Nick
Administrator
Paul Fletcher's book: The Seven Go#den Secrets of a Successful Stadium How to Plan, Fund, Build and Operate a Sustainable Stadium Venue
But during the journey they completely lost the plot and deviated from their early aims and objectives.
There are many lessons to learn from their experiences. Initially Coventry City FC were on their own. They had located a derelict 72-acre site within 500 yards of the M6 Motorway which would have cost around £20m to buy and decontaminate.
Before any work began, they agreed to sell 50 per cent of the site, around 35 acres, to Tesco for around £62.5m. This left a profit of around £40m to build themselves a new stadium.
They then seemed to abandon their earlier objectives and became over ambitious, star struck and stupid.
Although they had appointed a fine architect in Geoff Mann, who at the time was a senior partner at RHWL London (and an avid Sky Blues fan), they began to consider the folly of a 60,000 all-seater stadium with closing roof and retractable pitch, costing well over £100million.
At the time the new Wembley Stadium was not certain to go ahead in London so Coventry City FC even considered that their location would be ideal for a new National Stadium and wasted time and money on a pipe dream that never had a chance.
As their ambitions got higher and more costly they approached Coventry City Council for some funding, suggesting that this was now becoming a ‘community’ project for the city.
With hindsight, in my humble opinion, this was a massive error, and one which Coventry City FC may regret for the next 100 years. As the project evolved, Coventry City Council took more and more ownership of the project not trusting the football club in many aspects of the joint venture.
By the time I arrived in Coventry the deal had been struck; in simple terms it was going to be a joint venture between the football club and the council with both parties owning 50 per cent of the equity.
As the football club did not have the money to complete the purchase of the land, which would then enable them to sell off half of it to Tesco, it was agreed that Coventry City Council would purchase the land, then conclude the deal with Tesco, all as part of their joint venture agreement.
But mysteriously, once the purchase of the land and the sale to Tesco had been completed, Coventry City Council informed the football club that they were unable to share with them the profit from the sale of the land due to ‘state aid’ implications.
Instead, they offered Coventry City FC a 50 per cent share in the company that would operate the Ricoh Arena, but they, Coventry City Council would own all the equity in the property.
What I have explained in one paragraph took over 12 months to sort out and over £1m was spent on lawyers’ fees as the state aid fiasco continued through to a conclusion, which involved numerous highly paid lawyers As compensation the council offered Coventry City Football Club 50 per cent of the operating profit from the Ricoh Arena and the business plan forecasts were looking very favourable.
In addition CCFC would receive all their football related income streams.
But as the project evolved Coventry City FC were relegated from the Premier League and encountered massive financial problems.
They were so desperate to fight off administration that when under the chairmanship of the enigmatic Mike McGinnity, they sold their 50 per cent shareholding in the Ricoh Arena to the Higgs Charitable Trust for a reported £6m (Coventry Evening Telegraph August 2007).
As the Higgs Trust had previously invested around £2m in Coventry City Football Club, the price paid for the 50 per cent shareholding was around £4m.
At that time the Ricoh Arena had been valued at around £37m, therefore valuing Coventry City’s shareholding at around £18.5m, making the £4m purchase by the charity a snip. But as CCFC were so strapped for cash, they had no where else to go.
The major disadvantage for Coventry City FC when selling their shares in the Ricoh Arena was that they waved goodbye to all the Arena related incomes and all the football associated incomes such as catering income, car parking income, office rental income, rock concert income, international match income etc, which they had happily gifted to the early joint venture company.
In selling their shares to the Higgs Charitable Trust I felt, and probably CCFC also felt that the shares would be held in ‘safe-keeping’ until times improved.
Alan Higgs had been a lifelong fan of the Sky Blues whilst he was alive and left his fortune for the good of people of Coventry.
His son Sir Derek Higgs was an even bigger fan and served the club well for many years as both a Director of Coventry City FC and main Board Director of Arena Coventry Ltd.
Probably old news and been posted many a time, but I didn't know some of it. (stolen from GMK)