Examination of Witnesses (Questions 320
- 339)
TUESDAY 21 MAY 2002
MR MICHAEL
JEFFRIES, MR
MICHAEL CUNNAH,
MR ROGER
MASLIN AND
MR NIC
COWARD
320. And there was no change in the relationship
between the organisation and the FA? There was no change in the
guarantee?
(Mr Maslin) Absolutely not.
321. So the fact that that happened only the
day that you were cashing a cheque from Sport England, which was
sent to you on 15 March, is purely accidental? That is the cheque
for £103 million.
(Mr Maslin) That is right. The cheque for £103
million was to purchase Wembley from Wembley Stadium Ltd. It was
always agreed that we would change the name of the company to
Wembley National Stadium Ltd and we would just do it a couple
of days after the purchase.
322. Notwithstanding the answers that you gave
to Michael Fabricant's question, do you accept that there is—it
seems scandalous really that the FA sets up an arm's length company
and gives no guarantee; it does not have to find money to sort
out if the whole project falls down, and because Sport England
gives more money in a single dollop than the assets of WNSL, to
which it was giving, are worth, and WNSL is not even putting in
its own profits that it is making in the meantime into the acquisition
of the land—a stranglehold on politicians then, or on anybody
who has a real interest in the project, because if they criticise
they are seen as trying to undermine the project from going ahead
and it looks as if the public will neither get a stadium nor its
money back.
(Mr Maslin) I can see that there may be some dilemmas
there but the fact of the matter is that we needed to make a commercial
transaction with Wembley plc to purchase the land to start a new
Wembley Stadium project. On one thing that you said before, let
me make it absolutely clear that all the monies that came from
operating the stadium in the following 18 months or so were ploughed
back absolutely into the project.
Chairman: Yes; I remember you saying
that.
Miss Kirkbride
323. I myself have one niggling point about
the valuation of the land and what was paid for it. In the very
early exchanges you said that the land was valued at something
like £60 million and the business was valued at something
around £40 million. The business no longer exists, the buildings
are going to be pulled down, and the land is only valuable because
of where it is, because it is Wembley and if it was in the middle
of anywhere else anywhere in the country it would cease to be
Wembley with all the fascination and the glamour that is attached
to that name. I still do not see the difference between £60
million and £40 million, which is £103 million, which
is what the Lottery paid for this piece of land.
(Mr Maslin) Sorry: I do not quite follow.
324. I would like to know more about what was
behind the valuation of that piece of land. Earlier it was separated
into £60 million for the value of the land alone, which itself
seems rather high. That to me would be justified by the fact that
that is where Wembley is and where Wembley is is a an irreplaceable
commodity, but that is not the answer because on top of the £60
million is £40 million that was paid for the business which
means that where Wembley is the business is Wembley and the land
it sits on. I do not see the difference.
(Mr Maslin) The valuation was slightly different.
Yes, £64.5 million for the value of the land. The buildings
themselves were the difference. In terms of valuing a business—
325. I thought it was 40 million.
(Mr Maslin) Yes, it is.
326. They were going to be pulled down?
(Mr Maslin) Which is why, to answer one of your earlier
notes, in prudent accounting those assets have been written off.
There is a difference between the assets themselves and the purchase
of an ongoing viable business. Both we and Sport England had to
ensure that the business we were buying justified that price and
that was the basis of valuations. We got those valuations and
they supported that it was worth paying £103 million for.
327. I expect that is still as clear as mud
to most people but there we are. Given that a lot of money has
been spent on this project by the Lottery, and it has been exposed
to a lot of commercial risk, is the public going to get any dividend
in five years' time? Will Sport England actually see a return
on their investment?
(Mr Cunnah) No.
328. Why not?
(Mr Cunnah) The Lottery Funding Agreement allows for
one per cent of the turnover to be provided for local causes.
Perhaps you should allow me to change my answer to yes. In reaching
the agreement with Sport England, in return for the Lottery funding
money, what Sport England were requiring of WNSL was for WNSL
to provide a national stadium and that was the return it was looking
for. In addition, WNSL did agree that one per cent of turnover
would be provided for local worthy causes, perhaps refurbishing
or regenerating local playing fields or something like that. I
am sorry if I was rambling but I was thinking as I spoke.
329. Based on your projections how much would
that be?
(Mr Cunnah) That would be in the order of £750,000
a year.
330. To be decided by whom?
(Mr Cunnah) That would be—
(Mr Jeffries) A trust has to be established in which
Sport England and WNSL will have an interest.
331. The geographic location for the disbursal,
would that be the borough?
(Mr Cunnah) Clearly the borough would expect to benefit
from the stadium but that is really for the trust to establish.
332. I want to return to what Mr Coward said
about Birmingham. I think most people would find it pretty awesome
that Birmingham would not have been a part of this bidding process
at all, that there was disagreement between the FA and WNSL. Could
you explain to me why Birmingham was even being negotiated with
when it did not have a cat in hell's chance of having the stadium?
(Mr Coward) I think the FA's position has always been
clear on Birmingham. The FA has always been interested to meet
with the people from Birmingham who wanted to put together their
own bid and, as I said earlier, Adam Crozier and others from the
FA met with Birmingham to help them put together a presentation
and has always been impressed by that. I think as you heard from
Adam, and you received in a note, we always have expressed considerable
reservations in relation to a Birmingham national stadium for
the reasons that I previously outlined but which I can headline
as being massive uncertainty. It would be wrong for anyone to
think that there is a viable project at Birmingham as at this
date.
333. Is not the problem of the viability of
the project the contract that you had with WNSL? It has got nothing
to do with it being green belt land or anything else, the problem
is the contract that you had with WNSL. Why was that not made
clear to them rather than have these people waste their time in
the way that was the case?
(Mr Coward) An issue that we have been making clear
throughout, because people do know that we had to enter into a
long-term commitment to Wembley when the stadium was purchased,
and you yourselves know this, that was what the FA was required
by Sport England to do and that was what we very gladly did. That
does not preclude us, as we were asked to do, as part of the whole
review process, meeting with people from Birmingham who were putting
together a Birmingham bid. We did that.
334. So what would be the scenario in which
Birmingham would be considered?
(Mr Coward) As I say, there is a fundamental point
that the FA is required to take its events to the Wembley National
Stadium, whether it be the old version or, as we all hope, the
new stadium at Wembley. If that does not take place we will be
asked, I am sure, by Birmingham, if they wish to have a national
stadium, to take our events there. We would have to ask Sport
England for their consent to any change to the Lottery Funding
Agreements to allow us to do that.
335. But would WNSL not sue you for breach of
contract?
(Mr Coward) WNSL would also have to consent as well.
336. Therefore it is not a possibility.
(Mr Coward) We would not wish to put ourselves in
a position where we were being sued by WNSL.
337. You would have to buy out of your obligations
to WNSL?
(Mr Coward) That may be one option.
338. Did you raise this in discussion with Birmingham?
(Mr Coward) I cannot answer that because I have never
had discussions with Birmingham.
339. Can you tell us what discussions you have
had with regard to this particular matter with the Secretary of
State who told us a few months ago in the House of Commons that
Birmingham was the preferred second bidder?
(Mr Coward) As far as I am aware DCMS, and therefore
I assume the Secretary of State, has received full details of
Sport England's security package in relation to the grant that
was made by Sport England to Wembley National Stadium Limited,
so the Department for Culture, Media and Sport would be well aware
of our 20 year agreement to take our events to Wembley Stadium.
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