Beruflich Dokumente
Kultur Dokumente
KIRKDALE WARD
PUBLIC RTC/45
Executive Summary
The City Council has been working with Everton Football Club (EFC) to
create a world class, ground-breaking and iconic stadium as a much-needed
new home for EFC for the next century. The proposed new Stadium by EFC
at Bramley-Moore Dock will be a landmark for the Citys spectacular north
Liverpool waterfront and a powerful statement of intent for the Club and the
City of Liverpool that will resonate globally.
Terms have been agreed between Peel Land and Property (Ports) Ltd and
EFC for EFCs acquisition of land at Bramley-Moore Dock. The proposed deal
between EFC and LCC then envisages Peel granting a 200 year head-lease
of the land to the Funder of the new Stadium. The Funder will have the benefit
of a lease to a new Council created Special Purpose Vehicle company, which
will then sub lease the Stadium to EFC for 40 years. At the end of the 40 year
term, EFC will have an option to acquire the leasehold interest in the Stadium.
EFC will fully finance the new Stadium and the Councils role in this
transaction will be to guarantee the repayments to be made by EFC through
the lease structure. For this, the Council will receive a significant regular
annual fee and a security package to mitigate against risk should EFC default
on repayments. This arrangement involves no financial outlay by the Council
and structuring the proposed deal in this way will enable EFC to raise the
necessary funding to build the new Stadium.
From the Citys perspective, the proposed new Stadium will complement and
accelerate the regeneration plans already in place for the north Liverpool area
captured within the approved development framework for the Atlantic Corridor,
the recently launched vision for the neighbouring 10 Streets Creativity District,
and proposals for significant investment in highways and infrastructure, a new
Cruise Terminal, an Isle of Man Ferry Terminal and new residential and office
developments proposed for Liverpool Waters all within the Citys World
Heritage Site and Buffer Zone.
This report seeks authority from Cabinet to acknowledge the prospective and
significant regeneration, financial, commercial and economic benefits outlined
and to progress the Heads of Terms to final form, subject to satisfactory legal
and financial advice.
Background
EFC and LCC share a common goal to create a world class, ground-
breaking and iconic stadium in a new location that will not only be a
landmark for the City, but also bring about significant investment and
regeneration benefits to Liverpool.
Initial high-level studies conclude that the full development cost of a new
50,000 seater stadium with associated site specific facilities and infrastructure
would be in excess of 300 million.
Terms have been agreed for the acquisition by EFC of the necessary land
from Peel Land and Property (Ports) Ltd (Peel).
The terms between EFC and LCC envisage Peel granting a 200-year head-
lease of the land of the Funder of the new Stadium. The Funder will be the
landlord and will have the benefit of a lease to a new City Council created
Special Purpose Vehicle, LCC SPV. Then LCC SPV will sub lease the
Stadium to EFC. At the end of the 40 year term, EFC will have an option to
acquire the leasehold interest in the Stadium from the Funder.
Structuring the proposed deal in this way will enable EFC to raise the
necessary funding from a third party funder, to build the new Stadium. The
rent paid by EFC to the LCC SPV will be greater than the rent paid by LCC
SPV to the Funder and LCC SPV/the Council will then retain the uplift
difference between the rents, referred to as a Security fee, for its part in the
transaction. The amount of the Security fee will be determined by the shadow
credit rating and benchmarking exercise undertaken by KPMG.
In this way, LCC is securing, not financing, the lease obligations of the wholly
owned LCC SPV which in turn will be paid the Security fee and the rent by
EFC. The rent will, when capitalised by the Funder, deliver sufficient proceeds
to provide a fully funded solution for all the projected Stadium development
costs.
There are some risks to LCC and a clear rationale for supporting EFC, both of
which are outlined in detail later in this report. It is important to highlight some
of the key terms of this deal which oblige EFC to:
Provide a rent which will allow LCC SPV to pay its rent to the Funder
and to pay an annual Security fee to LCC, thereby safeguarding the
Council from any commercial risk from the venture. The Security fee is
anticipated to be in the order of 4M - 5M (based on a projected new
Stadium cost in excess of 300M). The margin fee will be determined
by the shadow credit rating exercise and taxation advice which is to be
completed by KPMG on behalf of EFC and LCC; and
Provide a full Security Package which is in line with security levels
expected in the commercial finance market that will create new ring
fenced bank accounts into which certain EFC incomes will be credited
to deal with an eventuality of non-payment of rent.
