Select Committee on Culture, Media and Sport Minutes of Evidence

Memorandum submitted by Wembley National Stadium Limited

  Following the Committee Reports of May 1999 and March 2000, considerable progress has been made towards the construction of the new National Stadium at Wembley.


  WNSL submitted its planning application to the London Borough of Brent in November 1999. Approval was given, subject to agreement under Section 106 of the Town and Country Planning Act, on 1 June 2000.

  The core of the Section 106 agreement is the provision of appropriate transport infrastructure for the area around the National Stadium. Agreement was subsequently reached with the active participation of the Minister for London, the Mayor for London and London Underground Limited. In précis Wembley will benefit from a rebuilt Wembley Park tube station (funded by LUL with support of WNSL) and two new roads: the Stadium Access Corridor and the (industrial) Estate Access Corridor. These roads are funded by the Single Regeneration Budget with support from WNSL. In total WNSL will pay £17.2 million at 2000 prices towards the costs of these works.


  WNSL asked for expressions of interest from potential contractors in July 1999. Initial documentation was received from 12 companies/consortia. WNSL compiled a shortlist of three companies in September 1999 and Bovis Multiplex (BMX) were selected as preferred contractor in February 2000.

  WNSL entered into detailed discussions with BMX but was unable to agree a final construction contract with the joint venture. Key issues were the pricing of sub-contracts within the total contract and the division of risks. WNSL broke off negotiations with the consortium in August 2000. WNSL was subsequently approached by Multiplex with a view to that company assuming sole responsibility for the construction contract.

  The WNSL board meeting of September 2000 agreed in principle that Multiplex be appointed lead contractor. A detailed contract has now been agreed with Multiplex of £326.5 million.

  Multiplex are the company responsible for the construction of Stadium Australia.


  The total all-inclusive funding for the new National Stadium covering the period 1997 to 2004 is as shown below:

Syndicated Loan
Sport England
FA Support
WNSL Contribution

  Figures are rounded up.

  The FA support provides back-up for WNSL's business plan. It gives a "comfort zone" for the funders and ensures that WNSL does not have to conclude key contracts ahead of financial close. Total project costs are likely to be under £600 million.

  Costs are approximately in line with those given to the Committee in early 2000. Figures previously released related specifically to the construction and did not include a range of costs—eg. contingencies, insurance, rolled-up interest, Section 106 contribution or management costs 1997 to 2004. The complete project budget is:

Contruction Contract
Land Purchase
Section 106
FA Contribution to Sport England
Professional Fees/Finance/Management/Pre-opening/All Contingency Costs

  Figures are rounded up. Approximately £136 million has already been committed. The construction contract, land purchase, Section 106 and FA contribution to Sport England are now all fixed costs.

  WNSL selected Chase Manhattan Bank as lead arranger for the company's loan syndication in February 2000. Chase are the global number one in syndicated loan finance. In 1999 they took part in syndications worth a total of 666 billion euro.

  Chase has carried out an exacting Due Diligence on the WNSL business plan over a period of eight months. Syndication was launched on 23 October 2000. Chase Manhattan and WNSL presented the Wembley business plan to 30 City Institutions on 1 November. Reaction at the meeting was positive and Chase Manhattan and WNSL are aiming to achieve financial close in December 2000.

  Several pre-conditions need to be met prior to financial close. These are essentially concluding contract details where heads of terms have already been signed.

  Work on demolishing the existing stadium will begin immediately after financial close.


The Future of athletics at Wembley

  WNSL remains of the view that the design team of the new stadium has produced an excellent design for an athletics stadium that does not prejudice the viewing experience of football or rugby supporters. This is a view that has been supported by Sport England, the Commission for the Built Environment, and, of course, the Committee itself.

  In order to ensure that it retained a positive long-term relationship with the Government, the Football Association came to an agreement with the Department for Culture, Media and Sport to pay £20 million to Sport England, on the understanding that the National Stadium would not be obliged to host athletics events.

  WNSL's understanding was that the Department felt that £20 million was an appropriate amount for football to pay in return for the management comfort of not having to install the athletics platform, on the two occasions when it may be appropriate to do so—the World Athletics Championship and a potential Olympic Games.

