The San Jose Sharks' SAP Center lease with the city is expiring next year, and the terms will be changing — opening the door for negotiations with both parties.
Next year, the city, which owns the arena, can hike the Sharks' rent annually, and Sharks Sports and Entertainment leaders are hinting at a desire for the city to help pay for upgrades in lease talks. The 30-year-old downtown "Shark Tank" is one of the NHL's oldest arenas.
Mayor Matt Mahan was tight lipped about what those talks will entail at a Thursday forum on the future of downtown, but vowed to keep the team happy. At the same event, team officials made a promise of $1.25 billion in economic benefits to San Jose over the next five years.
"When it comes to economic development, we work with the city. We trust the city," Sharks Senior Vice President of Government Affairs Chris Shay said at the annual Carabiner meeting, a downtown improvement talk hosted by the Urban Vibrancy Institute. "We are going to be releasing an economic impact study that uses the city's version — the city's rules associated with this — because nobody wants to put out a number that can't be supported."
He called the $1.25 billion estimate "conservative."
"This $1.25 billion impact over five years on the city of San Jose strips out every dollar from anybody in San Jose that spends any money in the Shark Tank or Tech CU Arena (an expansion of Sharks Ice) because of the fact they can spend it elsewhere. And we encourage them to spend it elsewhere," Shay said.
Sports clubs seeking taxpayer investments into arenas and stadiums often promise economic benefits. Sports subsidies watchdogs have scrutinized that promise, questioning how much these venues actually recoup the public's investment.
A 2023 economic report commissioned by the San Francisco 49ers emphasizes the financial return of such facilities.
Levi's Stadium in Santa Clara has generated a $2 billion economic impact for the region in the last decade. The report attributed it not just to football games, but to nearly 1,000 special or corporate events, as well as concerts with marquee names in music.
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Shay likewise touted a lengthy list of artists that have taken the stage at SAP Center, namely powerhouse Latin music acts like Bad Bunny, who have generated significant revenue for the city.
Sharks officials say the arena has brought an annual 1.5 million visitors -- and a total of 50 million -- since SAP Center opened in September 1993. They argue that's translated to a tourism boon: 25,000 overnight guests annually.
Shay referenced other NHL arenas a few years older than SAP Center that have either been upgraded or are in the process, such as the Washington Capitals' Capital One Arena in Washington, D.C., built in 1997, and the Carolina Hurricanes' PNC Arena in Raleigh, North Carolina, built in 1999.
At the meeting, Mahan said the Sharks generate $20 million in annual tax revenue to the city.
"We're now going through the process of discussing with them and negotiating what the next 20 or 30 years will look like in San Jose. I'm very committed to keeping the Sharks here. Not just staying here, but growing and thriving here," Mahan said. "I can't share a lot about that process because we're just (now) having that conversation, but I'm excited about what the future is going to look like."
The city last extended the Sharks' lease agreement in 2015 after the team lobbied for prior reinvestments in SAP Center. The agreement split those upgrade costs between the team and city for a $3 million roof and improved heating, ventilation and cooling. Under the current deal, the Sharks play home games on a fixed term through 2025, when the lease comes up for annual renewal through 2040.
Last April, the team and German software company SAP inked a five-year extension to their ongoing partnership, preserving the naming rights to the SAP Center where the hockey team plays their home games. The parent company of the San Jose Sharks will keep SAP's name across the front of the city-owned arena through 2028.
Shay said the Sharks are committed to San Jose.
"All these crazy people in teal work for you," he said.
This article was originally published in San Jose Spotlight. https://sanjosespotlight.com/san-jose-sharks-nhl-hockey-team-tout-financial-benefits-to-city-as-lease-set-to-expire-sap-center/
Contact Brandon Pho at brandon@sanjosespotlight.com or @brandonphooo on X, formerly known as Twitter.
