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

Annex 14

Letter, 30 June 2000, from Sport England to the Football Association


  Thank you for the meeting on Tuesday afternoon to discuss the issues related to a payment of £20 million in connection with the Wembley project. As you know, I have written to Adam Crozier on a number of occasions seeking clarification on the agreement reached between the Secretary of State and the Football Association.

  I am writing to confirm the main points arising from our discussions, and to seek your views as to the best way forward.


  First, the key timetable points appear to be:

    —  We need to reach a final agreement within the timeframe envisaged for concluding the financing arrangements for the project, which we understand is within the next week or two (please see below).

    —  The Secretary of State (in his letter to Ken Bates of 7 January 2000) envisaged that a payment would be phased over five years from December 2000 with best endeavours by the FA to achieve quicker repayment if possible. This is clearly important in respect of the potential cash flows associated with the Lee Valley Athletics project.

  However, it is clear from our discussions that there is still lack of clarity as to the basis of the arrangements:

    —  The Secretary of State's letter to Ken Bates suggested that the FA had offered a £20 million payment "if the requirements to stage athletics were removed". As you appreciate, there may be particular difficulties in changing the fundamental purpose of the project (ie. a stadium for three sports) without exposing the applicants to a possible full repayment of grant or the Council to judicial review. In any event, we had understood in our continuing negotiations with Chase and WNSL that this was not, in fact, an issue, and that there was no call for athletics to be removed from the project (particularly as it is already part of the design).

    —  Clearly any change at this stage may be very difficult in terms of process, and, at best, is likely to lead to significant timing implications.

    —  You also mentioned that the agreement with the Secretary of State, despite its absence from his letter, included the potential for changes to the Lottery Funding agreement to enable the FA/WNSL to generate additional funds to make up the shortfall resulting from a payment of £20 million to us. You had in mind a relaxation, for example, of the prohibitions on naming rights or anchor tenants. These are not matters which have been raised with us in this context.

    —  As we discussed, changes to these issues at this stage would have a significant bearing on the current discussions with Chase Manhattan in relation to the financing agreements. For example the sale of naming rights and the installation of an anchor tenant are among the key elements to be held in reserve in case of financial difficulties in the construction or post construction period.

    —  In addition we discussed the sale of naming rights should this be released to you now in return for the £20 million payment. If, for example, they could be sold for more than £20 million the Council would no doubt expect the local sale cost to be returned up to £120 million on the basis that there could be less financial need for our grant to the project if this condition was removed.

    —  For these reasons, and the fact that these are important factors in establishing the terms of the LFA, I do not think that the Council (who would have to review the project in this context) would be prepared lightly to accept this proposal.

    —  The Secretary of State's letter suggests that the payment would be made by the FA. You indicated that there were significant problems which may prevent the FA from making a payment of £20 million, in terms of financial and legal ability. You therefore expected that any payment would have to come from WNSL and not the FA even if WNSL provided the £20 million to be paid through the FA. You also indicated that the agreement with the Secretary of State had not been, as yet, considered or approved by either the Executive Board of the Council of the FA, although there is a meeting on 7 July where it could be discussed.

    —  With regard to WNSL, you doubted whether there was the potential for the financing proposals to include an additional £20 million, on the grounds of viability. You suggested that the potential was reduced still further by the additional costs to the project associated with the Planning Agreements as required by the London Borough of Brent.

    —  I would therefore be grateful if you could clarify whether the payment is to be made by WNSL or the FA, and on what basis.

  Finally, based upon our discussions yesterday, the options for structuring the payment appear to be limited, ranging from what effectively amounts to a voluntary payment from either WNSL or the FA, through to a renegotiation of particular terms of the Lottery Funding Agreement.

  Clearly, the timetable is very tight, and we must move forward to seek a resolution to the issues as soon as possible.

  I would therefore welcome your response to the points raised in this letter, and your further proposals. I suggest that we arrange to meet again very soon.

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