Examination of Witnesses (Questions 280
- 299)
TUESDAY 21 MAY 2002
MR MICHAEL
JEFFRIES, MR
MICHAEL CUNNAH,
MR ROGER
MASLIN AND
MR NIC
COWARD
280. How much of that would WNSL be able to
repay?
(Mr Maslin) It depends on how we took the business
forward. The only feasible way of Sport England really getting
some of the security back in that sense would be to re-open the
stadium and provide a trading route for returning some of that
money.
Chairman
281. Mr Fabricant has been asking you these
questions on an assumption that the project might not go ahead,
but if the project does go ahead,—and Mr Fabricant is right:
we all hope it will—it could be open to Sport England to
sue you to recover the money because you breached the Lottery
Funding Agreement, and we have heard today on several occasions
how that Lottery Funding Agreement has been breached. Whether
or not the project fructifies, it could be open to Sport England
to sue you for the money, could it not?
(Mr Maslin) With respect, we do not think we have
breached it.
282. That is not what we have heard.
(Mr Maslin) We have on a number occasions had to go
back to Sport England and ask them very specifically if we were
or were not in breach and they have assured us that we are not
in breach.
Chairman: We have different evidence.
Mr Fabricant
283. Tell me: when Sport England were negotiating
the original agreements and they assessed the bankability, did
they make any valuations as to the amount of money that might
be repaid if only the land were the asset to WNSL? I am trying
to get into their minds and, if I catch the Chairman's eye I will
be asking them this question directly, but I am interested from
your point of view to what extent do they quiz you as to the bankability
of the £120 million of public money which they gave you in
the event that the project does not go ahead?
(Mr Maslin) With respect, I was not around at the
time. I joined on 1 February 1999 but I understand that through
their advisers they indeed had to look at the security of that
£120 million and did so accordingly on the back of the FA
staging agreement which was for the ongoing period of 20 years.
284. Which you now tell us of course is not
bankable because most of that money cannot be returned.
(Mr Maslin) No. What I am saying is that in a workout
plan we would be sitting down with Sport England and the FA to
maximise the position of Sport England in terms of re-opening
the stadium if we got into that situation.
285. Then that would be extra to any existing
agreements of course. This would be a new agreement which you
would have to negotiate. I want to ask one final question, and
it is a different question and it is really of the FA. If this
project does not go ahead are you then venue neutral? Is the FA
prepared to look at other bids and that would of course include
Birmingham?
(Mr Coward) What I have just said is what may well
happen if the new stadium does not progress at Wembley. We will
be asked by Wembley National Stadium and Sport England, quite
rightly, to hold to our staging agreement that we had to enter
into in 1999.
286. So you are saying Birmingham would not
be an option?
(Mr Coward) That is not what I am saying. We have
always made it clear as far as the FA is concerned. Adam Crozier
has met with Birmingham and we were very impressed with Birmingham.
I know that you have received a note which sets out our reservations
as to why you believe there is considerable uncertainty in relation
to a Birmingham bid. I cannot, however, tell you that the FA would
be free to take its events to Birmingham because what I have just
told you is that in order to pay back the £120 million the
FA has had to enter into an agreement to take its events to Wembley
for 20 years.
287. So Birmingham are wasting their time?
(Mr Coward) I would not say that.
Mr Fabricant: I think you just have.
Derek Wyatt
288. Mr Coward, as you know, Adam Crozier has
put into the public domain a five page letter which you referred
to which actually rules out Birmingham; it is quite categoric
about that. Can I come back to a point made in the Telegraph
last week about the West LB, about a 50 per cent reduction in
its profits in the last year, so has it got the money?
(Mr Cunnah) It is probably appropriate for me to answer
that one. Yes, it has.
289. Can we just tease out where we are then?
You have exchanged heads of agreement with them on this proposal?
(Mr Cunnah) We are just about to.
290. This week or next week?
(Mr Cunnah) Within a week.
291. And that will lay out the terms of the
deal? Then they will give you presumably a sheet of their queries
on the actual contract and then they will sign it and pass it
back to you, you will look at it and then you will sign it? Is
that the process?
(Mr Cunnah) We are already going through that process.
We are very close.
292. So which bits are you doing? Are you waiting
for it to come back? Have they signed it off and given it to you?
Where exactly is it?
(Mr Cunnah) As Mr Maslin said, both boards have signed
this off and we are now going through the detail. Ultimately,
of course, both boards will sign up the completed documents.
293. Again, Adam Crozier thought this might
be the end of July rather than the end of June. Can we clarify
whether that is weeks or a couple of months?
(Mr Cunnah) That is the right timescale. It will take
as long as it takes. We are talking about weeks or a few months.
Chairman
294. Let us be clear about this. Mr Maslin I
think told us June. Mr Wyatt quotes Mr Crozier as saying July.
Which is it?
(Mr Jeffries) Chairman, can I help my colleagues here?
295. You see, "as long as it takes"
could be what our house intellectual Mr Bryant would call the
Greek calendar.
(Mr Jeffries) Chairman, by the nature of these projects,
which is the raising of, in essence, private sector funding for
what is going to be a public sector asset at the end of the day,
you always get to the stage where you reach commercial agreement
on heads of terms and then you have to commit to wrapping up agreement
on them. By its very nature there is a risk between the commercial
agreement and financial close. It would be irresponsible to put
a firm date on it because in extremis I would advise the
company to walk away if we could not finally agree satisfactory
financial terms with the banks.
296. You would not be saying Mr Maslin was irresponsible
when he was saying June?
(Mr Jeffries) Where we are now, given my experience,
it could take in my view—and this is a guesstimate—between
four, eight to ten weeks. That is my view, and I could well be
proved wrong.
Derek Wyatt
297. That is for approximately £310 million
that he has got to sign?
(Mr Cunnah) Correct.
298. And therefore the related agreements are
signed already? You have already signed those with your banks?
(Mr Cunnah) Those agreements are in a very similar
state. We will sign the heads of agreement within a week and follow
through on much shorter contractual procedures thereafter.
299. The golden share—can we come back
to that? What is it exactly? If it is such a wonderful thing why
did the previous chief executive of Sport England leave with half
a million pounds in his pocket? If it has not worked presumably
there is something wrong with it or Sport England should address
it. Can you explain this golden share?
(Mr Cunnah) The golden share is a mechanism which
allows the contents of the Lottery Funding Agreement to be managed
and for Sport England to hold WNSL to account on certain items.
If I may, they relate to the appointment of a receiver or the
business being wound up, changing the business materially, if
we were to try to acquire a company or do a joint venture, dispose
of the stadium, or pay a dividend within the first five years.
These are all items within the Lottery Funding Agreement that
Sport England, through the Lottery Funding Agreement, had requested
that we did not do without their approval. Hence the mechanism
of the golden share.
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