The terms of the arrangement are therefore designed to mitigate risk and
contain control measures to ensure sufficient precautions are taken such that
LCC is compliant with governance issues as well as the requirement to
safeguard public monies as well as achieving a commercial reward which
reflects the level of risk.
EFC intend to use the Stadium move to facilitate a vital Legacy Project at
Goodison Park, delivering health, education, affordable housing and public
spaces for the local community which is likely to stimulate further investment
in the L4 area and will create social, environmental and economic benefits.
Details of this will emerge from EFC in due course.
In January 2017, EFC revealed at their AGM that their preferred site for the
proposed new Stadium would be Bramley Moore Dock in Liverpool. It is
important to highlight the Clubs preference for Bramley Moore Dock and their
commitment to invest time, costs and energy into investigating whether this is
a viable option. Any decision to proceed with the Stadium at this location will
be subject to planning permission following consultation and due planning
process supporting this. EFC will be required to submit detail on their site
analysis and a Heritage Assessment among other planning requirements.
Prior to this year, in summer 2016, supported by the Council, EFC ruled out
plans to build a new ground at Walton Hall Park in Liverpool. Other site
options which EFC have previously considered, including redeveloping
Goodison Park, have a number of both physical and financial constraints
which meant that after careful consideration, these options have been
discounted by the Club.
Since the adoption of the North Liverpool and South Sefton Strategic
Regeneration Framework in 2011, North Liverpool has been a strategic
regeneration priority for the City. Many of the transformational projects
included within the Plan have progressed well in the last few years,
particularly Project Jennifer (the new District Centre at Great Homer Street,
Everton), the Anfield Project and Liverpool 2, the expansion of the Port, each
providing significant private sector investment and actual and potential job
creation.
Signs of new investment and a recent push for a new Vision (10 Streets) in
the Atlantic Corridor area of North Liverpool and the long-term brownfield
regeneration plans for the neighbouring Liverpool Waters has presented a
unique opportunity to combine each of these three strategies with the
prospect of delivering a new Stadium with significant private sector investment
and significant job creation in one of the countrys most challenging
regeneration areas.
Atlantic Corridor
Running north from the City Centre along the north Liverpool bank of the River
Mersey, Liverpool Waters and the 10 Streets District form the Citys and one
of the countrys largest and most ambitious regeneration areas.
At over 250 acres and with a potential for around 2 Million sq. ft. of new mixed
use development representing an investment value of approximately 6Billion,
the regeneration potential of the area cannot be understated. Both areas are
captured within the Atlantic Corridor Development Framework.
The recent 2016 LCC Cabinet approval of the Atlantic Corridor Development
Framework transpired as a result of increased development and investment in
the area. This focus has in part been down to the successful delivery of
several high value and high quality projects in the area including the Titanic
Hotel and Rum Warehouse within the Stanley Dock complex.
For the City Council to build on this success by proactively providing a vision
for the area going forward, the Atlantic Corridor Development Framework
Document was produced with the purpose of articulating a shared vision for
the area in the future and by providing the overarching context for
regeneration, outlining zones of use and investment clusters to establish
principles for development to maximize and harness the potential of the area.
A Spatial Regeneration Framework (SRF) is to be produced to establish a
planning framework and development principles to shape the development in
the 10 Streets Area. This SRF document will be considered for adoption as a
supplementary planning document (SPD) to assist in the determination for
future planning applications within the wider Framework area.
The Framework separates the area into distinct character zones based on
typical use providing guidance on the type of development sought, including
the range of uses, urban design, development criteria and general guidance. It
supplements several saved policies in the adopted Liverpool Unitary
Development Plan and aligns with strategic policies in the emerging city-wide
Liverpool Local Plan 2016.
The area which is made up of 5 distinct character zones based on typical use
comprise:
Liverpool Waters
City Fringe 10 Streets District
Atlantic Village and Park
Liverpool 2 and Port
Bankhall and Sandhills
Liverpool Waters extant outline Planning Permission provides for 9Million sq.
ft. of potential new mixed use development across several neighbourhoods
stretching from Princes Dock closest to the City Centre up to Bramley-Moore
Dock at its most northerly point. The most current development at Liverpool
Waters is focused on Princes Dock with recently approved tower residential
schemes about to start on site in 2017, based around a new neighbourhood
plan for this phase of development.
