Examination of Witnesses (Questions 1
- 19)
MONDAY 13 MAY 2002
MR MICHAEL
CUNNAH AND
MR DAVID
JAMES
Chairman: Mr Cunnah and Mr James, thank
you very much indeed for coming to see us this afternoon. Before
we proceed I have something to say and that is this. Members of
the Committee have studied the report that you have provided for
us in confidence. I had my copy before the weekend, other colleagues
have had theirs more recently but we have all had the opportunity
of studying it with care and it places us in a quandary. We are
due to see witnesses tomorrow morning, we are due to see the Secretary
of State, we are due to see WNSL, etc. Having discussed this among
ourselves we do not see how it is possible for us to have a fruitful
and meaningful session tomorrow on the basis of the terms upon
which this report has been made available to us because there
are many things in both the report and Mr James's letter that
we would not be able to refer to on the present basis but not
to refer to them would make our session tomorrow totally meaningless.
The series of events described in the Tropus report is as disturbing
a sequence of events as I have seen since I have chaired this
Committee and its predecessors. There are a number of matters
which I believe WNSL must be answerable for, that Sport England
must be answerable for and that the Secretary of State must be
answerable for. I exclude you, Mr James, because although you
have a very profound understanding of these matters you carry
no executive responsibility, what you provide is a detailed view
of the situation having read the report. I do not see and my colleagues
share this view with me, that we can proceed with this inquiry
upon the basis upon which we originally asked for this report.
We wish to proceed with this session this afternoon because we
will continue with this session on precisely the basis that it
was agreed in advance, namely the documents provided to us have
been provided in confidence, and we hope we will be able to get
a good deal of information this afternoon on that basis but we
would regard it as completely futile to proceed with the session
tomorrow and therefore we are going to cancel it with the aim
of reconvening it next week. The decision of the Committee is
that we wish this report to be made public. We are ready to sit
down with WNSL and consider what parts they wish to have removed
on the basis of commercial confidentiality and where it is genuine
commercial confidentiality we shall do our best to be forthcoming
but otherwise we will have to insist on this report being made
public and if WNSL and the FA are unwilling to make it public
we shall have to seek a resolution of the House of Commons to
require it to be made public because there are some very serious
issues of propriety, very serious issues of transparency and very
serious issues of responsibility for the use of public money which
we believe if we do not deal with in this open way we shall be
derelict in our duty and while it may be arguable that others
involved in this saga have been derelict in their duty we do not
intend to be derelict in ours. That being so, what we are going
to ask, and our clerk will be in touch with the appropriate authorities,
and we will need to have an answer within the next couple of days,
is for this report to be made available to us for publication
so that we can question the Secretary of State and Sport England
and WNSL about it and we want that decided, as I say, well before
the end of this week. Our clerks and myself are ready to sit down
and look at the aspects of commercial confidentiality but I make
it clear—and I do not do so as a threat, I simply do so
in order to advise you of the powers that are available to us—that
if the report is not made available to us we shall seek a resolution
of the House of Commons to require it to be made available and
published except for those parts involving agreed commercial confidentiality.
I do not expect you to reply to this although you are welcome
to reply if you wish but that is the way in which we intend to
proceed. If you do not have anything to say about that, and as
I say I do not expect you to say anything if you do not wish to,
then we will start the questioning. We are very grateful to you
for being present this afternoon to answer our questions. I will
ask Frank Doran to open the questions.
Mr Doran
1. Thank you very much Mr Chairman. As the Chairman
just said, the Committee has a considerable number of concerns
having read the Tropus report and other papers which have been
submitted. I want to concentrate on one specific area but could
I just ask one question in relation to the Tropus report because
I am not clear where ownership lies in this report. Paragraph
1.3, the introduction of the report says that ". . . the
distribution of this report to any persons other than the Board
of WSNL or the FA must only be done with the written authority
of the chief executive of Tropus". I am not sure whether
it is WNSL's report or Tropus's report or anybody else's? Could
I have that clarified. Again, I do not expect that to be done
at the moment.[2]
Our major concern is the issue of the public funds which have
been made available through Sport England to WNSL, a total of
£120 million. To help me a little in, if you like, gauging
how relevant or otherwise the Tropus report is, I want to concentrate
a little on the question of the purchase of land with that money.
