In a previous posting, I mentioned that an official council document had referred to renegotiation of City's lease for the City of Manchester Stadium. More quickly than anyone supposed, a Manchester Evening News exclusive on Saturday claimed that the deal has now been done. Has it? And if the MEN is right, what's the reasoning behind City dicthing the current revenue-based approach, agreeing to pay an index-linked flat rate set at a higher level than the Council would now receive from sell out crowds?
The Report to the Council's Resources and Governance Overview and Scrutiny Committee suggested that this could take until January 2011 (see page 9). It was a surprise, then, that the Manchester Evening News reported the terms of a new agreement yesterday.
One presumes, then, if it's true, that the negotiating team has reached this deal with the Blues' key personnel but it will still have to be rubberstamped by the Resources and Governance Overview and Scrutiny Committee. However, it's arguably the clearest sign yet that a stadium expansion is on the cards.
City moved to the City of Manchester Stadium in 2003, a year after the arena had hosted the Commonwealth Games. The capacity of the venue was increased by almost 10,000 from that during the Games, with the athletics track being removed, and a new lower tier being added. City paid for the cost of the fit out, which cost around £30 million. The Blues had allowed the Council to take ownership of the old Maine Road ground as part of the deal.
As an aside, it was originally hoped to retain the old place as a sports venue, but in the end, Sale RU the preferred new tenant, opted not to follow their interest through. Stockport County had also looked briefly at the possibility of taking on the venue. The £27 million value ascribed to Maine Road in the deal was also a cause of controversy: this came from the valuation assiged in the club's accounts but reflected the cost of building a sports stadium on the site. As the stadium was to knocked down and the site was in Moss Side, the value of what the Council received was much less.
In addition, City had to pay rent on the cost of the new ground, as yesterday's MEN piece indicated. The figure is usually quoted at 50% of receipts applicable to a crowd of a level over 34,000, though I have seen suggestions that it rises to 60% for crowds over 40,000(I can't currently find evidence of this). This income is used by the Council to support other sports facilities, primarily those on the Sporcity site.
Obviously, the level of rent actually paid fluctuates given that it is dependent on the level of crowds at City of Manchester Stadium. But, as yesterday's MEN piece points out, "The council pocketed £12.5m under the terms of the old lease" over seven seasons. The new arrangement, then, represents a significant increase, index-linked.
Now, I attended a supporters' meeting in London with David Bernstein back in January 2003 - two months before the former Chairman left his post and around six before the stadium move. Bernstein said that City had an option in the lease to buy the freehold, but that the terms were such that it made commercial sense to keep renting for at least 20 years. It appears that this is still the view, and the need for the club to renegotiate the terms of the lease could only arise if the venue were to be extended.
As I've noted, I don't expect an announcement yet. I guess that will follow once we've had Council confirmation of the renegotiated terms. Nevertheless, yesterday's story shows that the three elements of the Sportcity and area overall plan (stadium, visitor attraction and training ground) are continuing to move forward.
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