The Central Docks area is also beginning to attract private sector interest for
further residential and office development in parallel with successful
meanwhile use of the space for leisure events such as Sound City and
Cream, which in their own right attract thousands of people to the area for
Waterfront festival and music events.
The new Stadium scheme will generate additional regeneration benefits over
and above the complementary projects listed above and will act as a catalyst
to further investment around the Stadium itself. Master planners have been
appointed by EFC to establish the setting and the context for the iconic new
Stadium and will be looking closely at opportunities to attract further
investment locally, in tandem with the Citys plans for the area, including new
development and transport investment, and potentially including a new railway
station.
By relocating the football stadium to the Waterfront, the scheme would also
facilitate further economic benefits to be captured in Everton in the
Community programme in and around Goodison Park, delivering further social
regeneration benefits.
The A565 which runs through the centre of the Atlantic Corridor Framework
area is a key strategic route into Liverpool from the North. Funding and plans
have been approved to significantly upgrade the highway to provide a dual
carriageway road. Providing additional traffic capacity will create a robust
corridor for a link that is important to ease current congestion and for freight
traffic to the Port of Liverpool new Liverpool2 deep water container terminal,
Liverpool Waters, Bramley Moore Dock in the north of the City as well as to a
wide range of businesses along the route.
Regent Road, which separates the 10 Streets District from Liverpool Waters,
will benefit from upgrades to public realm which will create a more pedestrian
friendly environment for visitors to the area. Both projects will be funded
through LRGF (Liverpool Regional Growth Fund) and DfT (Department for
Transport) and will contribute towards the aims and objectives of the Atlantic
Corridor Development Framework Area by improving connectivity and public
realm.
Located to the south of the Atlantic Corridor Area is the proposed location for
the new Cruise Liner Terminal Facility. The relocation of the facility, if
approved, could create new development opportunities including long and
short term parking provision in the local area with the City Fringe/10 Streets
locations ideally placed to provide a suitable site. The Council is currently
examining the feasibility for the development of these facilities at this location
and is considering a range of options to bring this forward.
The Manx Parliament has approved funding for a new 3.5m Isle of Man Ferry
Terminal at West Waterloo dock. The current berthing facility is nearing the
end of its operational life and the decision was taken to relocate the facility
providing new and improved facilities. Planning Permission is to be sought
and the City Council is seeking highway funding to deliver a new access road
to take traffic to the new site directly via Waterloo Dock and to reduce
congestion on the Waterfront.
The re-use and redevelopment of historic properties is a major priority for LCC
including Central Library, The Everyman Theatre, Philharmonic Halls, Albion
House, the Cunard Building, Royal Insurance Building and Stanley Dock at a
combined cost of around 160M. A five-year review of Liverpools WHS found
that 427m has been invested in heritage buildings with a further 245m on
site and in the pipeline.
There are 18 listed buildings situated within the WHS which have been
refurbished/brought back into use since 2012, and a further 19 listed buildings
within WHS have contractors currently on site and are undergoing
refurbishment. In addition, major new developments have been successfully
incorporated within the fabric of the WHS and its buffer zone, including the
Arena, Convention and Exhibition Centres.
Liverpools approach, of successfully blending the history of the City with its
future growth and economic regeneration will continue to be central and
critical to the delivery of the new Stadium at Bramley-Moore Dock. A heritage
impact assessment and townscape and visual impact assessment would form
part of a detailed EFC Planning Application in due course and early ideas are
for the Stadium development itself to provide heritage interpretation and
viewing facilities of the historic Dock fabric/system which is currently not
accessible to the public. This will also create non-match day visitor experience
in this location, attracting additional footfall and spend in the area throughout
the year, all of which help further support a sense of place and the
protection/conservation of Liverpools heritage.
EFCs design team have confirmed from early discussions that there are a
range of options in relation to design and each would be the subject of early
pre-planning meetings with the local planning authority and Historic England
to inform decision making at an early stage.
