Salford City Council is to loan a further figure `up to £942,500' to its AJ Bell Stadium, or Salford Community Stadium Ltd (COSCOS), which it joint owns with Peel Holdings. Peel will be matching the sum.
A report to be considered by the Council's Cabinet next week, seeking to ratify the loan, states that "Despite an expected break even position at a trading level, there is still the requirement for the Stadium to be supported financially by the Shareholders in 2016/17 in order to repay development and working capital loans and interest..."
These `capital loans and interest' are actually payable to Salford Council, so, yet again, the Council is lending itself money to pay itself... "The funding for 2016/17 is predominantly required to allow COSCOS to pay its existing loan principal and interest obligations to the City Council" the report states.
The same thing happened last August when the Council and Peel loaned the stadium company £857,500 each (see here). The total `working loan capital' now given to the stadium company by Salford Council alone will stand at £3.55million if ratified by new Salford Mayor, Paul Dennett, next week. This is on top of around £17million still owed by the Stadium company to the Council from the original £20-22million building loan.
Salford's ruling councillors have been keen to point out recently how the city actually makes money from the stadium through its `market rate' loans but this latest report states that the interest won't be paid for a long time...
"The interest has been ignored for cash flow forecast purposes, as interest on new loans is expected to accrue but is not expected to be actually paid in the cash flow planning period" it states "Interest repayment will be a number of years hence aligned to Loan Note repayment." It proposes that the repayment date is 2022.
The report states further... "Interest will be charged at the agreed rate between the shareholders but will only be payable upon redemption".
The interest on loans that the Council takes out is almost certainly taken from its Revenue Account, ie the money used to pay for front line services.
These latest loans are not the end of the hand-outs, according to the report... "It is also currently anticipated, that over at least the next three years further loan finance will be required from the two COSCOS shareholders to support the company."
The report adds that the only way the stadium company is ever going to pay off these loans is by flogging the 17 hectares of development land around the Stadium. Two years ago, the then Deputy Mayor David Lancaster stood up at a Council meeting and announced that the Council was on the verge of selling land other than the Greene King pub deal..."If this comes off we won't be needing any more loans" he crowed.
Two years, and two more loans worth £1.8million later, no further land has been sold - although the Council is confident that "Further sales of development land are in the pipeline and will possibly include small supermarkets, fast food outlets, car dealerships, a hotel and petrol filling stations..."
It adds that "an estimated 5,000 more jobs will be created by the development at the site".
Together with the 3,858 `gross permanent jobs' being promised at Port Salford, and the 15,500 jobs promised at MediaCityUK, Salford is obviously looking towards full employment in the very near future...
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