Examination of Witnesses (Questions 40
- 59)
MONDAY 13 MAY 2002
MR MICHAEL
CUNNAH AND
MR DAVID
JAMES
40. Have you got a written agreement with them?
(Mr Cunnah) I am unsure as to the format
of the agreement but we do have their agreement and indeed there
is also the co-operation that goes with the Section 106 requirements
which need to be signed up.
41. As far as WNSL is concerned, Wembley Plc
are not a barrier to the start of any work and if you can get
your funding together by December then the work will be able to
proceed?
(Mr Cunnah) Correct.
42. There are no other provisions in the title
which will hamper the situation?
(Mr Cunnah) No, not that I am aware of.
Chairman
43. Are you telling us that providing the funding
is available there is no obstacle whatever to your starting construction
by December?
(Mr Cunnah) Yes, basically. All of the
plans are plans that we need to put in front of the bankers to
make sure that they understand the deal that we have agreed with
them and they will need to be signed off. That does mean we have
to get the final sign off from each of our stakeholders, whether
it is Brent Council, Wembley Plc, Sport England, DCMS, but all
of the pieces of the jigsaw are almost in place.
44. I want to be absolutely clear about this.
Are you saying then that the planning permission is in place?
(Mr Cunnah) The planning consent has
been granted and was granted on March 20. We have entered a period
now where the Section 106 has to be fully engrossed which I understand
is when we then achieve full planning permission.
45. Secondly, when you are talking about the
funding being in place, are you counting in the £20 million
of infrastructure funding which the Secretary of State has said
is a substitute for WNSL expenditure and is therefore in effect
a subsidy or is that £20 million not included in the funding
which you need to have in place?
(Mr Cunnah) Mr Chairman, it is included.
Mr Doran
46. I am not clear where you are on planning
permission. You had outline planning permission and you are awaiting
full planning permission, is that the situation?
(Mr Cunnah) Yes, I think so.
John Thurso
47. Can I just interrupt there. I have slightly
more knowledge, having gone through an English planning process
a short while ago. What you said I think was that you have full
planning permission but you are waiting for Section 106 to be
engrossed?
(Mr Cunnah) Yes.
48. It is a full planning permission granted
subject to Section 106 being agreed between the parties?
(Mr Cunnah) Correct.
Mr Doran
49. Moving on then, you are in a position where
you have the title to the land, there is a deadline for when you
must start the building but, as you say, all the pieces of the
jigsaw are coming into place. One of the things I would like to
go back to a little, you mentioned that you had a valuation done
on the property. Various concerns have been raised with us and
certainly with me outside this Committee about what you paid for
the property and what it might be worth now. My advice is that
an acre of land in that part of London, which is one of the poorest
boroughs in the country, for industrial purposes would be about
a million pounds, and it is industrial purposes that you would
most likely get planning permission for, particularly given the
nature of the site we are talking about and the fact that part
of it is listed. The figure you paid, if we round it up to £100
million, by the time we take away the goodwill that you have mentioned
and the staff perhaps for that part of that business, although
they could be a cost as well as a benefit now, we are left with
roughly £100 million. You do not know the exact size of the
site but my information is around about 27 acres, you think it
is more than that, but still you paid a real premium price. What
was the justification for that?
(Mr Cunnah) First of all I am happy to
be corrected by you on the size of the site. Secondly, the justification
was that the purchase was not of a piece of real estate it was
for the business that we purchased from Wembley Plc.
50. But we have disposed of that, £6 million
worth, £100 million as compared with a piece of land at the
moment which might be worth about £27 million on any reasonable
valuation of property in that area.
(Mr Cunnah) I think the expert valuers
of the business looked more at the future income streams of the
business in order to value the business itself. I think they looked
also at the total of Wembley Plc, valued the other parts to see
what the balance was which was left. I know they looked at three
or four different ways of valuing the business before they came
up with their valuation.