Liverpools WHS Status will be considered again at the 41st Session of the
World Heritage Committee in Krakow in early July 2017. It is recognised that
this new Stadium project may potentially add further risk to Liverpools current
WHS status however LCC believes, as is demonstrated above, that there is
room for both UNESCO WHS status and growth in the Citys economy in this
way.
Press reports recently confirmed that Durban is stripped of host status for the
Commonwealth Games 2022 and organisers are exploring options for a
replacement host. The Council has formally written to the organisers and put
itself forward as the 2022 Games Host. Liverpool will continue to prepare its
bid for the 2026 Games, with an accelerated timetable for 2022 Games
provision. The proposed new Stadium could play a key part in the
Commonwealth Games bid and discussions will take place with EFC about
this opportunity in due course.
Everton has played in English footballs elite division for a total of 114
out of 118 seasons;
In the current season, Everton has budgeted to receive c130m in TV
rights fees and future prospects for fees above this amount remain
positive. The Premier League has already secured a 13-fold increase in
rights for the Chinese market beyond the current term with the current
deal in place to 2019. Evertons own commercial prospects are also
positive;
The Club continues to manage and control costs effectively for player
wages. The ratio of player wages to turnover consistently out-performs
the Premier League average;
The Club has also out-performed rivals both by trading players and
developing players;
Maintaining competitiveness in the Premier League results in c20
million of economic benefit to the City Region, together with 250 full
time jobs and 400 part-time match-day jobs currently being provided in
north Liverpool; and
The social benefits for the City that EFC brings through its community
programme, Everton in the City (EitC) are well recognised in the City.
EitC interacts with over 13,000 individuals each year to help fulfil their
aspirations.
A new Stadium impacts significantly on the ability of EFC to grow and prosper
financially. A new Bramley-Moore Dock Stadium would offer the Club the
opportunity, through commercialism, to generate incremental profit which
would support the ongoing lease payments on the new Stadium.
Final heads of terms are being negotiated between the parties and final
approval of these terms will be the subject of a further report to Cabinet.
Two other leases will be granted once the Stadium is built. The Funder
will grant a 40 year lease to a wholly-owned subsidiary company of
LCC, a Special Purpose Vehicle (SPV). This LCC SPV would be
solely set up for the purposes of this transaction. LCC SPV would take
a 40 year under-lease, referred to in the heads of terms as the
Intermediate Lease.
With the consent of the Funder, LCC SPV will then have the benefit of
a 40 year under-lease (less one day) to EFC. This is referred to in the
heads of terms as the Occupational Lease and permits EFC to
occupy the new Stadium. The Intermediate Lease will be granted
subject to, but with the benefit of the Occupational Lease this means
that LCC SPV will become EFCs direct Landlord.
At the end of the term of each 40 year Lease, the 200 year lease will
subsist and as such, EFC will have the option to purchase the
Stadium/Stadium site from the Funder.
The rent under the Intermediate Lease (payable by LCC SPV to the Funder)
will be negotiated when offers are received in the open market from potential
Institutional Funders. The rent will increase with RPI each year for the 40 year
term. The rent will be payable annually in advance on 31st August each year.
The rent under the Occupational Lease (payable by EFC to LCC SPV) will be
greater than the rent payable by LCC SPV under the Intermediate Lease (as
increased by RPI under the Intermediate Lease), and LCC will through its
SPV, retain the difference between the two rents, representing a Security fee
payable to LCC for being party to the transaction. The Security fee and Rent
under this Occupational Lease will be paid annually in advance on 15th
August each year.
EFC will provide the annual Security fee and the agreed comprehensive
security package to LCC/LCC SPV for the performance of its obligations
under the Occupational Lease.
The Security fee will not replace or substitute the potential funds to enable the
Stadium development via s106 or s278, which are dictated as due by planning
law, guidance and policy.
EFC and LCC have discussed the prospect of entering into a Venue Hire
Agreement allowing LCC to use the Stadium at agreed times for agreed
purposes, in exchange for the payment of fees. This would be a separate
commercial legal agreement between the parties.
EFC will also participate with LCC and other parties as appropriate in the
master-planning and development of the wider regeneration of the area and a
car parking strategy, therefore maximising the opportunities to create
synergies between individual developments, the public and private sector and
achieve strategic economic benefits.
