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Coventry City open negotiations to buy half share of The Ricoh Arena

27 Oct 2011 09:49:20

Coventry City open negotiations to buy half share of The Ricoh Arena

Council's half share is not for sale

Coventry City have entered into negotiations with The Higgs Charity with the view of buying their 50% share of The Ricoh Arena.

There are numerous problems to overcome even before serious talks can begin, but the club has admitted that they have work to do before they would be considered as responsible owners.

Last week club chairman Ken Dulieu said they were close to securing the funding to enable them to buy a 50% share of the arena. The club has the option to buy all or part of The Ricoh Arena as part of their lease agreement.

The talks are in the very early stages at the moment and no news is expected for some time, but the club hopes to be able to say more on the subject by Christmas.

Coventry City council, who own the other 50% share have resolutely refused to deal with the current owners of Coventry City Football Club, Sisu and have made it clear that their share is not for sale.

It is understood that one of the stumbling blocks is the lack of transparency about who actually owns the club and both The Higgs Charity (sometimes erroneously called the Higgs trust) and the council are keen to know the identities of the owners as well as wanting assurances that the club has a workable business plan that included long term plans for  the regeneration of the area around the arena.

Should an agreement be reached between the club and The Higgs Charity to buy their 50% share, the council would still have the right to veto a deal if they felt is wasn't in their interests.

The leader of Coventry City council, councillor John Mutton is demanding to know more about Sisu and their long term plans and commitment to Coventry before he will even begin to consider dealing with them. He has also reiterated that the council have no intention of selling their half share at all, not to the club, Sisu or anyone else.

Councillor Mutton did offer some hope though and said the council would not veto any deal The Higgs Charity and the club reached if the deal met certain conditions.

The conditions would include proof that sufficient finances were in place, guarantees of the long term regeneration of the land adjoining the stadium which has already been earmarked for leisure use. The council would also need to know that The Higgs Charity were satisfied that they knew who the real owners of the club were.

The council clearly have little or no confidence in Sisu at the moment and this is the biggest problem facing the club's ambitions of buying a share in The Ricoh Arena and will make the negotiations even harder than they already are.

Speaking to the CT, Councillor John Mutton said, “I think the comments that have been made (by Ken Dulieu) are correct, that they would have to demonstrate that they have a business case that can turn things round. At the moment I can see no sign of that and, of course, the Ricoh wasn’t built purely for the benefit of the football club.

"It was built to regenerate a run-down part of the north east of Coventry to create jobs and we would want to see a commitment from potential future owners of the Ricoh that they share in the views that both the council and the Higgs Charity have expressed for redevelopment for the area.”

The redevelopment of the five acre site next to the stadium is a major stumbling block as considerable investment would be needed to develop the site, possibly with facilities including a dry ski slope, that will generate profits for all parties involved, including the council, The Higgs Charity as well as the club.

Even if a deal could be brokered, Councillor Mutton still insisted the council would retain their half share in the stadium.

He said, “If they showed that kind of commitment the council’s 50 per cent share still isn’t for sale but it may be that the council wouldn’t stand in the way of the 50 per cent owned by the Higgs Charity. We want to know who the owners are, have they got money to invest?”

Councillor Mutton was asked if the council would sell to another buyer and he replied, “Not at the moment, no.

He went on to explain, “We haven’t taken any dividends out of it even though it is making a profit each year because the ACL board had to take out a loan of £21million to pay the council back what we put in over and above our investment stake.

“So we haven’t taken dividends to enable them to get their debt to the bank down and I don’t see why we would want to sell knowing that at some stage there will be dividends coming out of it that we can use to pay for front line services without having to increase the level of council tax for the people of Coventry.

"They are the ones who invested the money, or we did it on their behalf, in the first place so they should benefit from it. So why would we take all the risks we did take when we built it and then sell it off to someone else to enjoy the profits? So it is most unlikely and I would certainly have no intention, at the present time, of even considering it.”

The Higgs Charity confirmed that Coventry City  have started talks over the the option to buy a 50% share of the stadium,  but, like the council, they have also said they require the club to provide proof that they have the funding and business plan and they want to know who are the real owners of the club.

Concerns over who owns Coventry City were even raised in parliament when conservative MP  Damian Collins,  who is a member of the Commons committee looking into how football in England is run, wrote to the Sports Minister Hugh Robertson expressing his concerns over the ownership of the club and wanted to know more about Sisu Capital.

He said, “In the case of Coventry City it didn’t seem to be clear who the ultimate owners of the club were. I took this up with the Football League to ask them and they confirmed to me that because no individual investor owned more than ten per cent of the club they didn’t know who any investors in the club were.

“I thought that was very unsatisfactory. We’ve got to know who those investors are.”

Both the council and The Higgs Charity have the same concerns and the Clerk to the Trustees of The Higgs Charity, Peter Knatchbull-Hugessen, said, “Every statement made by the charity or the council comes back to the same thing which is first.

"We have got to know who the people are  and we are going to be tougher than the Football League and secondly, we want to know that they are running a sensible operation that has a sensible business plan before we go anywhere. And the chairman has acknowledged that.”

Last week Coventry City chairman Ken Dulieu revealed he would like to be able to give some positive news about the purchase of part of The Ricoh by Christmas, but he did admit in an interview with the Daily Mail, “My difficulty is that I have to overcome a lot of hurdles for people to gain confidence in us. The first stage towards gaining credibility is putting our own house in order to prove we can run a football club.

"The second thing is: Have we got the funds? When I have those funds and we are quite near that at present, then I will approach the Higgs Trust and Coventry City Council. We have an on-going dialogue with the Higgs Trust. We have had a very positive meeting with them.”

Knatchbull-Hugessen,, for The Higgs Charity confirmed that there had been a “positive” meeting.

He said, “My view is that, at last, someone at the club has realised that it isn’t just about getting the money, it is about proving that they would be good partners.”

Mr Dulieu emphasised the importance of owning their own ground saying, “I think logically, you would want to control the whole brand. I don’t know how many of the 92 clubs don’t own their grounds.

"I would say it’s very few. But if that’s the case, it’s very difficult to control your product. This needs to be ‘Club Coventry.’ It’s not an overnight situation. I can understand from the council’s point of view that we are serious and financially responsible and that there is job creation on the agenda too – not just for the club.

“We want regeneration, not just for Coventry City FC. but for Coventry and its surrounding areas.”

This raises the issue about even more funding. Even if the club has raised the money to buy half of The Ricoh Arena, it would then have to find the money to redevelop the five acre site and to do that, it would need to find a business partner.

There is little doubt that there is massive potential to make considerable profit from developing the site and running the resulting leisure complex, but finding partners who will work alongside Sisu may prove difficult.

Mr Dulieu finished by saying, "That is where there is huge potential to make money rather than mere ownership of the stadium which is widely held to be of little economic benefit to the club on its own, given that it currently only makes about £500,000 profit a year after paying off part of its bank loan."

 


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