Supplementary memorandum submitted by
Lee Valley Regional Park Authority
Question 1: What corporate structure is proposed
for (a) the delivery and (b) the operation of the PL stadium and,
in the event that either of those structures will take the form
of a partnership who will the partners be?
1. It is intended to establish a specially
formed, legally separate body (the "Project Delivery Vehicle"
[PDV]) to lead the development of the project from June 2001 onwards.
The PDV or another specially formed body is likely to be responsible
for managing the centre after 2005.
2. The corporate structure for the development
phase will need to reflect the requirements and inputs of the
principal project partnersthe Lee Valley Regional Park
Authority, UK Athletics, the London Borough of Enfield, and in
principle the London Marathon Trust. These partners are expected
to own and/or participate in the selected vehicle and further
negotiations will be taking place between the partners to finalise
each partners' contribution to, and requirements from the project.
The PDV form and structure will reflect the outcome of these negotiations.
It is envisaged that a different corporate structure is likely
to be appropriate for the legacy centre, to reflect the changing
interests of the main project partners, the potential for introducing
commercial partners, and the need to optimise the financial position
including taking advantage of any fiscal benefits eg NNDR relief.
3. A preliminary study in the summer of
2000 by Ernst & Young examined a number of options and the
potential roles to be played by the principal partners. It suggested
that a Limited or Limited Liability Partnership (LLP) might be
the most suitable PDV structure during the construction phase,
and this will be the starting point for developing more detailed
proposals in the next few months. However, the project partners
will also be reviewing this initial conclusion to determine the
most financially advantageous, legally sound, and operationally
efficient arrangement. This will include consideration of the
tax implications of alternative models. PMP Consultancy in association
with KPMG have been appointed to undertake this work with an end
date of 30 April 2001.
4. The partners are also about to commission
advice on the legal implications, advantages and disadvantages
of the alternative models for the PDV structure. This will encompass:-
The ability of the PDV to adapt to
reflect emerging and evolving stakeholder interests, including
new partners/stakeholders, as the project develops.
The effect of the proposed model
on the apportionment of legal and financial risk between the PDV
and the project partners.
The legal capacity of the project
partners to participate in the PDV.
The impact of relevant legislation
affecting local authorities and similar bodies on the form and
structure of the PDV eg involvement in companies and capital controls.
The potential to comply with the
requirements of the Lottery Distributor and standard Lottery funding
The potential for the PDV to facilitate
the transition to an efficient management structure after 2005.
5. The project partners appointed legal
advisors will also be providing advice on the legal options, implications,
advantages and disadvantages on the alternative models for the
ultimate management of the centre, warm-up track, High Performance
Centre and other related facilities.
6. These may include management via a trust,
private sector partnership, management contract or a series of
franchises, plus potential "hybrid" options. The examination
of each option will have regard to:
Exposure to risk for the project
Taxation (including corporation tax,
VAT, and National Non Domestic Rates)
Impact on the control of facilities
by project partners
Question 2: What organisation(s) will bear
the financial risk associated with the delivery and operation
of the stadium?
7. The project partners are conscious that
risk cannot be completely eliminated. The scale of the development
means that the potential financial commitments and liabilities
are too large to be borne or underwritten by any of the existing
project partners. In essence this is a national project. While
the project partners are committed to its delivery and have already
assumed a degree of risk to achieve that end, as mainly regional
or local bodies they are not in a position to underwrite the project
as a whole.
8. One of the key reasons for the establishment
of a PDV is therefore to protect the individual partners from
financial risk. It is intended that this will be borne by the
9. The overall programme for the development
aims to minimise, as far as is possible, the financial risks associated
with a project of this size eg through a low risk planning strategy,
a prudent approach to business planning, and the adoption of proven
routes for design, procurement, and funding.
10. Work on identifying the potential for
commercial involvement will also examine the degree to which some
risks might be better managed by being allocated to private sector
Question 3: What options have been considered
for revenue funding for the LVNAC and what alternative sources
have been identified if the London Marathon Charitable Trust does
not make a firm commitment to provide the necessary funding?
