Tony Avelar/Associated Press

The San Francisco 49ers reportedly filed for arbitration with the city of Santa Clara on Tuesday because they could not lower the rent on Levi’s Stadium during negotiations.

Ramona Giwargis of the San Jose Mercury News reported the franchise has been negotiating with Santa Clara since November in hopes of lowering the rent on the rest of the 40-year lease it holds at the stadium. Giwargis noted “the team argues it is entitled under its lease contract to a reduction of more than $4 million a year because of better-than-expected financial performance.”

Levi’s Stadium opened in 2014.

49ers president Al Guido addressed the situation with Giwargis, saying, “We’re disappointed that this has to be the next step, but unfortunately it’s the only option we have left. It’s not the greatest use of time, money and energy.”

The key crossroads with the arbitration is the one-time rent reset that was in the contract. According to Giwargis, the team agreed to terms in 2013 "to pay $24.5 million for the first year," but the contract included a rent reset after that first year of operations. Giwargis explained the rent would be adjusted “based on changes in revenue, updated development costs and expenses.”

While the $24.5 million figure was based on a 40-year projection, the 49ers are pointing to the fact the financial performances have exceeded that projection. According to Giwargis, the team proposed a $19-million-a-year rent after stadium-building costs were $136 million less than expected and revenue increased by $8 million, but the city didn’t think that was enough.

Mayor Lisa Gillmor even discussed the matter, per Giwargis: “We weren’t comfortable with the numbers that were presented and I’m not sure all the expenses were included, including police and fire expenses. Our council was concerned about the transparency and how we were asked to reset the rent at the [11th] hour.”

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Along those lines, Giwargis previously reported the 49ers withheld more than $5 million in rent for the stadium as it fought for lower figures. According to Giwargis' latest report, "the team caught up with two payments in March."

The team also reportedly offered to pay $20.25 million a year in hopes of avoiding arbitration, but Giwargis said Santa Clara leaders wanted to keep the figure static at $24.5 million.

The team released a lengthy letter discussing the situation on 49ers.com, noting Levi’s Stadium surpassed expected financial performances and also added “millions of dollars to the City’s general fund.” The letter said the terms were “unanimously approved by the Santa Clara Stadium Authority Board in 2013” and explained that the one-time adjustment would increase rent if the financial performances were worse than anticipated and decrease it if they were better, which was the case.

The letter also highlighted the fact "the facility rent does not impact the City of Santa Clara General Fund or the City's taxpayers."

While the stadium's financial performance has apparently been better than expected, the team's on-field results have not been. Since moving into Levi's Stadium prior to the 2014 campaign, the 49ers are a disappointing 13-19. They have not reached the playoffs since calling the Santa Clara stadium their home even though they advanced to the NFC Championship Game or further in each of the prior three seasons.

In addition to 49ers games, Levi’s Stadium hosted Super Bowl 50 in February when the Denver Broncos defeated the Carolina Panthers, 24-10. It is also slated to hold the 2019 College Football Playoff national championship game.