Supplementary memorandum submitted by
1. WHAT IS
1.1 Since December, there have been several
developments in respect of Wembley.
1.2 First, the Football Association and
Wembley National Stadium Limited announced, on 8 December, a delay
in the project's financing process to let them address a number
of issues that had been raised by potential funders during discussions
with the banks. Furthermore, they announced a review of options
for the project in order to determine the best way forward.
1.3 Subsequently, on 22 December, the Football
Association announced some changes to the WNSL boardincluding
Sir Rodney Walker's promotion from board member to Chairman. In
addition, it indicated that its senior officials, including its
Chief Executive (Adam Crozier), would, in future, take a closer
interest in the Wembley project.
1.4 Since December, the FA and WNSL have
been working with Chase Manhattan plc (which has the lead responsibility
for arranging financing for the project) to address the issues
raised by potential funders.
1.5 On 1 February, WNSL and the FA announced
that, following a comprehensive review, they were confident that
funding for the project would be forthcoming, based on the existing
concept and an updated business plan, to be released to potential
funders in April. While a considerable amount of work remains
to be done, it is likely that the revised proposals will include:
(i) an increased financial contribution from
(ii) a review of the potential for any cost
(iii) a new timetable, based on starting
on-site this summer and the new stadium opening in December 2004.
Athletics at Wembley
1.6 In our last submission on this subject,
we summarised the changes that were being made to the original
Lottery Funding Agreement (LFA). These alterations had been necessitated
(i) the FA/WNSL's agreement with the Secretary
of State, originally reached on 22 December 1999 to pay £20
million to Sport England in return for the removal of the obligation
to stage athletics (including the World Athletics Championships)
at Wembley; and
(ii) the FA/WNSL's request, in the light
of this agreement to have this obligation formally removed from
the Lottery Funding Agreement.
1.7 Following a period in which the terms
of the original agreement between the FA/WNSL and the Secretary
of State were clarified, we undertook a two-stage consultation
process in which, among others, the DCMS and UK Athletics confirmed
that they no longer wanted to see athletics events staged at Wembley.
Sport England's Council members then agreed to the FA/WNSL request
in relation to athletics.
1.8 Accordingly, there was a basis, in December,
on which all interested parties could move forward. There was
agreement that (i) the athletics obligation should be removed
from Wembley and (ii) Sport England should receive a £20
million payment from FA/WNSL, to be paid over a five-year period
to December 2004.
1.9 However, following the review announced
by the FA in December, WNSL decided to embark on a formal reappraisal,
led by Sir Rodney Walker, of Wembley's potential to accommodate
athletics. This issue was discussed at Sport England's Council
meeting on 8 January, and the organisation's Chief Executive duly
wrote to WBSL seeking a clarification of its intentions.
1.10 Sir Rodney announced, on 18 January,
that the World Athletics Championships would not take place at
Wembley. While it was feasible to host athletics at Wembley, he
could not guarantee that the stadium and its ancillary facilities
would be ready in time to stage the 2005 Championships. However,
he indicated that Wembley should host athletics events further
into the future. As he stated: "the new Wembley Stadium has
a design life of fifty years and in all likelihood will be the
National Stadium for longer than that. If it is to be a true national
stadium I believe it has to have the ability to host major athletics
events, in particular the track and field events of any potential
London Olympic Games, during that time".
1.11 The willingness of the FA/WNSL to pay
£20 million to Sport England (see paragraph 1.6i) had been
made clear during the negotiations over the amendment of their
Lottery Funding Agreement with Sport England.
1.12 However, the changes to the LFA have
yet to be formally made and, following Sir Rodney's announcement
of 18 January, we have yet to receive clarification of WNSL's
intentions in respect of athletics events beyond 2005.
1.13 In view of the Council's previously
expressed opinions on this subject, WNSL was asked, by Sport England,
to clarify two outstanding points:
(i) the design solution which WNSL planned
to use to ensure that the new Wembley stadium could host athletics
events in the future; and
(ii) WNSL's plans to return £20 million
to Sport England, in accordance with its agreement with the Secretary
of State and its submitted request to amend the Lottery Funding
1.14 Discussions are continuing between
Sport England and WNSL, but no definitive answers on these points
have yet been arrived at.