In brief, the rewards will be as outlined in this report, including the significant
regeneration benefits delivered by the new Stadium, which will act as an
additional catalyst for development in the North Liverpool area and the annual
security fee which the Council will receive, (based on projections) in excess of
4.3M per annum, for its part in the transaction.
The security fee, subject to tax advice, will be reinvested in vital
services/projects that support the most vulnerable and or grow the Citys
economy.
The risk to the Council lies in the judgement of EFCs ability to cover their
rental commitment and the security fee and to mitigate against this risk, the
Council will receive a substantial security package (see below) from EFC to
ensure that the rent and security fee will be covered in this eventuality.
Security Package
EFC opening two bank accounts in EFCs name, but charged in favour
of the LCC SPV.
The first account (Cash Flow Account) will be used as security for the
payment of the rent in the Occupational Lease by EFC. All season
ticket revenue, hospitality fees and naming rights income will be
credited to this account. EFC are only entitled to access and use the
funds once the rent for the forthcoming year has been paid. It is
proposed if EFC is relegated from the Premier League and for as long
as EFC are not in the Premier League, they will be required to credit a
significant sum of the season ticket revenue (excluding hospitality
membership fees and naming rights income) to this account.
The second account (Rent Deposit Account) will be used as security
for performance of EFCs obligations under the Occupational Lease.
EFC will be required to make annual payments to the Rent Deposit
Account for the first five years of the term of the lease. All interest
which accrues on the deposit remain in the account. If EFC is
relegated, then they will be required to top up the Rent Deposit Account
using parachute payments paid by the Premier League.
Of note, in 2015, Sky TV won five of seven packages for Premier League
broadcast rights for three years from 2016. As a result the bottom club in the
Premier League can expect circa 99M in central prize money (up from 62M)
and the highest earning Club will receive 156M (up from 97.5M). Therefore
future earning from television rights look positive.
The Club has prepared an operational Business Plan that forecasts the
Clubs revenue and operating costs, cash-flows, funding and cash
balances for the next three years at Goodison Park and then for the 40-
year lease period in the New Stadium.
This shows that whilst at Goodison Park, the Club struggles to remain
profitable due to the constraints on being able to grow its income
streams, however following occupation of the New Stadium, it begins to
generate gross profit of 3% increasing to 9% by the end of the lease
term.
Analysis and interrogation with the Club has evidenced that the Business
Plan is relatively robust and is based on sensible assumptions backed
up by analysis and evidence where possible.
State aid
LCC and EFC have considered whether the proposed transactions are
capable of constituting State aid. State aid arises whenever State resources
are used to provide an advantage to a particular undertaking delivering
economic activities in a given market where these funds would distort that
market and affect other undertakings to compete on a level playing field.
In order to be State aid compliant, LCC must have a strong and objective
economic rationale for entering into the lease structures with the Funder and
EFC and the proposed transaction as a whole.
In order for the proposed transaction not to be State aid, LCC must be able to
evidence that its actions are in line with the requirements of the Market
Economy Investor Principle (MEIP) or Market Economy Operator (MEO)
principle as it is now referred to, and are therefore consistent with the actions
of a prudent private sector entity motivated by profit (and disregarding any
socio economic factors) i.e. would the private sector do the same deal, at the
same rates, if so, then the MEO principle has been met and there is no State
aid.
Following discussions, independent legal advisors for LCC and EFC are
confident no concerns are expected to arise as a result of the transactions
outlined in this report provided financial reports confirm MEIP applies to the
transactions.
Final legal advice will need to be confirmed to both parties based on the
calculations and assessments detailed in this report. The final form
independent pieces of legal advice will be appended to a future report to
Cabinet to endorse the final Heads of Terms.
The Next Steps
Obtaining the Shadow Credit Rating report from KPMG, being
commissioned by EFC with a scope approved by LCC, including the
provision that the Council can rely upon the calculation;
Further commercial negotiation of the heads of terms of the transaction
with EFC to include quantum of funding, approach to treatment of any
cost over runs, security fee and package;
KPMG to provide a further security fee pricing methodology for the
indicative credit rating for EFC based on the outcome of the credit
rating; and
Obtaining detailed accounting and tax structuring advice.
