A new report by Salford Council reveals, perhaps, the full extent of its financial dealings in relation to the AJ Bell Stadium – once called the City of Salford Community Stadium.
The report reveals that Salford Council has made loans to the stadium totalling £23.75m to 31st March 2014 – made up of its original £22million loan to build the Stadium, plus £1.75million `working capital loans'.
These latter `bail out' loans, to stop the Stadium going under, were thought to total `only' £805,362 but the report states that it was almost double that figure. The loans were made during the period 2012-2014, during the worst cuts the city has seen for a generation.
The report argues that the loans somehow bring in extra revenue because the Council borrows cheap and loans to the Stadium company at over 5% interest – but as the Salford Star reported earlier this year, the Stadium company is half owned by the Council so it's borrowing money to pay itself (see here).
The last accounts for the Stadium company, to March 2013, revealed losses of £695,000 on `cost of sales', £834,000 on `administrative expenses', and over £1.1million on loan interest. The Stadium also had a £7.9million `impairment loss' which, we understand, is essentially a de-valuing of the Stadium – appearing to have reduced its value from £19million in 2011 to £7.649million in 2013 (see previous Salford Star article – click here).
Indeed, the new report reveals that the Council's loans to the Stadium will never be paid off unless the land surrounding it is sold…
"It is through the capital receipts received through the sale and subsequent development of the land that will repay the Council's original development and working capital loans."
The report values the current debt at £22.97million and the value of the land at £25million. However, the last set of accounts for the Stadium appeared to put the value of the land at £15million. The Stadium company has just sold 1.3acres of the 17 hectares of land to Greene King to construct a pub/restaurant on the site.
Despite last year's dire accounts for the Stadium, the new report is incredibly upbeat, referring to `exciting' developments, including the new road (Western Gateway Infrastructure Scheme) "providing much better access for all users of the Stadium", increasing use of the community pitches, and increased use for non-sporting and sporting events…
"The Stadium is also home to the Manchester Titans, the American Football team, and is soon to be the venue for Salford City FC's training", the report adds. It is widely regarded that Salford City FC will eventually move to the Stadium under the tutelage of Gary Neville, Ryan Giggs et al.
"The significant growth in the non-sporting business and in particular, conferences and events, has helped drive forward the Stadium's business plan" the report states "Taken together with the sale of the development land and the income from the naming rights, the requirement for the Council and Peel Holdings to continue to invest funds into the operation of the Stadium has vastly reduced pushing the Stadium a long way down the road to complete sustainability."
Is the AJ Bell Stadium a horror story or not? No doubt councillors will have a full and frank discussion when the report is discussed at the full Council meeting next Wednesday. What they probably won't discuss is the outstanding loans due to Salford City Council from Marwan Koukash and his Salford Red Devils...
For the full Stadium report – click here (9th report)
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