SportBusiness International

Analysis and insight for the global sports business

Wembley sale | FA chairman Clarke issues update to council members

Wembley sale | FA chairman Clarke issues update to council members

SportBusiness International team's picture
By: SportBusiness International team

Posted:
24 May 2018
Article
  • LinkedIn
  • Print

The Football Association chairman, Greg Clarke has written a letter to FA Council members about the potential sale of Wembley Stadium and provided them with a Q&A to answer some of the questions raised about the offer. The association has granted SportBusiness International permission to publish the Q&A in-full to explain the rights-holder's thinking.

How did this offer for Wembley Stadium come about?
The Jacksonville Jaguars have been long term users of Wembley Stadium for one or more of their regular season NFL matches over a number of years. As that relationship has developed they have made no secret of their ambition to bring the franchise to London. They have always had a great experience of playing at Wembley Stadium and the conversation about what long-term options were available has evolved. Over the last year this conversation has become more serious to the point when a formal and very credible offer was made. It was not directly solicited on our part.

Why are you considering selling Wembley Stadium?
This offer is being considered because The FA Board believes it to be serious and credible. It represents a potential opportunity to invest in the game’s number one challenge, the poor state of community football facilities, whilst not undermining Wembley Stadium’s status as the home of English football. There are of course many questions to be resolved if a deal is to take place, but the Board had a responsibility to consider the offer further.

Does this offer represent fair value for Wembley Stadium?
Valuing a national stadium is not easy, that is why we have worked on this for many months with Rothschilds. This was not the first offer we received from the bidder, but it is the first one to the value we were prepared to present to The FA Board and Council. The valuation is higher than the value registered in the accounts, and is made up of an initial cash payment of £600m and would also include The FA continuing to own Club Wembley and its revenue stream, which is valued at around £300m over its future life time. If accepted The FA would no longer be responsible for the significant operational and capital expenditure costs of the stadium. However, The FA would retain the income from our FA generated events, such as England and Emirates FA Cup matches, even if the stadium was sold. In that sense, we would be divesting of the ongoing cost and liability of owning the stadium and retaining our existing revenue – which would all now go back into football. In addition, The FA offices would also remain in the stadium.

Why do the deal now when the debt is nearly repaid?
It has of course been a challenge to The FA finances to repay the debt on the stadium over the last ten or so years. In January this year we committed in our forward plans to have cleared that debt by 2024. The money needed to do that is in place (thanks to the international broadcasting deal of the Emirates FA Cup) irrespective of this potential sale. Once that debt is cleared The FA will be approximately £3m a year healthier (saving on interest payments), a positive outcome but not a transformational one. Even debt free, there is a limit to what additional profit can be generated from owning the stadium when capital and operational costs are considered.

Why don’t you just rent the stadium to the Jaguars?
A rental arrangement has been looked at, but this in reality is the worst of both worlds. We would face limits on the use of the stadium in the autumn and winter months, but with no upside in terms of a cash lump-sum or diminished operational or capital costs. The value of a rental agreement would not be transformational to the profit and loss of the stadium and likely create additional operational and management stress to the organisation.

Is The FA looking for other potential buyers?
It is important that in considering this deal, which of course involves public money, that we are as transparent as possible. If we do decide to proceed it is important we can demonstrate that this is an open process that ensures best value. However, as of writing we have not received any other bids.

The FA is in good financial health, why sell a valuable asset?
That is of course one of the key judgments we need to make. This is not a distress sell, we do not need to do the deal, but we must consider whether it is an opportunity worth taking. Wembley Stadium is a unique asset, and whilst valuable to us, the market for those who might be willing to invest in it in the future might be small. The foresight of those who invested in the stadium and made it a reality might be best realised now when the offer is on the table. It’s always important to remember that The FA is a not-for-profit organisation with a primary responsibility to promote and govern all of English football. Therefore switching our asset value from a stadium into community football facilities might be the right thing to do. That is the choice.

Is this selling the crown jewel of The FA or, as some have said, the "soul" of English football?
It’s important to remember that The FA did not own Wembley Stadium before 1999, so this is not a historic situation we are unwinding. There are very few national governing bodies that own and operate their own stadiums. We did not own it in 1966 or 1996. The emotional reactions and arguments are entirely understandable and that is why it is important that any owner of Wembley Stadium respects its role as the home of English football. However, many also argue that the real "soul" of English football is in clubs, leagues and volunteers up and down the country and that should be where The FA should focus its investment.

What restrictions would you put in place to ensure Wembley Stadium is protected in the future?
This is crucial to any deal that we potentially agree. In partnership with the public sector funders we would seek to ensure that all of the existing public sector funding protections would roll forward. This includes the block on renaming Wembley Stadium, sell on approvals, and future usage. Simply put, any new owner would be subject to the same protections as The FA has been over the last 19 years. This would include ultimate Secretary of State approval for any re-sale should the Government wish to extend this protection. In addition, long-term staging agreements for FA events and the other key Wembley Stadium events would also be written into any deal.

What will you do with the money generated from a potential sale of Wembley Stadium?
If we did decide to sell Wembley Stadium the proceeds would be used to support a transformation in community football facilities investment. The provision of football facilities is consistently cited as the main issue impacting growth and retention of grassroots participants. The lack of good pitches is highlighted as one of the biggest barriers to long-term sustainable success for the England teams in the future. Currently only one in three grass pitches are of adequate quality to play football in England, and this season just gone one in six matches were cancelled due to poor facilities – this is simply not good enough. We believe that The FA, alongside our partners the Premier League, invests more money into grassroots facilities than any other football governing body in the world. Our track record of investing in facilities is excellent. Our challenge is that the money we invest each year, albeit significant, is not making the transformative difference that we want to see. Only a significant development, such as selling Wembley Stadium, which would enable us to make the single biggest investment into grassroots football by any sporting body in the world, might make a real difference.

