San Jose City Council is expected to vote on Aug. 26 on an agreement extending the Sharks' arena deal through June 30, 2051. The Sharks must guarantee that hockey remains in San Jose or incur a termination fee approximately equal to the City's outstanding principal and interest on arena debt, which fluctuates over the term. The Sharks lose the unilateral right to terminate the lease; relocation would trigger a termination fee secured by a stipulated judgment held in escrow, enabling immediate collections and blocking sale or relocation if unpaid. The Sharks may relocate within San Jose without penalty. The City faces penalties for certain defaults, including renovation delays and parking shortfalls.
According to this memo of understanding, the Sharks will "guarantee" that hockey will stay in San Jose or pay the price. "If the hockey use agreement is modified to allow operations outside of San José, the Sharks will be subject to a financial penalty substantially equal to the outstanding principal and interest on the City's debt service. This amount fluctuates over the term of the agreement according to the payment schedule," reads the City's Memorandum of Understanding.
According to the Memorandum of Understanding, if the Sharks want to relocate, "They will owe a termination fee approximately equal to the City's outstanding debt plus interest. The recovery of these funds is protected by a stipulated judgment held in escrow, which allows the City to move immediately to collections with minimal legal action, should the Sharks default, and block a sale or relocation of the team if the termination fee is not paid.
Collection
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