Council Leaders Statement On Coventry City

Lord Mayor, it is appropriate that I make a statement as Leader of the City Council about Coventry City Football Club.

Over the last 10 years, the City Council has been working with the football club and other partners to regenerate the old gas works site in the north of our city.

Based on the decision this City Council made in October 2003, all parties have worked hard to ensure that we built a premiership facility for a premiership city that deserves a premiership team!

The financial problems that the Club faces are well known and lf long standing. Over the last few weeks these have been coming to a head. The Club desperately needs a new private sector partner to inject investment. It is clear that the City Council cannot determine the future of Coventry City Football Club. That is down to the Club themselves and the Co-operative Bank, who have a charge over their assets.

The Ricoh Arena has met and exceeded all our objectives and outputs that we set for it as a City Council. In regeneration, environmental improvement, job creation, image and promotion, etc, it has been an enormously important scheme that demonstrates how the city is changing for the better.

The City Council has been a key leader in this process, but the City Council cannot be involved and take responsibility for the financial affairs of the football club.

Even the most ardent supporters of the football club, now understand the scale of CCFC's financial problems. I now believe that they, and the city as a whole, believes and understands what the City Council can and can't do to help.

Coventry City Council is the freehold owner of the whole arena site (other than the Tesco development). The City Council - through a 100% owned company - developed and now owns the freehold of the arena and the land it occupies, plus an adjacent 5-7 acres of land north of Tesco on the east side of the railway line.

When CCFC couldn't deliver the promise of the new arena, the City Council had to step in if the city wasn't to lose the benefits of regeneration it sought.
The City Council therefore became the developer of the Ricoh Arena - and Council will remember we had to take the risk of delivering of that arena and bear the impact of any changes in costs. This we did.

CCFC were originally our 50/50 partner in ACL (Arena Coventry Limited) that has bought a 50-year lease from us to operate the Ricoh Arena.

At their own volition, and as a consequence of their ongoing financial difficulties, the football club sold its 50% shares in ACL to the Higgs Charity - and with it the football club's rights and benefits in the long-term returns and incomes from ACL.

The income streams to ACL had been agreed with CCFC when they were effectively leading the project. Attributing such income streams to ACL was absolutely essential if ACL was to be able to secure its own finance, but the football club hoped to benefit from the significant non-football income that the Ricoh Arena generates.

Again - and as a direct consequence of its own financial position - the football club had to sell the assets, which were so important for their future.
It has been said that the Council is taking money out of ACL and therefore indirectly from the football Club. This is simply not the case - the City Council has no figures in its financial plans reflecting a cash return on its investments. The agreed plan is that all profits which ACL make go to meet its costs and to repay the loans taken out to equip the Arena. Many of these costs would fall on CCFC if they owned and managed the Arena.

Members will be aware that over perhaps the last 9 months, the football club has been looking to attract a new financial investor and/or a take-over.
It is now publicly acknowledged that the finances of CCFC are in a worse position than they were 12-18 months ago and significantly worse than perhaps the public and the football supporters had appreciated.

Whilst the football club has significant debts, it is also trading at significant on-going deficit - simply its income falls well short of its expenditure and the football club's bank and its key creditors know that significant changes have to happen to secure the future of football in Coventry.

The City Council has no - and can have no - direct involvement in the operation or financing of a private commercial company that is Coventry City Football Club.

ACL as a separate legal and commercial entity and CCFC's landlord has tried to be as pro-active and supportive as it can in helping CCFC sort out its own destiny.

The ACL Board agreed it would be prepared to talk to possible new investors/owners of the football club on 4 criteria: -
1. that a deal had been agreed between the new investor/owner and the football club and Co-operative Bank to secure the long-term future of football in the city. If this was agreed then ACL had three follow-up criteria;
2. clarity and confirmation that the Ricoh Arena could continue to play a key role in the regeneration of particularly the north of Coventry;
3. that the new investor/owner could bring added management strength and expertise to the operation of the football club and the arena, and
4. that the new investor/owner had both the necessary financial resources to carry forward the take-over and could also finance any necessary appropriate acquisition of interests or shares in ACL (recognising that both shareholders had to achieve clear and transparent value for the investment that they had made in the arena).

Only when the ACL Board had come to a conclusion that these criteria could be met and that proposals were forthcoming that would be of interest to their two shareholders would they make recommendations to their shareholders accordingly.

After many months of abortive discussions and meetings, it is now publicly acknowledged that the football club has very little time to sort out its problems - and only the football club and the Co-operative Bank are masters of this process.

Notwithstanding all the different approaches the football club has pursued, until very recently there was not a credible bid that ACL could even consider in terms of recommending anything to its shareholders.

Within the last week, the ACL Directors, with the knowledge and support of the Co-operative Bank have met a bidder who they believe - with many issues still to resolve - could meet ACL's criteria. As yet the ACL Board has not formed a view or a recommendation to its shareholders - but the urgency of the football club's position dictates that this may well have to happen quickly - BUT ONLY IF THE FOOTBALL CLUB AND THE CO-OPERATIVE BANK AGREE THAT THEY WILL SUPPORT THIS BID.

In recent days ACL has been notified of a possible further consortium bid. Neither ACL nor the Council has any detailed knowledge of this bid, and nothing has been received in writing from the potential bidder. We wait to be advised by the Co-operative Bank whether this further bid does or does not have their support.

The football club has openly acknowledged that time is fast running out if they are to avoid going into administration and with all its many consequences.

To the extent that the City Council, through its shareholding in ACL, has to consider whether or not to sell some or all of its shares, or other interests in the Ricoh Arena, then the full Council will receive and consider a detailed financial report.

There may therefore need to be an urgent and single-item special Council meeting within the next 3-4 weeks. Only the actions of the football club and the Co-operative Bank will determine if and when this Council meeting will be necessary.

As a shareholder the Council will also expect to receive clear advice and recommendations from ACL - but ultimately only the Council can make decisions about its shareholding within the Ricoh Arena project.

In conclusion, the City Council recognises the value to the city of a powerful, well supported and well managed football team and club.

We are a premiership city that deserves a premiership team, but only the actions of the football club and the Co-operative Bank can determine the future of professional football in Coventry.

To the extent that we can help, the City Council will continue to act as positively as it has over the last nine months. Members and the public need to realise that responsibility and actions to resolve the situation predominantly rest outside this Council Chamber.