, and the relationship between the city and the team got worse. So the next big fight occurs over the shared profits from concerts. So there have been really amazing concerts down at Levi's Stadium. You know, last year we had Taylor Swift.

Era's Tour? Yeah. Beyonce. Whoa. Ed Sheeran. Heard of him. Yeah, I don't really know who that is, but he's very famous and has a lot of fans. And all of a sudden, in 2018, you know, the city was getting some money from the concerts, a couple million a year. All of a sudden, that goes to zero. They're not getting any more money from the concerts. So Lisa's like, what's going on? You guys projected that we would be getting a couple million every year. And now it suddenly goes to zero.

And so she gets really upset and she's wondering, what's going on? Who's running the finances? How come we're not getting our money? And what about the 49ers? What did they say about this? What they told us is that they are paying for police services that have an inflated cost. So they throw it back at the city. And this gets kind of complicated, but on game day, they have to pay police to perform security, to be around the stadium, to direct traffic every Sunday, right? And they have an agreement with the city, they'll pay a certain amount. But suffice it to say, what the 49ers say

is that the city is charging them too much for police services. So they have to take that shared concert revenue and pay the police. With the bad blood intensifying, Mayor Gilmore decided to do something about it. For the last five years, the 49ers have shown us that they do not have the experience and the expertise to operate a public facility like our stadium. And they have not managed it in the best interest of the Santa Clara residents. At a news conference in 2019, Gilmore said the city would be making a big move. And that's why we are here today, to announce that we have initiated legal action to remove the 49ers as our stadium managers.

And she makes a move to try to get someone else to run the finances of the stadium. She wanted to take the 49ers out of their position of power of controlling the management of the stadium. And that really ignited the flames of this fire. So she's trying to take control, and the 49ers come up with their own plan to fight back. That's after the break. With Smartwater's pure, crisp taste, We'll be right back. you look the same in whatever the heck red light therapy is. It's definitely not that. Don't overthink how you hydrate.

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It turned catastrophic in 2020. So city council elections in Santa Clara are a sleepy affair. This is not San Francisco. This is not New York City. There's not like heated political rallies. You know, people, politics is not a big deal. But in 2020, the 49ers Independent Expenditure Committee spent about $3 million to try to get people elected. The 49ers were backing several candidates for city council, and three of them got elected. This brought the number of 49er allies on the city council to five out of a total of seven members. And they were dubbed the 49er Five. One of those people is a retired engineer named Suds Jane,

who Zusha spoke with about the tensions between the team and the city. He pointed out a couple things. He said he thought it was great that the 49ers got involved in politics because more minorities got on the city council that year. He said it was good because it loosened Lisa Gilmore's grip on the city.

He thought she had too much power. What's his view on the stadium? What he says is that the city will see real financial benefits in about a decade after certain commitments are paid off, after certain loans are paid off, and after certain contingency funds are filled up. He said the city will really start to see big financial benefits from having the stadium there. They'll be able to use that money to build a new library,

a new swim center. So he's very confident that although now they may not be seeing as much direct financial impact to the city's budget, in 10 years it's going to be bountiful. In 2022, the 49ers made another big play in city politics. This time, they were trying to sack the mayor. She is making a big ruckus about the team. She keeps bringing up the shared revenue. She's bringing up other issues. So they say, we want to support someone else. We don't think this is a good working relationship.

And their independent expenditure committees, they put millions behind this guy, Anthony Becker, to run against Lisa Gilmore. And it is a vicious race. Anthony Becker is a member of the city council and one of the 49er Five. The race was contentious and expensive. But in the end, Gilmore won. Lisa Gilmore just spiked the ball in the Santa Clara mayor's race after fending off a major effort from the 49ers to unseat her.

So get this, she ended up defeating challenger Anthony Becker by fewer than 700 votes, despite being outspent 8-1 by the 49ers alone. Beyond these elections, there were also legal battles between the city and the team. Gilmore's lawsuit to oust the 49ers from the stadium management didn't succeed. The two sides eventually resolved that dispute. But there was another thing happening.

A civil grand jury was investigating complaints from residents about the 49er Five over alleged unethical behavior. And in 2022, that civil grand jury released its report. The report they issued is called Unsportsmanlike Conduct, and it details the relationship between these five council members and the team. It alleges that the council members would meet frequently with 49ers lobbyists before they would hold a meeting and vote on things. It alleges that some of the council

members went to Levi's Stadium for quote-unquote operational tours on game day, you know, essentially to watch the game for free. The report also alleged that the team used the 49er Five to push out both the city manager and the city attorney who'd been critical of the team. The 49er Five deny allegations of wrongdoing cited in the report. How did this report go down? This is a great story as well. There are so many twists and turns. There's so much drama. story as well. There are so many twists and turns. There's so much drama. So even before this report was released to the public, it got leaked all over. And in particular, it got leaked to the 49ers

before the public release. And this becomes a huge problem. The person accused of leaking it was the city councilman and member of the 49er Five who had challenged Mayor Gilmore. Lies, leaks, and litigation. Santa Clara City Council member Anthony Becker indicted on charges of perjury for allegedly lying under oath to a Santa Clara County civil grand jury. Becker has pleaded not guilty. The 49ers continue to say they've made a positive economic impact on the city. A report commissioned by the team said the stadium has generated more than $2 billion for the local economy since it opened. If the 49ers win the Super Bowl, will all be well? That's a great question. I think all will be well in the Bay Area. Everyone will be excited. You know, the 49ers have been to the Super Bowl and

the NFC Championship in recent years and fallen just short. So I think people will be just over the moon if they win the Super Bowl. But I will say that the city and Lisa Gilmore, certain city officials, will not be happy with the team. They're still going to be fighting with them. In fact, there is an election coming up over whether they should elect the police chief. All that is to say is that the fight will continue on and on and on and on and on.

What would you say is the lesson here? What's your takeaway? There's a broader debate in the American public about sports stadiums, right? So sports fans are super psyched to bring any stadium to their town. That's a given. But there are other people like economists who say you should probably not fund a big football stadium with taxpayer dollars because you're not going to get a return on your investment. You're not going to get the money coming back to your

city's coffers that you hope you will get. And I think some would say it's a cautionary tale for smaller cities that, you know, maybe it's not the best economic play to bring in a big football stadium to your little town. You may not get the financial benefits you'd hope for. That's all for today, Friday, February 9th. The Journal is a co-production of Spotify and The Wall Street Journal. The show is made by Annie Baxter, Catherine Brewer, Maria Byrne, Victoria Dominguez, Pia Godkari, Rachel Humphries, Ryan Knutson, Matt Kwong, Jessica Mendoza, Annie Minoff, Our engineers are Our theme music is by So Wiley. and me, Kate Leinbaugh. Our engineers are Griffin Tanner,

Nathan Singapak, and Peter Leonard. Our theme music is by So Wiley. Additional music this week by Katherine Anderson, Marcus Begala, Peter Leonard, Bobby Lord, Emma Munger, So Wiley, and Blue Dot Sessions. Fact-checking this week by Mary Mathis and Sophie Hurwitz. Thanks for listening. See you Monday.