By Robert Haugh
The two biggest items from last night’s meetings were the Stadium Authority Board unanimously approving a new stadium concessionaire, and a study session telling us the Santa Clara convention center is an asset, but needs a makeover.
Stadium Concessionaire
Chicago-based Levy Premium Foodservice Limited Partnership was unanimously approved for a 12-year concession service contract for Levi’s Stadium. We reviewed the contract details on Monday.
The company has a large footprint in the sports and entertainment industry. They agreed to the City’s worker retention ordinance. Board Chair Lisa Gillmor asked for a regular report to determine if workers are being retained or dismissed by the new vendor.
During 49ers VP JimMercurio’s presentation, we learned the new concessionaire will invest $22 million over the 12-year term on capital investments such as updated signage and equipment. They also pledge to work with the Mission College hospitality program and engage local Santa Clara restaurants. We’ve heard this story before, so let’s hope this vendor and the team keep their promise this time.
Mercurio admitted the current concessionaire, Centerplate’s customer satisfaction was spiraling downward. From 2014 to 2017, the “excellent & above average” ratings went from 67 percent to 52 percent, while the “average” and below average & poor” ratings increased by six percent and nine percent.
The 49ers agreed to pay a yearly $100,000 ($150,000 in year one) bonus to Levy if they meet performance goals. But the council — and the public — still doesn’t know how much the city general fund makes from stadium concessions. The 49ers haven’t given the city detailed information in their previous annual budgets. Let’s hope the new city management can pry this information from them.
Convention Center
The not-so-surprising news during a study session presentation by consultant Jones Lang LaSalle (JLL)was that the Convention Center really needs a makeover.
Here’s a quick summary:
- The Convention Center, managed by the Santa Clara Chamber of Commerce, has operated in the red for the last ten years. Total losses exceed $10 million dollars. Wow.
- The losses come out of the city’s general fund. Ugh.
- Last year, the losses were $2.3 million, including almost $1.5 million that was paid to the CVB for management and staffing. An additional $145,292 is paid to the Chamber for a “management fee.”
- In the immediate short-term, $5 million is needed for Convention Center upgrades.
- $64 million is needed in the short to mid-term.
- There are many urgent needs in the aging convention center, including HVAC, lighting and electrical updates.
- There’s no funding source for capital budget for improvements or renovations
- The convention industry is rapidly changing.
- The majority of current clientele are from the hi-tech sector and most are local.
JLL did not evaluate how much of the transient occupancy tax (a.k.a. “TOT tax” or “hotel tax”) is generated by the Convention Center. Councilwomen Patty Mahan and Debi Davis requested that it be presented to the council at the next discussion.
JLL is working with the Convention Center staff to set up sales metrics or targets which didn’t seem to exist before.
JLL also stated that a key metric is the annual goal of 15 “citywide” conventions — gatherings that actually fill hotel rooms. Now, we have only three annually. Davis asked if it’s feasible to meet that metric with the current staff, operations and model.
JLL will evaluate different models and the council is likely to make a decision around November. From the information that was presented and the questions that were raised, it’s clear that the council needs and wants to do something different than the status quo.
Councilman Pat Kolstad and Councilwoman Teresa O’Neill were absent from both meetings and the study session.
Next Meetings
March 13 – Study session on Stadium Authority budget and marketing report
March 19 – Ad-hoc audit committee meeting
March 27 – Final Stadium Authority budget adoption
Editor’s note: We corrected a statement about management of the Convention Center. It is managed by the Santa Clara Chamber of Commerce, not the CVB.
The Convention Center has been LOSING MONEY for decades!
The City of Santa Clara needs to make serious decisions about where the money is going to come from now that the cash cow, The Redevelopment agency is DEAD. Santa Clara does not even have the money to buy the Convention Center either. People need to get real …stop with the buzz words “economic engine” is pure fluff. Show us the M O N E Y .. and that means the money to the CITY of Santa Clara not “the region” because “the region” isn’t paying your salary either.
It all comes down to the Benjamins … Make a profit, NOW … or get out of the business and shut it down, Santa Clara cannot afford to be a non-profit charity. Santa Clara needs to BUY the convention center and they don’t have that money either .,, I, for one, am NOT PAYING A SINGLE CENT FOR ANY MORE BONDS AT ALL!
THE STADIUM is supposed to be the cash cow … oh right, that was a lie, wasn’t it Council and Mayor — Lisa, Kathy, Pat, Dom, Patty, Teresa, Debi — you all have ZERO CREDITABLY & don’t screw with the curfew promise either, or you’re out too!! COMMITMENTS MEET ACCOUNTABILITY …and FISCAL RESPONSIBILITY.
Robert please get your facts correct. The chamber nor the cvb is paid 1.5 million dollars to manage the convention center. The 1.5 million dollars you are referring to is given to the cvb to promote the city of Santa Clara and to increase TOT tax revenue. The CVB has nothing to do with the management of the convention center. The chamber was paid $145,000 to manage the convention center. This is public record. Technically the convention center did not lose money because the Convention center and CVB are separate organizations. If you have any questions you can contact the chamber but please put correct facts In your articles. It’s not that hard to pickup a phone to make sure you are putting out correct information.
I’ve made some corrections to make the column clearer. The CVB was paid $1.5 million last year and lost $2.3 million. This is the organization that Lisa Moreno runs. I believe she is the Lisa that commented.
Ravinder’s comment about the Chamber is correct and I changed the column to reflect it. The Chamber does not run the Convention Center, but gets paid a “management fee” of $145,292. I’m not sure why. And some people at City Hall who I asked to explain to me why the Chamber gets this money could not explain it either. I’ll be writing more about this in the future.
Of course, Ravinder and Lisa are welcome to write a column that explains or defends the management of the Convention Center.
I also added the city staff spreadsheet to show the numbers. It should help make things clearer and help identify the potential problems.
The Chamber gets paid a management fee of $1.5 million dollars to lose $2.3 million? I can see an easy cut right there.
The Chamber does not get paid $1.5 million to manage the CVB. In fact, the Chamber only receives a management fee to manage the Center. As Ravinder stated above, the City funds the CVB $1.5 million to market the City, hotels, and the Center.
Convention Centers’ are an economic engine which generates tax dollars to the general fund and other surrounding businesses.
It’s unfortunate and counter productive to the good work being done when “fake” news is being presented.The presentation from last night’s study session, which states the facts, can be obtained on the City’s website.