  WNSL subsequently made an application on 29 September 2000, at the specific request of Sport England and the DCMS, to remove the obligation to stage any athletics events, including the World Athletics Championships and the Olympic Games.

  This application was to be considered on 6 November 2000 but was deferred to 4 December 2000.

  The DCMS and the BOA have requested that WNSL retain the obligation to stage Olympic football and, should either code become an Olympic event, rugby in any potential London Olympic Games. WNSL supports this proposal

  The DCMS and the BOA have, WNSL is given to understand, requested that the opening and closing ceremonies of a potential Olympic Games be held at the National Stadium. In such a scenario, track and field athletics events would be held at a separate Athletics Stadium with a minimum capacity of 65,000 seats.

  WNSL is confused by this proposal. If 65,000 is an appropriate capacity for an Olympic athletics event, such a crowd could be comfortably supported in the National Stadium with the platform in place, with no sight line compromise.

  The BOA and DCMS proposal is that the opening and closing ceremonies be held with Wembley in "football mode". WNSL is unsure about the practicalities of this proposal.

  As stated above, WNSL is endeavouring to ensure the payment of £20 million to Sport England for use on the development of a national home for athletics. Sport England has deferred determination of WNSL's application. Payments will be:

On signing
Plus 12 months
Plus 24 months
Plus 36 months
Plus 48 months

Ticket pricing

  General Admission ticket pricing is established by event owners (eg the FA sets the pricing for a Challenge Cup Final and England Internationals). WNSL has now concluded staging agreements with the FA, the Football League and the Rugby Football League.

  The FA is bound by the terms of the Lottery Funding Agreement that states:

  "The primary purpose of the Project must be to provide and maintain a National Stadium which can attract and host the Flagship Events and, in addition, to ensure that the nation has every opportunity to purchase tickets for and gain access to the National Stadium for Flagship events".

  This has been interpreted as broadly tying ticket prices in real terms for flagship events to existing prices on a like for like seating basis.

  The major marked difference between current pricing and future general admission ticketing will be that event owners will no longer be obliged to offer discounted tickets for restricted view seats, as there are no such seats in the new stadium.

The 2005 World Athletics Championships

  WNSL remains confident that the National Stadium would provide a superb home for the 2005 World Athletics Championships in either 65,000 or 80,000 seat mode. Our preference would be 80,000 seat mode.

  The costs of converting Wembley into athletics mode remains approximately that outlined in the evidence submitted to the Committee in 1999 as between £15 and £20 million. Opening in 80,000 mode and subsequently "digging down" to create a football and rugby only stadium (as with the Commonwealth Games stadium in Manchester), would be likely to modestly reduce this figure. WNSL has not carried out any more work on this option given current circumstances.

  We estimate that compensation to WNSL for loss of earnings were the stadium to be constructed in 80,000 seat athletics mode as being approximately £2 million, depending upon the agreement with the event owner.

  However, while the costs of the platform have not changed over the last two years, a reversal of the decision to remove athletics from Wembley would result in increased cost to the event owner when compared to the original proposals.

  WNSL has now contracted with Multiplex to open in 90,000 seat football mode. Given that this is a Fixed Price Contract, alteration to the contract would need to be negotiated with the contractor. This cost is unknown, but WNSL would expect this cost to fall on the event owner.

  Similarly WNSL would expect any extra costs of meeting a specific opening date to fall onto the event owner. While the stadium construction programme is intended to be complete by the first quarter of 2004, WNSL cannot commit to opening by a specific date without further underwriting. Firm opening dates tend to create problems for construction projects. The Millennium Dome, the Jubilee Line extension and the Millennium Stadium all bear witness to this. Realistically the National Stadium will be open well before the commencement of the 2005 Championships, but the risk of maintaining the opening date would have to be assumed by the event owner, not WNSL.

  In order to stage the Championships WNSL would require a firm contract with the event owner setting out WNSL's rights and obligations. WNSL would need to be clear on the nature of the event owner and the strength of the covenant available to fund the costs of staging the event.