Can The FA be trusted to get the money to where it is needed?
Yes because we’re building on a track-record of delivery. Significant progress has been made since 2000 when The FA, The Premier League and DCMS (Department for Digital, Culture, Media & Sport) entered into its football facilities partnership. £605m has been invested by the funding partners delivering outstanding outcomes: 700 new and improved artificial pitches, 3,500 grass pitches improved and 1,000 new and improved changing pavilions. 6,400 grassroots clubs play at funded facilities. Every corner of England has benefited with 321 of the 329 local authorities in England having received funding and £135m has been invested in the most deprived communities. This is a great start and, through the development of Local Football Facilities Plans for every local authority by 2020, we will be able to take any new funds and ensure we build great facilities in the communities where they are most needed as quickly as we can.

How much did government invest in Wembley Stadium and will they ask for their money back?
Public stakeholders invested a total of £161m to build Wembley Stadium through three channels – Sport England invested £120m via Lottery money, the DCMS invested £20m, and GLA (Greater London Authority) invested £21m. The FA hopes that all funds will be rolled over and made available to invest in football facilities. Early indications are positive on this front but discussions continue with all parties.

Would The FA have to repay those who help fund the building of Wembley Stadium?
We are already in discussions with our public funding partners about what they would potentially do with their stake. All three – Sport England, the DCMS and the GLA – are existing partners in our grassroots facility investment programmes and we are optimistic that they would see the value in refocusing their investment back into grassroots football.

Was it a mistake to build Wembley Stadium in the first place?
Absolutely not. England now has one of the best stadiums in the world – just ask Uefa who have chosen Wembley Stadium to stage 7 matches in the 2020 European Championship including the Semi-Finals and the Final. The FA owns Wembley Stadium and we are in a strong position, in collaboration with key stakeholders in the game, to decide whether it is right to sell the stadium and invest the money directly into grassroots football. Uefa has made it clear to us that they do not see any sale impacting their positive view of the stadium.

Would England still play their matches at Wembley Stadium?
England matches will still be played at Wembley Stadium. When the stadium is not available to stage England matches then we will take the team on the road. Many top-class national teams don’t have their own national stadium and they play their games in club stadiums around their country. When we have done it in the past it gives other areas of the country the chance to see the team. If the Jaguars move permanently to London the autumn internationals will be taken around the country which will enable more supporters to watch the team.

Would all of the major FA competition matches still be played at Wembley Stadium?
Yes, this would be part of the contractual agreement. In addition, the long-term EFL deal in place to stage the Carabao Cup Final and the EFL Play-Off matches at Wembley Stadium, as well as agreed RFL and National League games, would be honoured as part of any agreement. The stadium will also continue to be available for global football competitions.

Will The FA continue to set the ticket prices for Emirates FA Cup Semi-Finals, Final and England matches?
Yes, we would continue to set the prices for these matches.

Would the proposal include a partial leaseback to The FA to cover a number of events days? How many event days would this include? And how long would the term be for?
Rather than a leaseback arrangement we would contract to use the stadium for all our key FA events. This would be a long term staging agreement similar to the one the EFL or RFL for example have with The FA at present. All of these details would be subject to negotiation.

Will permanent modifications be made to Wembley Stadium, including structural changes, branding, and stadium naming rights?
Any new owner may look to make changes to the stadium but we would seek to ensure that they would be subject to the same long-term restrictions placed upon us by the public sector funding partners. This would include no naming rights deal.

What research (or polling) has taken place to consider the views of fans, the general public and those in the Affiliated game?
Over the last fortnight we have surveyed and consulted with just over 4,000 people across the country to better understand their opinions of the potential stadium sale. It is clear that vocal minorities hold strong opinions both for and against the potential change in ownership of Wembley Stadium. Through our research with a variety of groups (general public, general sports fans, sport influencers on social media, affiliated league and club officials and grassroots players) what is clear is that most have some interest in the "story" but remain somewhat neutral in their opinion towards the potential sale. When presented with the outline of the reinvestment plans the neutral group is supportive of the sale albeit with some reservations whether the money would actually be invested specifically in their local area. In terms of the overall combined results, the split of sentiment towards the potential sale of the stadium is 23% Positive, 30% negative and 47% neutral. Interestingly the highest outright positive score (47% positive) comes from those within the affiliated game that hold three or more roles i.e. player, coach and club official.

Who has the final decision on the potential sale?
The FA Board will make the final decision; however, they will reflect the views of all the game's stakeholders they are elected to represent, of which The FA Council is the primary voice. This needs to be a decision made by consensus following thorough consultation. Following any potential FA Board decision there would then be a requirement for approval from each of the public sector funding bodies as well.

What is the process from here?
Consultation is ongoing across the game. We will take the views and feedback that have been expressed and continue to work with representatives of Mr. Khan on a potential deal. If the terms of a deal can be reached that look like they meet the requirements of the game this will be reviewed by The FA Board and discussed by The FA Council prior to any final decision. This is likely to be in the autumn at the earliest.

Back to top