The City of San Jose and the San Jose Sharks have announced plans to “Modernize” SAP Center.

As SHD reported on Thursday, a deal was imminent, and now some details of the pending plan have been released. If approved, a city council vote will take place on Aug. 26, the agreement will keep the Sharks in San Jose until at least 2051.

This 16-page memorandum of understanding demonstrates a positive relationship between the Sharks and San Jose. This goes against many other professional sports and city relationships. The A’s and the city of Oakland are a perfect example of a negative relationship between city and team.

*NOTE: the quotes from the released document are just a summary of what is being proposed to the city*

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Here are the highlights of the memorandum of understanding:

Sharks will remain in San Jose through the 2050-2051 season

“Approve the Third Amended and Restated Arena Management Agreement between the City of San José and San Jose Arena Management, LLC, for the property commonly known as SAP Center located at 525 W. Santa Clara Street, in San José, California, the term of which extends through June 30, 2051, including all attachments and ancillary documents contained in that agreement and subject to the terms contained therein.”

“The SAP Center at San Jose (SAP Center, or Arena) will undergo a $425 million renovation necessary to extend the useful life of the City-owned facility to 2051. The City will fund a net amount of $325 million of the renovation, and the Sharks will fund $100 million, in addition to any cost overruns in the project. The City anticipates issuing a financing framework for $350 million, and of the Sharks’ $100 million contribution, $25 million will be given directly to the City to offset debt service payments. The Sharks will manage the $425 million renovation project to improve and modernize the SAP Center. Over the course of seven years, the Arena renovations will take place in the summer during the hockey offseason. The renovations will create a better and safer fan experience, improve operations, and bring the Arena into greater compliance with current NHL and building code standards. The primary purpose of the renovations is to address significant structural needs in the building (which is more than 30 years old and has never undergone a major remodel), including an improved operational layout and modernization of the plumbing, electrical, HVAC, and audiovisual/broadcasting infrastructure. The renovations will also improve operations and the fan experience by providing new ways to experience an event and expanding the concourse and concession areas. These renovations will enhance the Arena’s competitiveness in attracting premier talent—both for headline touring acts and elite athletes—by upgrading the “VIP” back-of-house facilities and hockey clubhouses to align with contemporary industry standards.”

“The lease between the City and Sharks Ice, LLC for Sharks Ice at San Jose and Tech CU Arena will continue to support the Sharks’ residency in San Jose, as this facility continues to host Sharks and Barracuda hockey team practice and public events, and San Jose Barracuda AHL home games. The First Amendment to the Ice Centre Lease will provide for the Sharks to add a more robust guarantee (equivalent to the guarantee under the Amended AMA) in lieu of carrying a letter of credit to secure rental payments.”

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The proposed renovation work includes:

• Facility Deferred Maintenance: Improvements to building systems (including mechanical, plumbing, electrical, and technology), refreshing finishes, repairing Lots ABC, and updating other items that have outlived their intended lifespan.
• NHL Requirements: Renovations and improvements required to comply with NHL facility and operating requirements.
• Code Upgrades: Retrofits and other improvements to meet updated building and fire/life safety codes, fire insurance underwriting standards, and other applicable requirements.
• Architectural Enhancements: Renovations to enhance the building, including layout reconfiguration, addition of new finished spaces, and large-scale changes to the building.
• Enhanced/New Premium Products: New revenue-generating enhancements and the addition of new premium seating and other premium products.
• Food Service/Merchandise Revisions: Renovation of existing spaces and creation of new food service and merchandise spaces.
• Entertainment Enhancements: Program space and other features, including green rooms and other amenities expected by contemporary acts, will be added to attract top entertainment acts.
• Other Modernizing Improvements: Upgrades related to environmental sustainability, technology, lighting, audio/video, sponsorship assets, and activation.

Sharks & San Jose will work together to find a new arena district location in San Jose

The San Jose Sharks aren’t leaving San Jose for a long time, but they could leave the SAP Center eventually for a new arena district and a new building.

The memorandum of understanding states that the Sharks and San Jose will negotiate possible locations in San Jose for an arena district through Sept. 1, 2027. While that date is only a couple of years away, nothing is binding the city and the Sharks from extending that date to negotiate longer.

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“Approve the Memorandum of Understanding related to the Arena District Agreement, prescribing an evaluation and negotiation period from execution of the proposed Arena Management Agreement through March 31, 2027, with a defined goal of identifying a Future Arena Location and executing an Arena District Agreement for the new Arena District no later than September 1, 2027.”

Further down the document, this agreement says that it is impractical for the Sharks to stay at the SAP Center past the 2050-2051 season.

“The City and the Sharks have agreed that it will be impractical to extend the Arena’s use past the year 2051. In order to retain the Sharks as a cultural and economic asset and a source of civic pride and identity within San José, the City will work with the Sharks to identify and reserve an appropriate site for the construction of a future arena and associated site improvements. The Memorandum of Understanding for the proposed arena district will bind the City and Sharks to negotiations through March 31, 2027, with the intent of defining a new arena location and district plan by September 1, 2027. The arena district will include both the designation of a potential future arena location and a surrounding entertainment district that includes other uses such as retail, restaurants, hotels, arts and cultural venues, and other gathering spaces.”

This means not only will the Sharks stay in SAP Center, but when they want to/the building becomes impractical to play in, the city and team will have a location to build a new arena.

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This is another example of the City and a professional sports team working together to keep a beloved product around without tying either side to a negative financial situation.

Once again, the 16-page document that was released is not legally binding at this moment. The full agreement will be put to a vote for approval on Aug. 26.

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