1.15 In discharging our responsibilities
as a distributor of Lottery funds, we have two principal objectives
(i) to facilitate the English National Stadium project at Wembley
and (ii) to ensure that the grant of £120 million is adequately
protected. We welcome, therefore, the announcement by the FA and
WNSL, on 1 February, that a new timetable has been set and that,
with an increased financial commitment from the FA, there is an
improved prospect of the funding for the project being raised
to enable work to begin on-site this summer.
1.16 We will continue to monitor developments
closely, in terms of (i) the financing package and (ii) the planning
design, and construction process, to ensure that WNSL and the
FA, as recipients of Lottery funding, comply with the terms of
the Lottery Funding Agreement.
1.17 Sport England has had no desire to
complicate the financing process and has not, therefore, pressed
for the immediate payment of the first instalment of the agreed
£20 million sum. However, we are conscious that this money
is necessary to minimise the size of the likely funding gap in
respect of Picketts Lock.
1.18 Throughout a period of uncertainty,
Sport England has beenand remainsfully committed
to the development of the new national stadium at Wembley. We
hope that WNSL will secure the finance they need to ensure that
work can start on site in the near future.
2. What is the current funding commitment
of Sport England to the Crystal Palace National Sports Centre,
and what is its expected future beyond 2004 in the light of the
proposed development of Picketts Lock?
2.1 In November 1999, Sport England's Lottery
Panel rejected the London Borough of Bromley's bid for £32
million of Lottery money to help fund a major redevelopment of
the National Sports Centre at Crystal Palace. In reaching their
decision, Panel members were conscious that Bromley's proposals
would have involved the Lottery meeting the vast majority of the
project's costswith only a small proportion of the capital
funding, and no revenue funding, coming from the Borough itself.
2.3 Since then, Sport England has continued
to discuss Crystal Palace's future with the main interested partiesincluding
Bromley, the Amateur Swimming Association and UK Athleticswith
the intention of arriving at a consensus on the best way forward
for this important facility.
2.2 The Panel recently considered revised
proposals for a combination of community and high performance
facilities at Crystal Palace, and agreed, in principle, to fund
a new scheme.
2.4 Although no final decisions have been
taken, and no funding has been committed, we envisage that Crystal
Palace will continue to be a high quality training facility, serving
the southern part of the London region. However, it is harder
to decide upon its future as a competition venue for athletics,
as this issue can only be resolved once the future of Picketts
Lock is clearer.
2.5 As members of our Council have stressed,
they cannot make an informed decision on the proposed Picketts
Lock development until they have received the consultants' reports
(expected in the Spring) on its likely technical feasibility and
economic viability. They have also emphasised that, in assessing
any Lottery application in respect of Picketts Lock, they will
want to consider the issues "in the round". As well
as analysing the application itself (on the basis of the usual
Lottery criteria), they will take account of its implications
of existing athletics stadia across the country. The views of
Gateshead, for example, have been brought to the Committee's attention
in a separate submission.
2.6 We are also conscious of our commitments
to Crystal Palace under the terms of the lease that lasts until
2004 and we will ensure that this, too, is taken into account
in the decision-making process.
2.7 We will keep the Committee informed
of Sport England's decisions in respect of both Crystal Palace
and Picketts Lock.
3. Has Sport England considered underwriting
sporting events in the same way as The Sports Council for Wales
and, if it has not adopted that approach, why not?
3.1 Sport England would be acting outside
its statutory powers as a Lottery distributor and its Financial
Memorandum if it underwrote sporting events. However, while
we cannot support any event in such an open-ended manner, we canand
dogive specific grants to a number of different events.
3.2 This happens relatively infrequently,
because UK Sport has the prime responsibility for helping to fund
sporting events. Nevertheless, there are occasions when it is
appropriate for Sport England to fund eventsfor example,
those which are linked closely to other Sport England-supported
programmes or capital projects.
3.3 Under the current division of responsibilities
between the Sports Councils, Sport England's key role is not directly
to attract sporting events to this country, but to ensure that
such events generate the best possible sporting legacyin
terms of both improved facilities and increased participation
4. What scrutiny has Sport England undertaken
of operational plans for the 2005 World Athletics Championships,
including the business plan and proposed organisational structure?