51. Was there any competition for the piece of
land?
(Mr Cunnah) We believe there was, certainly
we were led to believe by Wembley Plc that there was.
52. Any seller would tell you that. Did anybody
check whether there was any competition?
(Mr Cunnah) The other competition was
a well known football club so we had every reason to believe that
was true.
53. That was Arsenal who were looking at the
site.
(Mr Cunnah) It might have been.[10]
54. You cannot comment. We are in a situation
where you paid—you may not accept this—a highly inflated
price. Our concern is you have £120 million of public money
and sitting where I am sitting it looks as though it did not matter
what you paid as long as you had the property.
(Mr Cunnah) I would not agree with that.
Mr Doran: I do not know, Chairman, in
the discussions which have to take place over the next few days
whether it would be appropriate to ask for the correspondence
and these valuations.[11]
Chairman: It is certainly appropriate
because the exchange you have been having, Frank, causes me difficulties.
We have had different estimates of the valuation of the land,
different estimates of the purchase, I have not heard anything
that remotely approaches £114 million and therefore I want
to know why £114 million was spent of —without being
over-crude—other people's money on something which so far
as I can gather, you can correct me, by any estimate we have heard
this afternoon is not worth anywhere near £114 million.
Mr Doran
55. If I can just follow that, Chairman, with
one final question. Not only does it seem, certainly to me, you
have paid an inflated price for the land but you have accepted
also that you have bought the property with conditions which are
very hard to understand. I can understand you have no control
over the conditions attached by the Hilton hotel chain, which
are possibly something to do with their contractual relationship
with Wembley Plc, but why was money paid, this sort of money paid,
in a situation where you are required to return 7 acres—it
might be more or less, that is the figure I have been given? Do
you get any compensation for returning that 7 acres or does it
just get lost? It is a quarter of the site if my figures are right.
(Mr Cunnah) First of all, let me clarify
that the solution Coopers & Lybrand gave was a range that
included the purchase price, so it did support the fact that that
was a reasonable price to pay for the business. Also the hotel
business was really quite peripheral to the business plan.
56. Despite that, WNSL spent over two years and
an awful lot of money pursuing that option?
(Mr Cunnah) I again would need to check.
I do not think within the design of the overall stadium that the
hotel would have been a major feature of the design or the design
costs. Also the land which reverts to Wembley Plc is not part
of the land that we purchased. It is just land that in the purchase
and sale agreement Wembley Plc allowed us to access during construction
in order that construction could happen most effectively.[12]
57. That does not hold together with what you
said earlier. You said you had negotiated with Wembley Plc access
rights. What we are talking about is the land you paid £106
million for, a part of which you will lose if you do not start
work with the approval of Wembley Plc in December.
(Mr Cunnah) Correct.
58. When I asked if that were lost and the Chairman
asked whether if that were lost you would carry on with the stadium,
you said it was not possible.
(Mr Cunnah) No, let me try to clarify.
There are two parcels of land, the large parcel that we have acquired
that the stadium will sit upon—
59. With no conditions attached?
(Mr Cunnah) The conditions that we talked
about re the hotel etcetera, but that is our land. There is then
another parcel of land which borders the parcel that we have purchased.
The construction comes right up to the edge of the piece of land
that we have purchased and the constructors need access to Wembley
Plc's land to finish their construction, therefore that land (which
always remains in their ownership but to which we have access
during the construction period) is the part that goes back to
them. If we do not have that land available during construction
we do not lose our land but we will have to think again in terms
of how we build the stadium under those circumstances.[13]
Mr Doran: Chairman, that is an area on
which we need a lot more clarity. Thank you very much.
10 See HC 164 (1999-2000), paragraph 10. Back
11
Note by WNSL: see supplementary memoranda submitted by
Wembley National Stadium Limited set out after this oral evidence,
p 42. Back
12
See Q4 and related note. Back
13
See Q4 and related note. Back
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