“What will be the future of Wembley Stadium?” This might have been a headline last week, as news emerged of a possible deal to sell Europe’s best jumbo-sized football venue to Shahid Khan, owner of tier-two Fulham and the Jacksonville Jaguars of the National Football League (NFL).
In fact, the headline is taken from the Athletic News, one-time bible of the British sports establishment, nearly 93 years ago – on 14 December 1925, to be precise. “The FA has a contract…for the [FA Cup] Final to be played there for 21 years from 1923,” the article continued, “But Wembley is now in the hands of the liquidators.”
A few months later, after Bolton Wanderers had defeated normally free-scoring (but also free-conceding) Manchester City 1-0 in the 1926 Final, the newspaper was virtually writing the stadium’s obituary. “It is generally agreed that there is small chance of another FA Cup Final being played at Wembley Stadium,” it told readers. What is more: “It is rather tragic to have to confess that the majority of people interested in association football will watch its passing as the Final ground with few regrets.”
In the event, Arthur Elvin, the son of a Norwich policeman, rescued Wembley with the aid of a sideline in greyhound racing, and the stadium gradually acquired the aura it retains today.
From this it can be seen that there is nothing new about speculation and uncertainty enveloping the future of this iconic soccer venue. Nor is there anything automatic in the notion that England should be endowed with a national football/sports stadium.
But, having paid through the nose to rebuild the thing, while working hard to service the resultant hefty pile of debt, nor is it necessarily the case that this heavily-trailed potential deal to offload the asset is a good idea. The devil, to coin a phrase, will be in the detail; all will depend on the terms of any eventual agreement – and how the FA, in its wisdom, opts to spend the proceeds.
Like everyone else, I have seen the price tag trailed at anywhere between “in excess of £500 million” and £900 million. The higher figure seems to depend on valuing the Club Wembley premium seats operation at somewhere around £300 million, however. Since the FA would be expected to retain this, it seems the amount the regulator would most likely receive for any sale would be £500-600 million, with £900 million serving, in effect, as a valuation of the overall Wembley business.
Club Wembley produced £56.5 million of turnover for the FA in the last year for which figures are available. If, as has been suggested, the floated deal resulted in more NFL and somewhat fewer England football matches being played at Wembley, it is worth posing the question whether annual Club Wembley revenue can be sustained at this level.
The prospective deal is being portrayed as a boon for grass-roots football in England. This is because, in the words of the Evening Standard, which broke the story, “half a billion pounds raised by the sale will be spent on building up to 1,500 artificial pitches nationwide”.
No doubt some of the money raised would be used for this purpose. Putting my cynical hat on though, I cannot help wondering whether this is partly to try and dissuade those public entities whose funds helped to rebuild Wembley and its environs from asking for money back.
Deferred grants listed in the Note on long-term creditors in the latest FA accounts include £78.8 million from Sport England, £18.5 million from the Department of Culture, Media and Sport and £16.7 million from the London Development Agency.
What other potential uses might there be for bits and pieces of Mr Khan’s money if a deal were to go ahead?
Well, debt repayment would, I think, be one, not least because, as the accounts make clear, current loan facilities are “secured against the value of Wembley Stadium”.
On 2 October 2015, the FA entered into new borrowing arrangements – namely a £300 million loan facility – with Barclays, HSBC and Santander. This consisted of a £100 million term loan and a £200 million revolving credit facility. The term loan, interestingly, is due for repayment in October 2018, while the credit facility expires in 2022.
Of course, not all of the £300 million will necessarily have been drawn down. The most recent accounts, covering the period to end-July 2016, are now rather aged, with a new set of figures due at Companies House by April 30. Nonetheless, at 31 July 2016, £195 million of the £300 million, including all of the term loan, had been drawn down.
The FA’s finance costs decreased considerably, from £29.1 million to £18.2 million in the year, as a consequence of the refinancing. The net book value of the stadium at 31 July 2016 was £433.4 million, so it looks likely any deal with Khan would produce a one-off gain.
Those 2016 accounts also mention obligations related to the sale and leaseback of a hotel at St George’s Park, the national football centre. The outstanding obligation under the finance lease was put at this time at £49.8 million. Would FA decision-makers see an argument for paying this off with sale proceeds? Once again, it seems worth posing the question.
I actually wonder whether the FA’s back office operation, or most of it, might move to Burton in the event of a Wembley sale. It is at least worth asking whether it would remain at Wembley and, if not, whether this should be viewed as a knock-on additional cost of a disposal.
What will be the future of Wembley Stadium?
David Owen worked for 20 years for the Financial Times in the United States, Canada, France and the UK. He ended his FT career as sports editor after the 2006 World Cup and is now freelancing, including covering the 2008 Beijing Olympics, the 2010 World Cup and London 2012. Owen’s Twitter feed can be accessed at www.twitter.com/dodo938. Contact him at moc.l1713924260labto1713924260ofdlr1713924260owedi1713924260sni@n1713924260ewo.d1713924260ivad1713924260