Concerns have been raised about the cost of an arena planned for Cardiff Bay, with a heritage group claiming there could be a funding gap of more than £60m.
Cardiff council, which is developing the project in partnership with a private sector consortium, says it has “strong confidence” that money loaned to the consortium will be repaid.
Lyn Eynon, of Cardiff Civic Society, said: “We have been trying to find out how much the new indoor arena would cost the city and whether the claimed benefits will be realised.
“Most of the information about this is hidden from residents – who will have to pay the bill – in confidential appendices to cabinet papers.
“We have submitted Freedom of Information requests to get to the truth, but the council is stalling on its obligations.
“Some information has nonetheless filtered out. The council has accepted from the time of its choice of Atlantic Wharf as the location for the arena that, while it should not require an ongoing operational subsidy, arenas are not sufficiently profitable to cover the substantial capital costs required for new-build projects, and that an element of public funding would be required.
“The question is how much.”
The council has quoted £150m as the cost of building the arena, but the civic society thinks will be more than that
Detailed costings in the authority’s capital strategy for 2022/23 suggest the total outlay may be £187.7m, but there are further costs on top of that which the civic society believes may take the final figure to £200m or even higher, with construction costs rising sharply.
Mr Eynon said: “The council papers claim the arena will be fully funded by annual lease income from the arena operator, although council leader Huw Thomas has previously accepted that the council will cover around 15% of the cost.
“But the description of row 85 in the spreadsheet implies that lease income will cover only the cost of borrowing for direct funding. If so, the council would carry at least 30% of the cost, or upwards of £60m.
“Another view of this comes from the Capital Financing Requirement table, which includes an item ‘Arena Affordability Envelope’ which rises to £246m by 2025. After that it falls by £4m a year, suggesting this is what the council expects as revenue from the lease income.
“A 46-year lease has been proposed, implying a total lease income of £184m, confirming a shortfall of around £60m, even if costs do not rise.
“The council should put all the facts in the public domain so that citizens can see how their money is spent.”
A Cardiff council spokesman responded: “The indoor arena will be delivered through a public-private partnership with the Live Nation/OVG consortium.
“The council will provide the finance for the development up to an agreed cap, with Live Nation/OVG committing to provide the revenue to service the debt, secured through a long-lease agreement.
“Live Nation/OVG will also be responsible for funding any increase in costs over and above the agreed council cap, including any increases arising from inflation. This commitment from Live Nation/OVG has been underpinned by a parent company guarantee from Live Nation Entertainment Inc, a global company with a c£12bn annual turnover, which gives the council strong confidence that the finances will be fully repaid as agreed.
“The Live Nation/OVG consortium has already committed to spend a significant amount of their own capital over and above the council’s financial cap to improve the specification of the building and to deal with inflation. The arena will now have a capacity of 17,000, up from 15,000, making it one of the UK’s leading live entertainment venues, operated by the world’s number one operator.
“The specific details of how much the project will cost remains confidential at this stage because the consortium is in the process of negotiating contracts to deliver the project.
“It is clear, however, that the investment in this project will deliver significant additional benefit by kick-starting the plans for Atlantic Wharf and the wider regeneration of Cardiff Bay, bringing new jobs, investment, and visitors to the area.”
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