Didn't ACL commit the 'first evil' by charging above market value?
Market value? The market rate requires a market, with buyers and sellers. Simplified, the amount of supply from the sellers and the amount of demand from the buyers determines the price. The City of Coventry has effectively one seller of football stadiums capable of taking 10,000+ Sky Blues fans. It also has one purchaser of stadiums demanding to accommodate 10,000 fans (most games). Both the buyer and seller may or may not have other options, but they're probably tenuous (playing at Leicester etc / Monster trucks etc) and they should be far better off with each other. So there is little in the way of a market per se.
Therefore, if this is truly about the rent, and not distressing ACL, then a compromise will only be reached if the two sides can find a level which suits both sides. Sisu have suggested they will only pay this so-called "League 1 average rent" (or somewhere between £150,000 and £200,000 if I recall correctly). And from ACL's side, how much do they need from Sisu to make City's tenancy worthwhile? I don't know.
But this might help. Here's a few details from Doncaster's council relating to Rovers much hyped so-called £10,000 rent of their 15,000-seater stadium.
1. There was no residual debt for building the stadium (i.e. no £21m loan to pay off like Coventry).
2. The stadium was intended to make a surplus of about £300,000 a year which would go towards major items of expenditure such as relaying the pitch etc. At some stadiums this would be considered a budgetary item (such as a sinking fund) that a management company would account for (e.g. In Swansea £200,000 a year is put aside for the Liberty, if I recall correctly).
3. But Doncaster's stadium management company was actually losing money (a £2.1m loss was estimated for the period between the stadium opening and March 2012) and annual losses were projected to be about £350,000 a year - despite cost cutting.
4. The council's financial analysis showed none of the clubs using the ground were "paying anything like the true cost of their usage."
5. At the time, Rovers paid £281,000 per year for 25 days use per year + cup games, after ending an earlier temporary deal to pay over £700,000 more per year (I.e. about £1m per annum) in return for perimeter advertising (worth about £500,000) and match day car park income.
6. Rovers and the council were only 6 years into a 25-year lease agreement, which limited the council's room for manoeuvre.
So the council proposed a new, longer lease that would pass management of the stadium over to Rovers.
As part of this the council:
1. Were independently advised Rovers should be paying between £450,000 and £600,000 per year for such an arrangement (+ £75,000 per annum for an attached soccer centre).
2. Were told this was considerably more than Rovers would pay.
3. Had to consider the losses being incurred by the stadium management company that the council wholly owned.
4. Noted that "Rovers at present pay nothing to the council" because the £281,000 was swallowed up by stadium running costs.
So under the new deal Rovers:
1. Take on the stadium running costs (that were clearly in excess of the £281,000 per annum they were paying).
2. Cover the existing losses (an estimated £350,000 per year).
3. Pay the council £100,000 per year, a sum which would increase with inflation. This would effectively be reduced to £10,000 for the first 9 years because of 9 years worth of naming rights money for stadium upkeep that would be passed on to Rovers.
In summary, Rovers had the council over a barrel by refusing to pay a sum that would cover running costs. The council, keen to insulate itself from these loses, cut the club a favourable deal to take it off their hands.
Nevertheless, while partially offset by gaining access to new income sources and redundancy savings, adding together the known outgoings, this £32m, 15,000-seater stadium could effectively be costing the club more than £700,000 a year plus whatever they have to set aside for major repairs (which the originally projected £300,000 surplus was supposed to cover).
It's hardly a cheap deal costing the club just £10,000 a year.
So what will it cost to run a 32,000-seater stadium with a loan against it which has somewhere in the region of £15m left to pay off?
And if, for argument's sake, a rental deal can't be reached, ACL go bust and Sisu buy the stadium on the cheap, how much will that cost the club to run? Anyone want to bet it'll be under £400,000 a year?
And if Sisu can't afford or don't want to buy it, you might like to know that another option the council mentioned for Doncaster's nearly new stadium was: Selling it for redevelopment.
The 19-year rental agreement put pay to that in Doncaster, but as Sisu have not paid the Ricoh rent you have to wonder how much security (if any) their contract provides if a bank is looking to recoup its loan...
