Select Committee on Culture, Media and Sport Minutes of Evidence

Examination of Witnesses (Questions 1 - 19)

MONDAY 13 MAY 2002


  Chairman: Mr Cunnah and Mr James, thank you very much indeed for coming to see us this afternoon. Before we proceed I have something to say and that is this. Members of the Committee have studied the report that you have provided for us in confidence. I had my copy before the weekend, other colleagues have had theirs more recently but we have all had the opportunity of studying it with care and it places us in a quandary. We are due to see witnesses tomorrow morning, we are due to see the Secretary of State, we are due to see WNSL, etc. Having discussed this among ourselves we do not see how it is possible for us to have a fruitful and meaningful session tomorrow on the basis of the terms upon which this report has been made available to us because there are many things in both the report and Mr James's letter that we would not be able to refer to on the present basis but not to refer to them would make our session tomorrow totally meaningless. The series of events described in the Tropus report is as disturbing a sequence of events as I have seen since I have chaired this Committee and its predecessors. There are a number of matters which I believe WNSL must be answerable for, that Sport England must be answerable for and that the Secretary of State must be answerable for. I exclude you, Mr James, because although you have a very profound understanding of these matters you carry no executive responsibility, what you provide is a detailed view of the situation having read the report. I do not see and my colleagues share this view with me, that we can proceed with this inquiry upon the basis upon which we originally asked for this report. We wish to proceed with this session this afternoon because we will continue with this session on precisely the basis that it was agreed in advance, namely the documents provided to us have been provided in confidence, and we hope we will be able to get a good deal of information this afternoon on that basis but we would regard it as completely futile to proceed with the session tomorrow and therefore we are going to cancel it with the aim of reconvening it next week. The decision of the Committee is that we wish this report to be made public. We are ready to sit down with WNSL and consider what parts they wish to have removed on the basis of commercial confidentiality and where it is genuine commercial confidentiality we shall do our best to be forthcoming but otherwise we will have to insist on this report being made public and if WNSL and the FA are unwilling to make it public we shall have to seek a resolution of the House of Commons to require it to be made public because there are some very serious issues of propriety, very serious issues of transparency and very serious issues of responsibility for the use of public money which we believe if we do not deal with in this open way we shall be derelict in our duty and while it may be arguable that others involved in this saga have been derelict in their duty we do not intend to be derelict in ours. That being so, what we are going to ask, and our clerk will be in touch with the appropriate authorities, and we will need to have an answer within the next couple of days, is for this report to be made available to us for publication so that we can question the Secretary of State and Sport England and WNSL about it and we want that decided, as I say, well before the end of this week. Our clerks and myself are ready to sit down and look at the aspects of commercial confidentiality but I make it clear—and I do not do so as a threat, I simply do so in order to advise you of the powers that are available to us—that if the report is not made available to us we shall seek a resolution of the House of Commons to require it to be made available and published except for those parts involving agreed commercial confidentiality. I do not expect you to reply to this although you are welcome to reply if you wish but that is the way in which we intend to proceed. If you do not have anything to say about that, and as I say I do not expect you to say anything if you do not wish to, then we will start the questioning. We are very grateful to you for being present this afternoon to answer our questions. I will ask Frank Doran to open the questions.

Mr Doran

1.  Thank you very much Mr Chairman. As the Chairman just said, the Committee has a considerable number of concerns having read the Tropus report and other papers which have been submitted. I want to concentrate on one specific area but could I just ask one question in relation to the Tropus report because I am not clear where ownership lies in this report. Paragraph 1.3, the introduction of the report says that ". . . the distribution of this report to any persons other than the Board of WSNL or the FA must only be done with the written authority of the chief executive of Tropus". I am not sure whether it is WNSL's report or Tropus's report or anybody else's? Could I have that clarified. Again, I do not expect that to be done at the moment.[2] Our major concern is the issue of the public funds which have been made available through Sport England to WNSL, a total of £120 million. To help me a little in, if you like, gauging how relevant or otherwise the Tropus report is, I want to concentrate a little on the question of the purchase of land with that money. My understanding is there was a purchase price of £106 million, is that correct, Mr Cunnah?