Mayoral Recommendation:
That subject to the receipt of KPMG Shadow Credit Rating report and
appropriate due diligence on this calculation by the Councils own advisors
Mayors Priorities
The recommended actions will support the Mayors priority to create 20,000
new jobs in the city and demonstrating our credentials as a business and
enterprise friendly city by helping to maintain the viability and competitiveness
of EFC moving forward and helping to grow the Citys economy.
Corporate Aims:
This project provides a once in a lifetime opportunity to consider Bramley-
Moore Dock as a location for EFC new stadium and maximise regeneration in
North Liverpool.
This would complement Liverpool Waters and 10 Streets, and would provide
an unrivalled and transformational mix of major key component projects which
will act as further catalysts for fundamental change, investment and creating
new business interests in this part of Liverpool and the delivery of an
estimated minimum 5,000 new jobs within the next ten years.
Key Decision:
Yes.
On approval of the report, EFC will embark on a planning process that would
potentially lead to the submission of a planning application by the end of the
2017 calendar year.
EFC and LCC share a common goal - to create a world class, ground-
breaking and iconic Stadium in a new location that will be not only a
landmark for the City but also bring about significant investment and
regeneration benefits for the City of Liverpool. The specific headline
benefits for LCC in supporting this project can be summarised as follows:
A significant annual cash return from the security fee;
Achieves substantial economic regeneration, creates jobs and delivers
a new Stadium for EFC, a significant contributor to the economy of the
City;
Endorses and underlines the Citys ambition and open-for-business
outlook and will be a kick-start for north Liverpool regeneration
including the northern neighbourhood of Liverpool Waters, accelerating
development and bringing outstanding architecture to the waterfront;
A powerful, best-in-class and much-needed legacy for North Liverpool
and L4;
Public, community and City Council access to an inspirational sport,
leisure, entertainment and recreational facility; and
Complementary to existing regeneration schemes.
Alternative options considered:
Not undertaking the proposals contained in this report
The Heads of terms would not be finalised and this would leave EFC without a
financial solution to their new Stadium aspirations at this time, meaning that
the regeneration benefits to North Liverpool of this proposed project at
Bramley-Moore Dock would not be realised, alongside other complementary
major projects also described in this report.
Financial implications:
In terms of the work done to date on a potential deal, financial due diligence
has included:
Review of EFCs audited accounts;
High level assessment of EFCs business plan and associated financial
model; and
High level review of EFCs approach to delivery of the new stadium.
SDLT
The Stamp Duty Land Tax due on the registration of the Intermediate Lease
by LCC SPV will be remitted by EFC.
Fees
There are fee amounts incurred by the Council to date which require charging
to EFC for work to support the production of their business plan which would
be required by their funders so this will be recovered. If the project proceeds,
the Council may be required to charge a fee for Officer time to the project.
This would be negotiated with EFC at a later date.
Legal implications:
Powers to enter into the Proposed Transaction
2. The Local Government Act 1972 s120 gives power to LCC to acquire
land and thereby take a lease.
3. The Local Government Act 1972 s123 gives power to LCC to dispose
of land and thereby grant a lease but this must be for the best
consideration that can reasonably be obtained.
State Aid
In order to be State Aid compliant, LCC must have a strong and objective
economic rationale for entering into the lease structures with the Funder and
EFC and the proposed transaction as a whole.
Advice received from independent firms of solicitors acting for LCC (DWF
LLP) and EFC (Slaughter & May) concurs there will be no State aid present
provided the transactions are on an MEIP / MEO basis. If the transaction were
challenged and State aid were found to be present, the recipient of any aid
would be required to pay this back (EFC), at a rate decided by the
Commission and potentially with interest. EFC have been independently
advised and are aware of the risk of potential risk of State aid challenge.
Risk Management:
LCC has obtained independent legal and financial advice and it has
concluded:
1. LCC has the legal powers to enter into the proposed transactions (see
Legal Implications and comments in report).
The EFC Charitable arm, Everton in the Community (EitC) will also continue
to prosper. EitC interacts with over 13,000 people each year, employing 52 full
time staff, 50 casual staff and 170 volunteers. The community team works
extremely hard to provide inspiration to disadvantaged local individuals.
Reports attached:
None.