11. The Lee Valley Regional Park Authority,
London Borough of Enfield and UK Athletics have agreed to contribute
to this net annual revenue deficit, estimated at around £900,000
During the next stage of the project (JanuaryMay
2001) further revenue options will be considered. These include:
(b) Rate relief for the legacy management
(c) Income stream for centre naming rights
12. It is important to note that the LVNAC
project is only eight months old and that tremendous progress
has been made in a short time. There is a commitment from the
project partners to fund the annual running costs of the new centre.
There is also a commitment to reduce the annual running cost and
over the coming months, and indeed, over the next four years there
will be a drive to capture other revenue contributions.
13. As part of the feasibility exercise,
initiated in June 2000, Ernst and Young carried out a comprehensive
business planning study for the legacy LVNAC. The study identified
a number of income strands for which there is a high level of
confidence in achieving: Health and Fitness, conference/exhibitions,
five a side football, golf. After taking these income streams
into account the business planning study concluded that the annual
net running costs for the LVNAC would be in order of £900,000.
14. In addition the London Marathon Trust
has indicated that it is prepared to consider making a significant
revenue contribution towards the annual running costs. At its
most recent board meeting in January the LMT agreed to take an
active part in the LVNAC project during the next critical stage:
stadium and centre design, capital funding; determining a PDV,
legacy stadium/centre management structure, revision of business
15. If LMT does not make a firm commitment
to provide revenue funding then there will clearly be a greater
imperative placed upon the other project partners to achieve revenue
streams from other sources.
Question 4: What discussions have been held
on possible anchor tenants from sports other than athletics and
is this option still being considered?
16. It is hoped that over the coming months,
as the stadium and other facilities designs take shape and the
capital funding position becomes clear, potential anchor tenants
will be more inclined to take an interest in the project. This
option is still very much being considered.
17. Discussions have taken place with premier
league rugby clubs with a view to them becoming anchor tenants
at the LVNAC. Such early discussions have proved positive and
at least one club expressed a strong interest. However the project
is still in its infancy and rugby clubs are tied into long term
contractual arrangements. It is therefore difficult to see a club
committing itself to a partnership that will not kick off until
the 2005-06 rugby season, at this early stage.
Question 5: How and when will the design team
18. Faulkner Brown has been appointed to
prepare design drawings to support the planning application for
a National Athletics Centre at Picketts Lock.
19. The selection of the architects met
all the key rules of procurement under OJEC and representatives
from organisations including Commission for Architecture in the
Built Environment (CABE) were consulted. Consultants tendered
for work under Lee Valley Regional Park Authority's procurement
Question 6: A "c" value of 90mm
is given in the summary of the technical feasibility study. What
focal point is used in this calculation?
20. The Technical Brief (October 2000) produced
in accordance with the requirements of UK Athletics stipulates
"When measuring `c' values the point of focus is to be the
outside of the outside lane of the athletics track". The
design team are however assessing these viewing standards to ensure
that UK Athletics' desire for an intimate atmosphere can be achieved.
21. The recent study visit to the Stade
de France (Paris), Stade Charlety (Paris), and the King Baudoin
Stadium, formerly Heysel (Brussels) revealed that none of these
stadia achieve the viewing standards set out in the NAS Technical
Brief. Currently it is proposed that the point of focus be the
outside of lane 3 and the jump pits which are located outside
the track. In order to achieve the World Athletics Championships
capacity whilst maintaining an intimate atmosphere for the "Legacy"
centre some of the temporary seating may have a minimum "c"
value of 60mm.
Question 7: Does the estimated cost of £95
million include the costs already incurred and those to be incurred
to next spring from the grant of £1.33 million.
22. Yes, the estimated total cost of £95
million does include the costs already incurred and those to be
incurred to next spring from the grant of £1.33 million.