An alternative design

  WNSL remains convinced that the current design for the National Stadium is the most appropriate response to the brief prepared in response to the Lottery Funding Agreement with Sport England: ie, a stadium that will host 20 football/rugby matches each year, and will only host occasional athletics events.

  The main users of the stadium are football and rugby league, the main funder of the stadium football.

  The only canvassed alternative design is a move to retractable seating on the model of the Stade de France. This would raise several issues:

Capacity and Footprint

  Despite having 10,000 more seats and 5cm extra legroom for each spectator, the new Wembley has a footprint almost identical to that of the Stade de France (Wembley will have an enclosure line of 935 metres compared to 950 metres for the Parisian stadium).

  Because a permanent athletics track would be included in a Wembley re-design, albeit usually hidden by a retractable roof tier of seating, the upper tiers of seating would need to be permanently fixed for optimum athletics viewing lines. This would reduce the number of seats it is possible to fit onto the footprint available at Wembley to approximately 80,000 seats. Even if it were possible to acquire additional land, seats over 80,000, in this scenario, would be outside an acceptable viewing distance for football and rugby league.

  Given that seats over and above 80,000 would be the most costly seats to build and would have to be discounted due to poor views, it is likely that no economic case could be made for such a stadium design with a capacity of over 80,000 seats for football/rugby league with retractable seating.

  When comparisons are made with the Stade de France, it should be borne in mind that several features in the Stade de France would not meet recommended United Kingdom stadium practice. Examples include the low provision of concourse facilities, toilets and concessions stands, the exposed concourse areas and the nature of the access/escape stairs to the upper tier.

Acceptable viewing standards

  A stadium similar to the design used at the Stade de France would have the design feature of placing the "corners" of the football lower tier in the sight line of many spectators, obscuring views of runners on the bends. Roughly 5,000 seats with sight lines would be obscured by walls rather than spectators heads. In addition spectators in the mid and upper tiers would not only be placed further back for football and rugby, they would suffer inferior "c" values during athletics events when compared to the design proposed for Wembley.

  Given that an 80,000 seat stadium for football rugby league would have its capacity reduced to 75,000 in athletics mode (as is the case with the Stade de France), a further 5,000 "unacceptable" seats would produce a stadium with only 70,000 seats acceptable to the DCMS/BOA. This is substantially below the 80,000 seats deemed necessary by the BOA in order to make an Olympic bid. If 80,000 seats is the minimum Olympic requirement, the confusion in relation to the opening and closing ceremonies increases. An athletics venue of 80,000 would be far superior to a 90,000 football venue for an opening and closing ceremony.


  The current stadium is designed to generate a substantial proportion of income from premium seats. In practice these seats cross-subsidise general admission tickets. Reducing either the quality or capacity of the stadium would render the project unfundable under the current business plan.

  Funding for construction is currently secured by the FA underwriting several parts of the WNSL business plan. With a revised business plan it is unlikely that this FA support would be forthcoming. Leaving a gap of at least £100 million in project funding.

Abortive costs

  WNSL has spent approximately £30 million, excluding land purchase costs, to reach the current position. All of these costs would be abortive and approximately two years would be lost to the project, adding inflation costs to the overall project costs.

Redesign time

  As explained above, a move to retractable seating would change the stadium design fundamentally. Such a redesign would take at least 12 months. The current planning permission would fall if a new design were proposed. It is likely that it would take at least a further 12 months to put in place a usable planning permission. The current stadium is to be built in 39 months, so it is reasonable to assume a similar construction time for any new design. This gives a best case opening date of second quarter 2006 if work on a new design began in January 2001. This figure does not allow for any additional time to attract private sector funding or the negotiation of a construction contract.

In conclusion, in relation to an alternative design:

    —  It is likely that a redesign of the stadium would lose FA support, leading to at least a £100 million gap in funding;

    —  It is likely that the redevelopment would then have to be led by a new organisation;

    —  A stadium with a retractable lower tier would provide only 70,000 "acceptable" seats under BOA criteria on sight lines;

    —  There would be abortive costs of £30 million plus inflationary pressures on the new design;

    —  The issue of a warm-up track would remain and could not be resolved within the present landholding; and

    —  A resigned stadium would not be open for the 2005 World Athletics Championships.

December 2000

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