By Robert Haugh

Santa Clara News Online (SCNO) recently obtained the 49ers-Fanatics merchandise contract and found a clause that could void the deal.

A few weeks ago, the Santa Clara City Council was lobbied heavily by the 49ers to give a sole-source contract to Fanatics, a sports merchandise retailer, to sell items at Levi’s Stadium during non-NFL games.

The Council voted 5-2. The 49er Five complied with the team’s request. Mayor Lisa Gillmor and Vice Mayor Kelly Cox voted against the motion.  

Here’s the conflict-of-interest section in the 49ers-Fanatics agreement:

Paragraph 19 – Conflicts of Interest

“Contractor certifies to the best of its knowledge, none of the Indemnified Parties has any financial interest in the business of Contractor and that no person associated with Contractor has any interest, direct or indirect, which could conflict with the faithful performance of this Agreement. Contractor is familiar with the provisions of California Government Code section 87100 and following and certifies that it does not know any facts which would violate these code provisions. Contractor will advise Stadium Manager if a conflict arises.”

The contract was signed by 49ers Executive Vice President and General Manager Francine Hughes and Fanatics President of Business Affairs Gary Gertzog.

So there’s a big problem. In 2022, the National Football League invested $320 million in Fanatics, giving every franchise, including the 49ers, a financial stake in the retailer’s success.

The conflict question was raised by Gillmor during the Council’s May 13 discussion of the sole-source contract. 

The City staff froze and said they hadn’t done their due diligence on the issue. 

So 49ers lawyer and lobbyist Jihad Beauchman had to address the issue. “The 49ers entities do not have any economic interests directly in Fanatics,” said Beauchman. 

You can watch the video of the discussion. It’s about five minutes long.   

Days later, an SCNO investigative report disclosed the NFL investment. 

Ethics scholar Dr. Tom Shanks labeled Beauchman’s remark “deceptive,” noting that the team benefits indirectly through the league’s ownership stake. 

Then at the May 27 City Council meeting, former City Attorney Brian Doyle asked the Council to reconsider its earlier vote. 

Doyle also warned the Council that Beauchman’s participation itself may violate California conflict-of-interest law. 

“Because there is a reasonable potential impact on Mr. Beauchman’s financial positions with the 49ers organization, he was prohibited from even participating in the decision,” said Doyle.

In response, the Council voted unanimously to direct City Attorney Glen Googins to investigate and report back at its next session. 

This is a developing story.