Select Committee on Culture, Media and Sport Appendices to the Minutes of Evidence


Supplementary memorandum from Wembley National Stadium Limited


  Project expenditure to date has been £139 million. £106 million of this relates to the purchase of the stadium site and is secured by Sport England's rights under the staging agreement between WNSL, Sport England and the FA. A further £3.5 million was spent in process of stadium acquisition. Of the remaining £29.5 million needed to support that project to date, £10.5 million is the remaining grant funding, £4 million is funding from the operating surplus of the stadium (operating profit of circa £15 million net of write-offs, redundancy and other company costs) and £15 million is funding directly from the FA.

  The initial project costs prior to the stadium purchase showed a project with 37.5 per cent public funding (through the National Lottery grant) and 62.5 per cent private sector funding. Whilst total costs have been revised from time to time, the proportion of public funding has never been higher than this at any point. As currently planned, private sector funding will account for 80 per cent of the total project cost.


  Over the last three years the projected cost of the new Wembley stadium has frequently been compared to other recently completed stadia. However, the figures used have seldom been compiled on an accurate like for like basis.

  The most recently published figure for the total project cost of new Wembley is circa £715 million in the interim Carter report of December 2001. Although Multiplex have held the price of the construction contract since that date there will still be some variation to that figure given that it includes many items other than the basic construction cost of the new stadium. Broadly, that £715 million includes the following: land purchase and associated costs, design development, finance costs (including rolled up interest), Section 106 payments, legal fees, all company running costs 1998 to 2005 (including the closure of the original stadium), contingent cost, pre-opening costs, demolition, construction, fit out.

  Figures quoted by the media and others in comparison tend to be simply for the main construction costs of other stadia. There is seldom any attempt to compare location costs, source of funding (state or debt finance), inflation or even capacity.

  In an effort to present comparable information, the stadium industry tends to compare cost per seat. Even this figure has an innate complication as costs do not grow in a linear fashion, rather they grow exponentially as the cost of building a seat 50 metres above ground level, along with the volume of supporting space, is obviously far higher than building a seat five metres above ground level. Hence, although Wembley's costs are less than 4,000 per seat, the final 10,000 seats—those furthest back from the pitch and highest from the ground—will cost well over £5,000 per seat to build (ie add circa £50 million to the price. [WNSL figure]).

  Also important is the form of funding. A substantial government grant towards construction will limit financing costs. Wembley, for example, will carry rolled up interest (interest on the private sector loan that cannot be paid until opening and hence rolls up to opening appear as a circa £50 million capital cost). The stadium will also carry a high debt burden for a national stadium as no grant will go directly onto construction costs.

  The current international model of stadium finance is to provide generous facilities for premium seats as these contribute substantially more income than general admission seats. A stadium with a higher number of premium seats will inevitably carry a high construction cost as such seats demand a far higher quality of facility than general admission seats. Importantly this higher construction cost is allied to the likelihood that the stadium will become self-supporting. WNSL, and by extension the FA, cannot afford to create a cheaper, loss making stadium.

  It is worth noting that it is very unlikely that many of the newly constructed World Cup stadia will be self-supporting. Almost all will rely on some form of state support for continued existence. The stadium in Oita, for example, has basic running costs of 300 million yen per annum but only 50 million yen was expected in revenue in its first year of operation.

  The Cyril Sweett report made alterations to costs, adjusting for inflation and location (building costs in Australia, for instance, are far lower than the UK).

  The Cyril Sweett report described the Wembley Stadium design, "value for money both in terms of the market price for the scheme as designed, and in terms of comparison with stadia of similar standing".

    "Undoubtedly Wembley is of a higher quality than most other stadia, firstly as this befits a national rather than a club stadia, but also as a requirement of the lottery funding. The national stadia appear at the higher end of the cost range of costs per seat. Wembley falls into this category, and compares favourably with other national stadia."

  Cyrill Sweett makes clear that Wembley appears as good value when compared to other stadia with a similar business model, most notably those in North America. The most expensive new stadium currently planned is the new Soldier Field Stadium in Chicago, estimated to cost will cost $9,854 per seat (ie with an exchange rate of £1 = $1.45, £6,796 per seat).

  The new Wembley is also particularly good value in terms of cost per square metre.

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Prepared 10 July 2002