  (Mr Cunnah) That is correct.

2.  Exactly how much was bought with that £106 million?

  (Mr Cunnah) We purchased the stadium business from Wembley Plc for £106 million in 1999.

3.  Roughly how much land is involved in the transaction, including the stadium?

  (Mr Cunnah) From memory, and it is not very good, it is in the order of 80 acres.

4.  Eighty?

  (Mr Cunnah) I would like to have that clarified.[3]

5.  My understanding is it was around about 26/27 acres.

  (Mr Cunnah) I am not sure.

6.  It is still the case that Wembley Stadium Limited, from whom you purchased the land, own a significant other piece of land there in the area? They still have an interest in a certain amount of land?

  (Mr Cunnah) Wembley Plc do, yes.

7.  The purchase price of £106 million, can you tell us was there any valuation done of the land, any independent valuation done before it was acquired?

  (Mr Cunnah) There was an independent valuation done on the business by Coopers & Lybrand, as they were then.[4]

8.  What did the business include for Wembley Stadium?

  (Mr Cunnah) The business included the stadium asset itself plus the employees of the stadium business.

9.  They have been acquired by WNSL?

  (Mr Cunnah) Correct.

10.  They are still employed?

  (Mr Cunnah) Many of them, of course, left the business when the stadium closed, the others are still with the business.

11.  Was there any other element of the business? Did you obtain goodwill, for example?

  (Mr Cunnah) A very small amount in the accounts were declared to be attached to goodwill.

12.  From memory what do you call a small amount?

  (Mr Cunnah) About £3 million I think.[5]

13.  About £3 million for goodwill of the business. The valuation of the property would be what, the pure property?

  (Mr Cunnah) In the books of accounts the property is somewhere around £67 million I think.

14.  Right.

  (Mr Cunnah) That is not the same as market value.

15.  Do you now have title to the land on which Wembley Stadium was built?

  (Mr Cunnah) Yes, we do.

16.  Is it a clean title? Are there any restrictions on the title?

  (Mr Cunnah) No, there are no restrictions other than I think that there was perhaps a covenant relating to the hotel business which the local Hilton hotel had enjoyed from the previous occupation.[6]

17.  What was the nature of that restriction, can you tell me?

  (Mr Cunnah) It was in relation to whether a hotel could be run within the stadium and certain conference events within the stadium of a certain size.

18.  My understanding is for the first few years of this project there was a plan to include a hotel and that there was a considerable amount of money spent in developing these plans for a 200 bedroom hotel. You seem to be saying there is some restriction on building a hotel.

  (Mr Cunnah) Not in building the hotel but in the running of the hotel.

19.  In operating the hotel. It was basically the case that you needed the permission of the Hilton hotel chain to operate a hotel?

  (Mr Cunnah) Correct.

2   Note by Wembley National Stadium (WNSL): WNSL's view is that the report by Tropus can be distributed only with the consent of both WNSL and Tropus. See Memorandum submitted by WNSL part of the Minutes of Evidence taken before the Committee on 21 May 2001, response to written question 6, for further details of the distribution of the Tropus Report by WNSL. Back

3   Note by WNSL: See Memorandum submitted by WNSL part of the Minutes of Evidence taken before the Committee on 21 May 2001, response to written question 3, for clarification of the purchase agreement between WNSL and Wembley Plc over the Wembley site. In brief: the WNSL freehold title to the Wembley site comprises two areas: 24 acres on which the Stadium stands; and 7 acres of "developmental land" subject to an Option in favour of Wembley Plc. Wembley Plc has the right to require WNSL to return any of the Option land which is not used for the development of the new stadium. In addition this land will revert, in full, to Wembley Plc if WNSL has not started to develop the site by 31 December 2002 (having given three months notice of its intention to do so). Back

4   Note by WNSL: see supplementary memorandum submitted by Wembley National Stadium Limited set out after this oral evidence. Back

5   Note by WNSL: this figure was incorrect. See further evidence given before the Committee by WNSL and The FA on 21 May 2002 where the figure is given correctly as £250,000. Back

6   See Q4 and related note. Back

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