What is the timetable for consideration of a Lottery bid for this
event and what commitments have so far been given relating to
support for running costs for the event?
4.1 The London 2005 Bid Committee (established
by UK Athletics) prepared a business plan for the 2005 World Athletics
Championships before submitting its event bid to the International
Amateur Athletic Federation.
4.2 The Committee commissioned financial
consultants to help with the preparation of this plan, which included:
(i) operating cost projects, including: stadium
hire costs; transport costs; event administration; marketing and
promotion; and allowances for unforeseen contingencies; and
(ii) income projections including: ticket
revenues; and local sponsorship opportunities. Under the event
staging agreement with the IAAF, all other event revenues would
remain with the Federation.
4.3 The plan suggested that the costs associated
with staging the World Athletics Championships would exceed the
income they were likely to generate by some £15 million.
(i) excluded the costs of providing the stadium,
warm-up facilities and athletes' village. Such costs, it was assumed,
would be met through other sources; and
(ii) assumed that the Championships would
be staged at Wembley. They would, therefore involve:
(a) a single athletes' village;
(b) high levels of potential ticket revenue,
as a result of Wembley's large capacity; and
(c) the Championships benefitingas
a result of the Lottery Funding Agreement between Sport England
and WNSLfrom the new stadium's ability to generate high
levels of income from premium seats and banqueting.
4.4 Sport England did not make any formal
commitment to help meet the running costs of the 2005 Championships.
However, its Lottery Panel did make, in October 1998, an "in
principle" budget allocation (of up to £15 million),
dependent on the prevailing budgetary pressures at the time of
any application being made, in the expectation of UK Athletics
asking for support to help stage this event. The factors behind
this decision included:
(i) the Panel's desire to see the country
stage the Championships, for the first time, and thus improve
the country's chances of attracting other major sporting events
in the future; and
(ii) the likely shortfall identified within
the Bid Committee's business plan.
4.5 As it became increasingly clear, in
1999, that the 2005 bid had a good chance of succeeding, Sport
England commissioned Grant Thornton to assess the business plan.
Their conclusions suggested that it seemed sound, with income
and expenditure projections which appeared realistic at that (early)
4.6 The key findings of the Grant Thornton
report were passed on to the Chief Executive of UK Athletics and
the 2005 Bid Committee, to provide them with guidance on how their
business plan should be developed in the event of the bid to the
IAAF proving successful.
4.7 However, the business plan now needs
to be revised to take account of the fact that, as Sir Rodney
Walker stated on 18 January, Picketts Lock has been identified
as the London location for the 2005 World Athletics Championships.
As a result, the updated plan needs to take account of the change
from Wembley to Picketts Lock, and the associated capacity income
4.8 Sport England is expecting to receive,
in the spring, an application for financial support for the 2005
Championships. As usual, this will be assessed against the criteria
that we are obliged to employ through the Financial Directions
that we receive as a Lottery distributor. They include viability,
value for money, eligibility and financial need.
4.9 In the meantime, we have provided UK
Athletics with guidance on the application process and informed
them that the success of any funding bid will also depend on:
(i) the outcomes of the Picketts Lock feasibility
(ii) a staging agreement being agreed between
and signed by representatives of the IAAF, UK Athletics (as the
host Federation) and the host city; and
(iii) the creation of an organisational structure
capable of delivering the 2005 Championships in a successful and
financially sound way. Without such a structure, the IAAF would,
in any case, decline to sign the staging agreement.
5. Is Sport England satisfied that all capital
projects for the 2002 Manchester Commonwealth Games are on time
and on budget?
5.1 In line with its agreement with Manchester
City Council, Sport England has concentrated entirely on helping
to fund the facilities that will be used during the Games, and
by the community thereafter. Under the same agreement, Manchester
City Council is responsible for the successful operation of the
5.2 Having worked closely and constructively
with Manchester City Council and our other partners, we believe
that good progress has been made with the construction of the
facilities which, thanks largely to Lottery funding, will help
to host the 2002 Games. For example:
(i) the Aquatics Centre was formally opened
in October 2000;
(ii) the Bolton Arena (which will host the
badminton competitions) will be complete in the spring;
(iii) the National Shooting Centre (at Bisley)
is due to be completed this summer; and
(iv) other facilities, such as the Velodrome,
have long been operational.
