It’s deja vu over at Salford City Council as officers have signed off on another £857,000 to the company which owns the AJ Bell Stadium and the land around it in Barton, Eccles.
The terms of the loan will run until 21 March 2016.
As per earlier agreements, Peel Holdings, who jointly own the stadium company with Salford City Council, will match the loan, taking the total lending this time to £1.714m.
A council source suggested the money had likely been borrowed, rather than coming from existing budgets, because councils are able to borrow at low rates of interest.
The stadium – home to Salford Red Devils and Sale Sharks – was built with a £22m loan under a 50-50 joint venture agreement between Salford City Council and Peel Holdings.
The two bodies, one public, one private, have had to bail out the stadium company with six-figure sums on at least four occasions.
Peel and Salford City Council lent £600,000 each in ’emergency funding’ in 2013, followed by a further £410,724 in February 2014.
The council have apparently endless civic funds to lend to the stadium company, because they’re in a bind until all that land around the stadium starts to pay off.
They won’t go into any more details about why the money is needed – they’ll argue commerical confidentiality.
The size of the loan is down to ‘cash flow’ issues, according to a council spokesperson.
It’s the same explanation as given in August 2014 when Salford City Mayor Ian Stewart signed off on a £275,000 loan.
That arose because a payment of £1 million in ‘captial receipt’ from the sale of 1.3 acres of land off the A57 Liverpool Road to the UK’s largest pub and restaurant chain Greene King took ‘longer than anticipated’ to come through.
Greene King are in the process of finishing the build on the Barley Farm pub, which its hoped will be a destination pub for Salford rugby supporters.
Mr Stewart said at the time: “It will…be the catalyst for the sale of more land around the AJ Bell Stadium and bringing this former derelict wasteland back to life.”
The 40 acres of brownfield land around the stadium has been valued – by the council – in the region of £25m.
Land values are thought to have increased from a couple of hundred thousand pounds per acre to nearer £1m per acre since the stadium was built.
Peel’s giant road, rail and canal distribution hub, Port Salford, is in the process of being completed.
The council’s rationale is that when the new A57 link road is completed, these parcels of land will look even more attractive to investors.
The completion of the road itself was delayed by over a year because of fears the rail bridge would not be able to withstand the weight of freight trains coming into Port Salford.
A Salford City Council spokesperson said: “The stadium was always built with the community in mind and employs more than 250 people, directly and indirectly, through its supply chain.
“It is a major catalyst for regeneration and while this continues it is no different from any other business that needs cash flow support to get fully established.
“As such, the City Mayor has approved a loan of up to £857,000, up to 21 March 2016. This loan will be matched by The Peel Group, who are joint owners of the stadium company.
“The stadium company will continue to make £1.503m of repayments and interest back to the Salford City Council in the same financial year.
“The community is already seeing the benefit and when Port Salford and the new A57 road scheme are complete it is expected that 5,000 more new jobs will be created in the city.”
The issue being – members of the press are given scant information on these loans. Members of the public are even less well-informed.
The decision can’t be called in by councillors unless there is some issue with the technical procedure of loaning money back to the stadium company.
Essentially, the good of the club, and the stadium, is the good of the city. Frustration is abound that it’s presented as a fait accompli.
Main image © MARKDJ Photography