Select Committee on Culture, Media and Sport Minutes of Evidence

Examination of Witnesses (Questions 40 - 59)

MONDAY 13 MAY 2002


40.  Have you got a written agreement with them?

  (Mr Cunnah) I am unsure as to the format of the agreement but we do have their agreement and indeed there is also the co-operation that goes with the Section 106 requirements which need to be signed up.

41.  As far as WNSL is concerned, Wembley Plc are not a barrier to the start of any work and if you can get your funding together by December then the work will be able to proceed?

  (Mr Cunnah) Correct.

42.  There are no other provisions in the title which will hamper the situation?

  (Mr Cunnah) No, not that I am aware of.


43.  Are you telling us that providing the funding is available there is no obstacle whatever to your starting construction by December?

  (Mr Cunnah) Yes, basically. All of the plans are plans that we need to put in front of the bankers to make sure that they understand the deal that we have agreed with them and they will need to be signed off. That does mean we have to get the final sign off from each of our stakeholders, whether it is Brent Council, Wembley Plc, Sport England, DCMS, but all of the pieces of the jigsaw are almost in place.

44.  I want to be absolutely clear about this. Are you saying then that the planning permission is in place?

  (Mr Cunnah) The planning consent has been granted and was granted on March 20. We have entered a period now where the Section 106 has to be fully engrossed which I understand is when we then achieve full planning permission.

45.  Secondly, when you are talking about the funding being in place, are you counting in the £20 million of infrastructure funding which the Secretary of State has said is a substitute for WNSL expenditure and is therefore in effect a subsidy or is that £20 million not included in the funding which you need to have in place?

  (Mr Cunnah) Mr Chairman, it is included.

Mr Doran

46.  I am not clear where you are on planning permission. You had outline planning permission and you are awaiting full planning permission, is that the situation?

  (Mr Cunnah) Yes, I think so.

John Thurso

47.  Can I just interrupt there. I have slightly more knowledge, having gone through an English planning process a short while ago. What you said I think was that you have full planning permission but you are waiting for Section 106 to be engrossed?

  (Mr Cunnah) Yes.

48.  It is a full planning permission granted subject to Section 106 being agreed between the parties?

  (Mr Cunnah) Correct.

Mr Doran

49.  Moving on then, you are in a position where you have the title to the land, there is a deadline for when you must start the building but, as you say, all the pieces of the jigsaw are coming into place. One of the things I would like to go back to a little, you mentioned that you had a valuation done on the property. Various concerns have been raised with us and certainly with me outside this Committee about what you paid for the property and what it might be worth now. My advice is that an acre of land in that part of London, which is one of the poorest boroughs in the country, for industrial purposes would be about a million pounds, and it is industrial purposes that you would most likely get planning permission for, particularly given the nature of the site we are talking about and the fact that part of it is listed. The figure you paid, if we round it up to £100 million, by the time we take away the goodwill that you have mentioned and the staff perhaps for that part of that business, although they could be a cost as well as a benefit now, we are left with roughly £100 million. You do not know the exact size of the site but my information is around about 27 acres, you think it is more than that, but still you paid a real premium price. What was the justification for that?

  (Mr Cunnah) First of all I am happy to be corrected by you on the size of the site. Secondly, the justification was that the purchase was not of a piece of real estate it was for the business that we purchased from Wembley Plc.

50.  But we have disposed of that, £6 million worth, £100 million as compared with a piece of land at the moment which might be worth about £27 million on any reasonable valuation of property in that area.

  (Mr Cunnah) I think the expert valuers of the business looked more at the future income streams of the business in order to value the business itself. I think they looked also at the total of Wembley Plc, valued the other parts to see what the balance was which was left. I know they looked at three or four different ways of valuing the business before they came up with their valuation.

51.  Was there any competition for the piece of land?

  (Mr Cunnah) We believe there was, certainly we were led to believe by Wembley Plc that there was.

52.  Any seller would tell you that. Did anybody check whether there was any competition?

  (Mr Cunnah) The other competition was a well known football club so we had every reason to believe that was true.

53.  That was Arsenal who were looking at the site.

  (Mr Cunnah) It might have been.[10]

54.  You cannot comment. We are in a situation where you paid—you may not accept this—a highly inflated price. Our concern is you have £120 million of public money and sitting where I am sitting it looks as though it did not matter what you paid as long as you had the property.

  (Mr Cunnah) I would not agree with that.

  Mr Doran: I do not know, Chairman, in the discussions which have to take place over the next few days whether it would be appropriate to ask for the correspondence and these valuations.[11]

  Chairman: It is certainly appropriate because the exchange you have been having, Frank, causes me difficulties. We have had different estimates of the valuation of the land, different estimates of the purchase, I have not heard anything that remotely approaches £114 million and therefore I want to know why £114 million was spent of —without being over-crude—other people's money on something which so far as I can gather, you can correct me, by any estimate we have heard this afternoon is not worth anywhere near £114 million.

Mr Doran

55.  If I can just follow that, Chairman, with one final question. Not only does it seem, certainly to me, you have paid an inflated price for the land but you have accepted also that you have bought the property with conditions which are very hard to understand. I can understand you have no control over the conditions attached by the Hilton hotel chain, which are possibly something to do with their contractual relationship with Wembley Plc, but why was money paid, this sort of money paid, in a situation where you are required to return 7 acres—it might be more or less, that is the figure I have been given? Do you get any compensation for returning that 7 acres or does it just get lost? It is a quarter of the site if my figures are right.

  (Mr Cunnah) First of all, let me clarify that the solution Coopers & Lybrand gave was a range that included the purchase price, so it did support the fact that that was a reasonable price to pay for the business. Also the hotel business was really quite peripheral to the business plan.

56.  Despite that, WNSL spent over two years and an awful lot of money pursuing that option?

  (Mr Cunnah) I again would need to check. I do not think within the design of the overall stadium that the hotel would have been a major feature of the design or the design costs. Also the land which reverts to Wembley Plc is not part of the land that we purchased. It is just land that in the purchase and sale agreement Wembley Plc allowed us to access during construction in order that construction could happen most effectively.[12]

57.  That does not hold together with what you said earlier. You said you had negotiated with Wembley Plc access rights. What we are talking about is the land you paid £106 million for, a part of which you will lose if you do not start work with the approval of Wembley Plc in December.

  (Mr Cunnah) Correct.

58.  When I asked if that were lost and the Chairman asked whether if that were lost you would carry on with the stadium, you said it was not possible.

  (Mr Cunnah) No, let me try to clarify. There are two parcels of land, the large parcel that we have acquired that the stadium will sit upon—

59.  With no conditions attached?

  (Mr Cunnah) The conditions that we talked about re the hotel etcetera, but that is our land. There is then another parcel of land which borders the parcel that we have purchased. The construction comes right up to the edge of the piece of land that we have purchased and the constructors need access to Wembley Plc's land to finish their construction, therefore that land (which always remains in their ownership but to which we have access during the construction period) is the part that goes back to them. If we do not have that land available during construction we do not lose our land but we will have to think again in terms of how we build the stadium under those circumstances.[13]

  Mr Doran: Chairman, that is an area on which we need a lot more clarity. Thank you very much.

10   See HC 164 (1999-2000), paragraph 10. Back

11   Note by WNSL: see supplementary memoranda submitted by Wembley National Stadium Limited set out after this oral evidence, p 42. Back

12   See Q4 and related note. Back

13   See Q4 and related note. Back

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