5.3 The current position is summarised in
the attached table.
5.4 In the past, some concern has been expressed
about the main stadium, and the fact that its scheduled completion
date has always been relatively close to the opening of the Games
themselves. Sport England's Chief Executive, Derek Casey, acknowledged
this point in oral evidence to the Select Committee in April 1999.
5.5 However, the City of Manchester Stadium
remains on schedule for substantial completion by November andfollowing
testing, commissioning and fitting outit is due to be handed
over to the Games company in March 2002.
5.6 In common with the other largely Lottery-funded
facilities that will be used during the Games, the Stadium is
being delivered on schedule, within Sport England Lottery budgets,
and in accordance with the terms of the relevant Lottery Funding
5.7 As previously indicated, the Games'
Lottery-supported facilities have been developed on the basis
that there will be a substantial post-2002 sporting legacy, in
terms of both local community use and elite English Institute
of Sport programmes. Furthermore, the Games' facilities will contribute
to the revitalisation of previously deprived areas, and help to
generate a substantial number of jobs. (Please see sections 2
and 3 of our original submission to the Committee).
6. Is Sport England satisfied that all conditions
attached to its funding of the 2006 FIFA World Cup bid were complied
with in full by the Football Association?
6.1 A number of conditions were attached,
from the outset, to our financial support for the FA's 2006 World
Cup bid. For example, the Lottery Funding Agreement made it clear
(i) the grant would be returned to Sport
England in the event of the bid proving successful; and
(ii) Lottery money could be used only for
certain specified purposesand not for hospitality, for
6.2 We have subsequently monitored, carefully
and consistently, how this money has been spent. For instance:
(i) we have exercised our rightswhich
were built into the Lottery Funding Agreementto monitor
the bid's progress and examine its expenditure, and thus ensure
that Lottery money was being used in accordance with the rigorous
terms agreed by Sport England and the Football Association; and
(ii) the Lottery award was paid, in instalments,
only after satisfactory financial data had been received. (In
fact the last payment, of £344,351, has yet to be sent to
the Football Association, and will be paid only after Sport England
has seen the final audited accounts).
6.3 In 1999, in oral evidence to the Committee,
we expressed confidence in the way that the 2006 bid team had
been meeting all the relevant conditions of the LFA. Since then,
our Lottery Compliance Team has continued to monitor the situation,
and none of its audits has found any indication of Lottery proceeds
being spent in an inappropriate manner.
6.4 As previously indicated, we believe
that the potential benefits of staging a football World Cup are
so substantialfrom both a sporting and an economic perspectivethat
it was right to give strong (if conditional) support to the 2006
bid. As the Committee has previously concluded, a successful bid
would have provided "an enormous return".
7. What is Sport England's assessment of the
BOA's feasibility study on a London Olympic bid and what is Sport
England's own estimate of the likely cost of developing facilities
for a London Olympic Games?
7.1 Sport England is keen to support a viable
British Olympic bid. Accordingly, we have been looking forward
to reading the British Olympic Association's feasibility study
on the possibility of staging a future Olympic Games in London.
(As the BOA has made clear, it believes that only a London-based
bid would have a good chance of bringing the Olympics to Britain).
7.2 The Chief Executive of Sport England,
Derek Casey, wrote to his counterpart at the BOA (Simon Clegg)
on 9 January, to ask for a copy of the feasibility study, so that
we could respond to the Committee's request. However, in his reply
(dated 23 January), Mr Clegg declined to make this document available
to Sport England.
7.3 Without this information from the BOA,
we regret that we cannot provide the Committee with a meaningful
estimate of the likely cost of developing (i) the sporting facilities
identified as needed by the BOA or (ii) the associated infrastructure
improvements that the BOA has identified as being necessary for
a London-based Olympic Games.
||Sport(s) to be hosted
| Belle Vue Leisure Centre||Hockey
|Manchester Aquatics Centre||Diving, Swimming/synchronised swimming, Water polo
|Manchester Sportcity project
City of Manchester Stadium
Opening and closing ceremonies
| National Cycling Centre
||Track cycling||September 1994
| Other facilities||
|| || |
| Athletics Centre||Warm-up
| Indoor Tennis Centre||Table tennis
| National Squash Centre||Squash
|National Shooting Centre||Shooting