House of Commons - Culture, Media and Sport

Select Committee on Culture, Media and Sport Fourth Report

II. THE EVOLUTION OF THE NATIONAL STADIUM

4. The starting point for the new National Stadium was the shared sense that, while the current Wembley Stadium had a very fine history, it had very little future. Built as the centrepiece of the 1924 British Empire Exhibition, it has staged many celebrated football matches since the 1923 FA Cup Final, including the 1966 World Cup Final. The Stadium was the venue for track and field athletics during the 1948 Olympics. It has been the traditional venue for the Rugby League Challenge Cup Final.[18] In short, it has become the de facto National Stadium.

5. The current Stadium has passed the point at which it can usefully serve that role. According to Mr Derek Casey, the Chief Executive of Sport England, "it was in such a shocking state that something had to be done".[19] The Secretary of State said that "we all know from our own experience of Wembley in its current condition that something desperately needs to be done". That opinion has been echoed by others.[20]

The National Stadium competition

6. Faced with that position and with the prospect of a number of applications for Lottery funding for major new stadia after the nomination of sport as a recipient of National Lottery proceeds, Sport England decided to establish a National Stadium competition.[21] The Football Association (FA), the Football League, the FA Premier League, the Rugby Football League and the British Athletic Federation were invited to participate in the development of the project. By July 1995, bids had been received from Birmingham, Bradford, Manchester, Sheffield and Wembley. In October 1995, Wembley and Manchester were short-listed.[22] In October 1996 the governing bodies of the three sports of athletics, football and rugby league announced that Wembley was their preferred bidder.[23] In December 1996, Wembley was selected by Sport England as the preferred site for the National Stadium and a decision was made in principle to award a Lottery grant of £120 million.[24] At the same time, it was announced that £80 million would be allotted for two major projects in Manchester for the 2002 Commonwealth Games—£60 million for a stadium and £20 million for an aquatic centre.[25]

7. Mr Casey contended that, at the time of the competition, the FA "had an open mind" about where to stage its events in future.[26] This interpretation was disputed by Manchester City Council, which believed that "football appeared to have made its mind up to support Wembley at a very early stage". Manchester City Council considered that the selection process had allowed the governing bodies of the three sports, and of football in particular, too great a role in the project.[27] According to the official history of Wembley Stadium, "there was a certain inevitability in the outcome".[28]

8. During this inquiry we did not examine the merits of the competing bids submitted in 1995 and 1996 for the site of the National Stadium, although we realise that the perceived outcome at Wembley of a Stadium not suited to athletics understandably colours opinions on the quality of the original decision.[29] Notwithstanding the many contentious issues surrounding the development which we consider below, two matters appear beyond dispute. First, as we remarked last year, "a redeveloped Wembley provides a resonant and fitting centrepiece of facilities offered for the 2006 World Cup".[30] Second, a major project has been established which can serve as a catalyst for regeneration in one of the most deprived parts of England.[31]

Acquisition of the site and management changes

9. The project for the National Stadium at Wembley was intended to be taken forward by Wembley plc, the then owners of the Stadium, and by a body specially established for the purpose, the English National Stadium Trust (ENST). In 1997 it was planned that the ENST would lease the site from Wembley plc and that the Trust would be responsible for the design, construction and finance of the new Stadium.[32] Early in 1998 ENST decided that it was unable to make progress in securing a lease from Wembley plc.[33] This was in part because a rival bidder for the site had emerged in Arsenal Football Club.[34] At this point, the FA, acting on behalf of the football event holders, withdrew from the project as then structured. Sport England concluded that the model of an independent trust to develop and operate the Stadium had not proved practicable.[35]

10. In July 1998 a new project structure emerged with football as the dominant partner. It was agreed that, in order to secure the site in the face of private competitors such as Arsenal FC, the Lottery grant would be devoted principally to the purchase of the current Stadium and the associated business.[36] The finance to build the new Stadium would be raised by a development company (WNSL) which would be a wholly-owned subsidiary of the FA. This finance would be secured on the basis of a commitment by the FA to hold its flagship events at the new Stadium. The ENST would continue to exist and would lease the Stadium site to WNSL. The ENST would be represented on the Board of WNSL and would have a "golden share" in WNSL to ensure that Lottery conditions and the wider public interest were respected.[37] After negotiations with Wembley plc, these elements were put in place by January 1999 and the purchase of the Stadium was completed on 15 March 1999.[38]

Athletics and the National Stadium

11. Athletics was in a period of considerable organisational strife as these developments were taking place. The British Athletic Federation went into administration in October 1997.[39] The original plan for the National Stadium had listed eight athletics events to be staged there.[40] The new governing body of athletics, officially designated as UK Athletics from January 1999, re-assessed this proposal and took the view that the Stadium would be too large for national and Grand Prix events.[41] As London International Sport, a body which was established with the remit of attracting major events to London, put it to us last year, "it would not be financially viable" to use the Stadium for Grand Prix events and "the Stadium would not be filled to anything like capacity".[42] On 2 March 1998 Mr David Moorcroft, the Chief Executive of what is now UK Athletics, wrote to the Stadium developers and, appreciating the value of being "realistic from the outset" about the potential use of the National Stadium for athletics, stated that the sport could not provide an annual event for the Stadium.[43]

