Salford City Council is set to agree a further loan to its City of Salford Community Stadium (COSCOS) for 'up to' £632,500 this week.
COSCOS - branded the AJ Bell Stadium and home to Salford Red Devils and Sale Sharks - is a joint venture company with Peel Holdings, which will also forward a matching loan for the ailing project.
Latest Salford Council accounts show that, at the end of March this year, there was an outstanding loan of £16.678million for the actual building of the stadium, plus £7.442million outstanding loans for 'operational funding'. This latest loan of £632,500 for 'operational funding' will take the total to £24.752million.
The Stadium company made a £1.459million loss last year down from a £671,000 profit the year before and has net liabilities of £7.068million, up from liabilities of £5.610million last year.
Strangely, in the report going to councillors this week recommending the new loan, officers state that there's been "an improvement in performance" of the Stadium, before explaining that "Ongoing financial support is necessary to enable the Stadium Company to fully discharge its liabilities during the current financial year.
"Without this additional support from both shareholders, the Stadium Company would default on the existing council loan with serious implications for the City Council's investment and accounts" it adds.
The new loan is required, bizarrely, so that the Stadium can re-pay previous loans from the Council... or, as the report states, "to pay its existing loan principal and interest obligations to the City Council".
Even more weird is that the Council will find the money for the loan from interest payments made by the Stadium company on previous loans. In other words, money is circulating from the Council to the Stadium and back, while the liabilities and loans are increasing. Interest repayment on this latest loan, the report states "will be a number of years hence".
The report states quite clearly that more loans will be required in the future... "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 Council is hedging its bets that 17 hectares of land around the Stadium will be sold to pay off the debt, while events will feed into income. So far, however, only one plot of land has been sold, to Greene King restaurant and pub chain, two years ago.
"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" states the report "Potential tenants are also interested in leasing space within the stadium enabling the stadium to maximise commercial space both inside and outside."
The Council is hoping that the opening of the new road, or Western Gateway Infrastructure Scheme (WGIS), plus the development of Port Salford, will help to improve finances as it "ideally positions the Stadium in the centre of this major regeneration area in the city."
This new £632,500 loan for the Stadium is ten times more than was handed to Swinton Lions last week to ensure that ailing club's survival...
See also related Salford Star articles...
Swinton Lions Secret £60,000 Loan from Salford Council click here
Salford Stadium Makes Huge Loss click here
Photo by Gareth Lyons
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