Liverpool council innovates with funding deal for Everton FC stadium
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Photo: Ben Sutherland, Flickr
Liverpool City Council (LCC) has agreed an innovative funding deal to effectively underwrite the development of a new home for Premier League football club Everton FC.
The authority has reached agreement with the club and site owner Peel Land and Property (Ports) to allow a new stadium to be built at Bramley-Moore Dock, a waterfront site north of the city centre.
The deal will effectively see the council paid millions of pounds a year in order to guarantee Everton’s repayments on the loan it needs to fund the stadium.
A statement by the council said: “This project provides a once in a lifetime opportunity to consider Bramley-Moore Dock as a location for EFC’s new stadium and maximise regeneration in north Liverpool.”
Initial studies conclude that the full development cost of a new 50,000 seater stadium with associated facilities and infrastructure will be in excess of £300m.
In a complicated arrangement, Peel will grant a 200-year head-lease on the land to the funder of the new stadium.
That funder will then grant a lease to a new city council special purpose vehicle, which will in turn grant a 40-year lease on the stadium to the football club.
At the end of the 40-year term, Everton will have an option to acquire the leasehold interest in the stadium from the funder.
A report by council officers said: “In this way, LCC is securing, not financing, the lease obligations of the wholly owned LCC SPV”.
The deal will not cost the council a penny, unless the club defaults on its rental payments.
To mitigate this risk, the club will pay the council rent of up to £5m a year more than the rent paid by the council to the landlord.
This “security package” will comprise two accounts. The first will be used as security for the payment of Everton’s rent, and will receive all revenue from season ticket sales, hospitality fees and naming rights. The club will only be able to access the account once the rent for the forthcoming year has been paid.
Everton will also be required to pay into a rent deposit account for five years, used as security for the club’s future rental payments.
Accountancy firm Grant Thornton has assessed a business plan prepared by Everton, which forecasts revenue, operating costs, cash flow, funding and cash balances for the next three years at Goodison Park and then for the 40- year lease period in the new stadium.
Grant Thornton said: “Analysis and interrogation with the club has evidenced that the business plan is relatively robust and is based on sensible assumptions backed up by analysis and evidence where possible”.
The council said that the security fee will be reinvested in vital services/projects “that support the most vulnerable and or grow the city’s economy”.