12. Accordingly, the athletics use of the National Stadium became focused upon a limited range of international bid events. One international bid event, the European Cup, is to be staged this year in Gateshead at a Stadium with a capacity of only around 12,000.[44] The capacity required for the European Championships was said by the Secretary of State to be around 25,000. Sport England considered that these Championships would be more suited to a venue other than Wembley.[45] The interest of UK Athletics in the National Stadium has thus become concentrated on one event for which it can bid—the World Athletics Championships.[46]

13. In recent years, there has been a growing understanding that facilities for major events should have long-term viability.[47] Last year the Department for Culture, Media and Sport set out its policy on venues for major events as follows:

During the same inquiry the BOA told us that the International Olympic Committee (IOC) "looks favourably upon the re-use and multi-use of existing venues".[49]

14. Mr Casey indicated to us last year that the cost of a separate athletics stadium in London capable of meeting the demand for the very largest events which may come to this country about once a decade would not be "far off" the then projected cost for the construction of the new Wembley Stadium—£198 million.[50] In addition to this consideration, Sport England had fundamental doubts about the long-term viability of such a Stadium. Mr Trevor Brooking, the Chairman of Sport England, said in April 1999: "you may be going to build an athletics facility and let it lie there as a white elephant most of the time when it is only going to be used two or three times in twenty years".[51] This view was repeated in evidence by Sport England and WNSL during the present inquiry.[52] Long-term viability required the involvement of another sport or sports. This was the rationale for the National Stadium.

15. On the basis of the evidence received last year and rehearsed now, this Committee made the following statement in May 1999:

The only change in the evidential position since then is that the number of events requiring a Stadium with a capacity in excess of 50,000 has been clarified as two rather than three. No evidence has emerged during the present inquiry to call into question the Committee's conclusion.

Financing of the Stadium and project costs

16. The essential financial foundation for the development of the new Wembley is the 20-year staging agreement with the FA to hold its flagship events at the Stadium. On this basis, WNSL, a wholly-owned subsidiary of the FA, is required to finance the construction of the new Stadium through debt.[54] As Mr Ken Bates, the Chairman of WNSL, told us last year: "the FA have to raise the money, run the Stadium and make it pay".[55] According to Sport England, "in addition to their capital investment, the FA/WNSL will take the long-term risk over Wembley".[56] As the Secretary of State put it:

"It is not just that football is bringing the majority of events to the new Wembley. Football is also bringing a very substantial proportion of the money to the new Wembley."[57]

17. Neither of the other two partner sports is making any advance financial commitment or undertaking any financial risk.[58] Although heads of terms have been agreed between WNSL and the Rugby Football League (RFL) for more than a year, the RFL is prepared to consider withdrawing from the Stadium and staging its major matches elsewhere if certain conditions are not met.[59] Mr Bob Stubbs, the Chief Executive of WNSL, told us that the RFL's events were profitable and that Wembley was also keen to secure them for non-financial reasons, but that the events were not crucial to WNSL's financial prospects.[60] Relevant athletics events and the Olympics must be taken by the new Stadium on a cost-only basis: all rights to ticketing, television, sponsorship, advertising, merchandising, catering, hospitality and all other services belong to the event owner.[61] Athletics thus brings no direct profit to WNSL which is financing the construction of the Stadium.[62]

18. Since we last considered Wembley National Stadium, the estimated costs of its construction have risen by £136 million from £198 million to £334 million.[63] Mr Stubbs told us that the earlier estimate had been indicative. The increase was attributable to three factors: an increase in football capacity from 80,000 to 90,000; a decision greatly to enhance the quality and quantity of spectator provision; and an extension of self-funding commercial facilities to create "a much deeper and broader business" than stadia such as Twickenham and the Millennium Stadium in Cardiff.[64] These increases will be funded by debt finance.[65] WNSL was confident that the project changes would generate additional profits.[66] On 27 January Mr Stubbs told us that he was confident of securing a preferred funder to underwrite the debt.[67] It has subsequently been announced that a lead arranger for the financing of the Stadium has been selected.[68]

19. It is possible for major projects of this kind to be undertaken as public projects funded principally by Government. According to Mr Casey, this was the approach of the French Government to the construction of the Stade de France.[69] Wembley National Stadium is not such a public project. It is a public/private partnership to which the public, through the National Lottery, contributes £120 million, a figure established in 1996 which has not been re-visited or adjusted for inflation subsequently.[70] Sport England considered that their initial investment had been successful in "leveraging in" more than £350 million from private sources. The extent of private involvement made the public commitment "excellent value for money".[71] Under the Lottery Agreement, Sport England can seek re-payment of the grant in full if the project does not remain on track.[72]