"Council agrees multi-million pound bailout of Ricoh Arena"

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Coventry City Council has today agreed a dramatic £14million plan to bail out the Ricoh Arena stadium company amid an ongoing dispute with the Sky Blues.

Leading councillors said they are intervening with a new loan arrangement to safeguard “a publicly funded asset” and protect Arena Coventry Ltd, the company half-owned by the council and the Alan Edward Higgs Charity.

ACL has been affected by Coventry City Football Club’s refusal to pay over £1m in rent since March last year – now the subject of legal wrangling.

There had been speculation that Yorkshire Bank – which provided funding for the development of the stadium with a £21m mortgage – was considering calling in the debt because of the uncertainty over the rent issue.

This could have left the door open for Sky Blues’ owners Sisu to buy the Ricoh at a knockdown price.

A full council meeting this afternoon unanimously approved the plan in private business – with no discussion in public – for reasons of “commercial confidentiality”.

The unprecedented and historic move will see the council pay off the outstanding mortgage with Yorkshire Bank – thought to still be a significant proportion of the original amount – with the council effectively becoming ACL’s bank, according to council leader John Mutton.

ACL will pay back the council in instalments over a longer period at lower interest rates.

No further financial details about the loan arrangment – or any council borrowing to enable the move – have been made public but the council claims the deal will bring a “net surplus to council taxpayers”.

Council leaders say they want to safeguard what is a “publicly funded asset”, designed to bolster the Coventry economy and create jobs.

In a statement issued to the Telegraph, council leader John Mutton said: “We’re now effectively acting as a banker to ACL, which will see the council pay off the current loan arrangements with its current lender the Yorkshire Bank.

“There is no net cost to the council – this is a commercial arrangement that will provide a modest surplus to plough back into services and jobs.

“This loan is not about putting money into the football club; no cash is being put into CCFC by the council; this would be unlawful and inappropriate.

“We’re working with ACL and ACL’s bankers to restructure ACL’s loans over a longer period, so it can provide a solid business platform now the club has been relegated to League One, although of course we all hope we will soon be moving back to the Championship.

“As a result, the interest that ACL now pays on its loan will go to the council, some of it helping to support jobs and services, rather than to the bank.

“It’s up to ACL and the club now to find a way forward on the rent issue; we know that ACL is totally committed to doing this, and we hope the club’s owners will be committed to doing so too.”

Coventry City fans’ groups, and Conservative councillor John Blundell, have publicly stated in recent months that Sky Blues owners Sisu’s refusal to pay its monthly £100,000 rent could potentially push ACL into administration.

Were ACL to go into administration, the stadium could potentially be sold at a lower market rate.

Coventry City Football Club chief executive Tim Fisher recently publicly speculated ACL could be heading for administration.

He blamed other ACL financial pressures including loss of income from stadium sponsorship and naming rights.

He and Sisu have insisted the £1.2m annual rent is too high, and were last year in aborted discussions to lower it and for the club to buy at least a half stake in the stadium. ACL’s most recently filed accounts last year showed profits of £470,000.

The loss-making football club, relegated last summer, has long maintained acquiring revenues from the stadium is vital to its future.

Coun Mutton’s statement added: “We have taken a decision that will benefit city taxpayers and secure the future of one of our most important and best loved public assests that brings great benefits to Coventry people.

“Not many councils would have done what we’ve done, but I’ve always believed that councils can – and should – be prepared to take bold and radical decisions when that is the right thing to do.”

He said Labour councillors have never regretted a council decision in 2003 to enable the stadium to be built by taking out a loan.

He cited securing Olympic football and showcase concerts including by home city legends The Specials as “great experiences”, with more to come.

Councillor Lynnette Kelly, cabinet member for city development, said: “The council is playing a facilitating role, assisting Arena Coventry Ltd to stabilise and prosper in the future, but without subsidising either ACL or CCFC from public funds, which would be irresponsible and inappropriate in the current economic climate.”

ACL is jointly owned by the Alan Edward Higgs Charity and Coventry City Council, which owns the stadium freehold, and land around it long earmarked for a revenue-spinning hotel and leisure complex. ACL last month secured a “statutory demand” against the Sky Blues that it must pay £1.1m of unpaid rent in full.

A 21-day deadline attached to the statutory demand has now expired. It could have enabled ACL to apply to the courts for a winding up order against Coventry City Football Club.

Mr Fisher recently pledged Sisu would step in to prevent the club being liquidated. ACL in November proposed a package of lowering the rent to £400,000, allowing the club to pay back rent arrears over ten years, and the club taking some matchday stadium revenue.

The club claimed that rent offer was still too high, saying the average Division One rent was £170,000 – close to the £250,000 it claimed it was continuing to pay to cover some matchday costs.

Talks also collapsed between Sisu and the Alan Edward Higgs Charity over the club obtaining its 50 per cent shares in ACL.

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Ricoh company welcomes council decision

Reacting to the news that Coventry City Council has today agreed a dramatic £14million plan to bail out Ricoh Arena stadium company ACL, a company spokesman said: “We are very pleased that Coventry City councillors have made this decision.

“For ACL, it will help provide greater long term financial stability and certainty to our business - which has a proven track record of attracting inward investment and driving regeneration in the city of Coventry.

“But the ACL Board also believes that it will benefit the council taxpayers of Coventry by strengthening an asset which will generate income for the city for many years to come.

“This decision is good news for the Ricoh Arena and good news for the great City of Coventry.

"We now hope that CCFC’s owners – the Mayfair-based hedge fund Sisu – will take this opportunity to engage with us properly to resolve the rent dispute.

"We also hope that they will present to the Board of ACL a workable financial and business plan which will put CCFC on a secure and proper financial footing for the long term.”

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Tories backed council's stadium move

The Tory group of 11 opposition councillors at Coventry City Council voted unanimously to back the deal.

Group leader Kevin Foster said that it was now time for SISU to constructively negotiate CCFC’s future.

Conservatives had refused to sign a confidentiality agreement which gagged 43 Labour councillors from publicly disclosing details of months of sensitive negotiations between the council. ACL, the football club and Sisu.

But the Conservatives joined Labour councillors in deciding not to comment publicly about the bailout until the deal was approved in private.

Coun Foster said: “It is clear that something radical needed to happen to put ACL onto a firm financial footing for the future.

"Over the last year we had been calling on the city council to take action and be more open about moves being made to secure its future, as well as the council’s shareholding in it.

"This included the city council being realistic about the need for a cut in the rental payments from CCFC. Yet we also believe that SISU should not be rewarded for simply refusing to pay any rent and backed legal action by ACL intended to force them into paying up.

“Ten years ago I refused to back a financial package for the Arena that I believed was unrealistic and unsustainable due to the elements affecting the football club.

"Moving to a new stadium should have been part of bringing a new era of long term success, yet a decade of disappointment culminating in relegation to the third tier of English Football has been the result.

"I hope today marks a new start for the Ricoh and CCFC, it is now time for SISU to engage constructively about the future. The whole of Coventry will be looking at their reaction.”

In relation to the confidentiality that surrounded today’s vote, he added: “As a group we believe our actions as councillors should always be based on our oaths of office and duties to our constituents, not any separate deal signed behind closed doors.

"That is why we refused to sign the now infamous 'gagging order' on ACL when asked to do so last year.

"Much of the information it covered we were able to deduce and it set a worrying precedent for the future.

"My group has not signed it, but following detailed briefings we were prepared to accept that the public interest would not be served by certain details being released prior to the vote taking place today.”