My understanding is there was a purchase price of £106 million,
is that correct, Mr Cunnah?
(Mr Cunnah) That is correct.
2. Exactly how much was bought with that £106
million?
(Mr Cunnah) We purchased the stadium
business from Wembley Plc for £106 million in 1999.
3. Roughly how much land is involved in the transaction,
including the stadium?
(Mr Cunnah) From memory, and it is not
very good, it is in the order of 80 acres.
4. Eighty?
(Mr Cunnah) I would like to have that
clarified.[3]
5. My understanding is it was around about 26/27
acres.
(Mr Cunnah) I am not sure.
6. It is still the case that Wembley Stadium
Limited, from whom you purchased the land, own a significant other
piece of land there in the area? They still have an interest in
a certain amount of land?
(Mr Cunnah) Wembley Plc do, yes.
7. The purchase price of £106 million, can
you tell us was there any valuation done of the land, any independent
valuation done before it was acquired?
(Mr Cunnah) There was an independent
valuation done on the business by Coopers & Lybrand, as they
were then.[4]
8. What did the business include for Wembley
Stadium?
(Mr Cunnah) The business included the
stadium asset itself plus the employees of the stadium business.
9. They have been acquired by WNSL?
(Mr Cunnah) Correct.
10. They are still employed?
(Mr Cunnah) Many of them, of course,
left the business when the stadium closed, the others are still
with the business.
11. Was there any other element of the business?
Did you obtain goodwill, for example?
(Mr Cunnah) A very small amount in the
accounts were declared to be attached to goodwill.
12. From memory what do you call a small amount?
(Mr Cunnah) About £3 million I think.[5]
13. About £3 million for goodwill of the
business. The valuation of the property would be what, the pure
property?
(Mr Cunnah) In the books of accounts
the property is somewhere around £67 million I think.
14. Right.
(Mr Cunnah) That is not the same as market
value.
15. Do you now have title to the land on which
Wembley Stadium was built?
(Mr Cunnah) Yes, we do.
16. Is it a clean title? Are there any restrictions
on the title?
(Mr Cunnah) No, there are no restrictions
other than I think that there was perhaps a covenant relating
to the hotel business which the local Hilton hotel had enjoyed
from the previous occupation.[6]
17. What was the nature of that restriction,
can you tell me?
(Mr Cunnah) It was in relation to whether
a hotel could be run within the stadium and certain conference
events within the stadium of a certain size.
18. My understanding is for the first few years
of this project there was a plan to include a hotel and that there
was a considerable amount of money spent in developing these plans
for a 200 bedroom hotel. You seem to be saying there is some restriction
on building a hotel.
(Mr Cunnah) Not in building the hotel
but in the running of the hotel.
19. In operating the hotel. It was basically
the case that you needed the permission of the Hilton hotel chain
to operate a hotel?
(Mr Cunnah) Correct.
2 Note by Wembley National Stadium (WNSL):
WNSL's view is that the report by Tropus can be distributed only
with the consent of both WNSL and Tropus. See Memorandum submitted
by WNSL part of the Minutes of Evidence taken before the Committee
on 21 May 2001, response to written question 6, for further
details of the distribution of the Tropus Report by WNSL. Back
3
Note by WNSL: See Memorandum submitted by WNSL part of the
Minutes of Evidence taken before the Committee on 21 May 2001,
response to written question 3, for clarification of the purchase
agreement between WNSL and Wembley Plc over the Wembley site.
In brief: the WNSL freehold title to the Wembley site comprises
two areas: 24 acres on which the Stadium stands; and 7 acres of
"developmental land" subject to an Option in favour
of Wembley Plc. Wembley Plc has the right to require WNSL to return
any of the Option land which is not used for the development of
the new stadium. In addition this land will revert, in full, to
Wembley Plc if WNSL has not started to develop the site by 31
December 2002 (having given three months notice of its intention
to do so). Back
4
Note by WNSL: see supplementary memorandum submitted by
Wembley National Stadium Limited set out after this oral evidence. Back
5
Note by WNSL: this figure was incorrect. See further
evidence given before the Committee by WNSL and The FA on 21 May
2002 where the figure is given correctly as £250,000. Back
6
See Q4 and related note. Back
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