City of Salford Community Stadium Limited (A J Bell Stadium)

Report to Council from the Deputy City Mayor, Paula Boshell & Cllr David Lancaster

2016/2017

City of Salford Community Stadium Limited (A J Bell Stadium)

1. BackgroundThe A J Bell Stadium has been open for business since late 2011and remains a significant part of the overall regeneration and development of the 17 hectares of land known as ‘Salford Gateway’ adjacent to the Manchester Ship Canal and A57Liverpool Road. Alongside the WGIS road scheme and Port Salford, the area, itsconnectivity and overall development is moving forward with the first sale ofland to Greene King having taken place and two more plots in the process of finalising legal processes with further discussions on plots continuing.

Following the well publicised problems with the bridge we are informed that the WGIS road will be open in the autumn/winter of 2017 including the bridge across the Manchester Ship Canal providing a vital link to the Trafford Centre and Chill Factor. Port Salford is in development and the Culina warehouse is in operation. It will, along with other developments at the Stadium site, provide several thousand new jobs in the area.

The A J Bell Stadium comprises:

A total of almost 2,000m2 of meeting and hospitality space. A 700 capacity suite capable of coping with events as diverse as major corporate uses, exhibitions and private and community meetings. 13 syndicate rooms which can be used as hospitality boxes on match

days, overlooking the main pitch. A commercial gym. Home to the Salford Red Devils Rugby League Super League Club and

Sale Sharks Rugby Union Aviva Premiership club. A Foundation charity related to the Salford Red Devils Super League Club. A financial services company A fleet hire company

As well as the main Stadium pitch, there are two other facilities; a 3G all weatherfloodlit sports surface with high usage from professional and amateur teams from awide range of sports and a floodlit outdoor grass pitch which has accreditation from the RFU and FA, with availability for rugby, football and other team sports.

The significant growth in the non-sporting business and in particular, conferencesand events, has helped drive forward the Stadium’s business plan. Taken togetherwith the sale of the development land and the income from the naming rights, theoperation of the Stadium has moved according to its financial plan towardssustainability.

The Stadium is also very much part of the wider and significant leisure offer that theCity of Salford provides to its people, businesses and communities and is thereforeseen as a valuable asset in that context.

2. Stadium facts and offer

2.1. SportingThe Stadium has a capacity of just under 11,500 spectators accommodated in 4stands with the opportunity to increase the capacity to approximately 20,000 in thefuture should the need arise.When the Stadium first opened, it was home to the Salford Red Devils, the RugbyLeague Super League team, now under the ownership of Dr Marwan Koukash.Within its first year, the Stadium also recruited Sale Sharks, the Aviva PremiershipRugby Union team as its second anchor tenant making it the home of top class rugbyin the northwest. During the last year, approximately 55 first class fixtures have beenheld at the Stadium including 18 U20’s RFU World Cup games including the England v Ireland Final and the RFU U17’s Finals.

The Stadium has Yourgym as one of its key anchor tenants which is a commercialgym located within the Stadium’s west stand; it offers quality gym facilities at verycompetitive rates and has approximately 3000 members.

2.2. Non-sportingThe Stadium event and conferencing business has continued to perform well both inthe number and quality of events. It is a significant employer both in the local andregional area. The objectives of the Stadium Company remain to grow the non-match day income. To that end and in partnership with Elior, the Stadium’scatering partner we have significantly increased the non-matchday Conference and Events sales which are showing an increase in revenue of 36% compared to 15/16. In summer 2017 Elior will be looking to strengthen their onsite team with a senior role of Venue Sales Director to further drive new business to the Stadium. The income to the Stadium from catering commission has increased by 29% compared to 2015/16. The on site team have won the Elior Star Site for 2016, with approximately 400 sites internationally this was a significant achievement.

The Stadium Operation’s Team numbers 20 including casual staff. The vast majorityof these live in the local area. The Stadium has significant conferencing, banquetingand event facilities located in the main west stand. A range of events can beaccommodated ranging from 1 person through to 700 on the second and third floors.

In addition, there is the Fans Bar on the ground floor that can accommodate up to250 people and we are currently planning to develop a Fans Village offering even more facilities and opportunities for visitors. This makes it one of the premier and largest event venues in the northwest. The Stadium benefits from its unique accessible location and car parking for up to 600 cars. Over the last year the sales team has forged close links with Marketing Manchester to allow for greater access and support for bringing corporateevents to the Stadium.

The Stadium’s catering and events contractor is part of the Elior Group. Itemploys a core conferencing and banqueting team of 15 on site with a further 200casuals brought in as events dictate and a business development team of three todrive forward future business. The vast majority of these staff live in Salford and its

immediate environs.

Business has continued to grow and in the last year there were over 400 different events involving around 35,000 delegates. There have been blue chipcompanies such as the Cooperative, the Automobile Association and Edward Mellor Auctions that have held major events at the Stadium. In addition, there have been many different conferences, birthday parties, school proms, funeral wakes, weddings, awards dinners, Christmas events and those held for charity. Indeed approximately 55% of the last year’s business has come from within a 10 mile radius of the Stadium demonstrating its local focus and popularity, with a revenue contribution of 35%.

There have been 49,790 visitors to the Stadium for conference and events of which there have been 698 in total, key companies using the Stadium include:

Royal College of Physicians (examinations) Salford City Council Salford Professional Development Auction Houses including Pugh Auctions and Edward Mellor NHS Balfour Beatty The Cooperative RRG United Utilities

Business mix percentage breakdown

The Stadium has been used for several filming events involving blue chip sports companies and top flight international sports stars, including Adidas advertising involving Paul Pogba.

To deliver these events requires a significant supply chain, much of which is locally

sourced. Significant six figure expenditure is spent each year with businesses, manyof which are SMEs which helps drive forward the local and regional economy.

The Stadium continues with ambitious plans to hold concerts at theStadium in 2018 and new events such as comedy nights, boxing matches and adrive-in cinema to further complement and expand its business plan.

The Stadium has been commended for its accessibility by the RFU Auditors with registration on the site DisabledGo, it is recognised as Autism Friendly and staff have undergone Dementia Awareness training.

In addition the Stadium is actively seeking new tenants for the available office space and has secured two new tenants in 2016/17, Real Financial Services and Letstalkfleet Ltd.

3. CommunityThe Stadium was constructed with the local community in mind. It provides avaluable local asset and employer for the local area. It hosts the ‘Friends of A J BellStadium’ group which remains well attended by local residents, tenants, the two clubs andrepresentatives from fans groups and the Stadium team and its partners.

The Salford Red Devils Foundation is based at the Stadium. They are the communityarm of the Club and undertake significant community based work throughout the Cityof Salford and the region as a whole. They use the sport of rugby league as a vehiclefor delivering important programmes relating to public health and skills and work such as smoking cessation, tackling obesity and bringing people into employment. In 2017 they are delivering a significant Men’s Mental Health Programme supported by the Stadium. Similarly, Sale Sharks utilise the Stadium’s facilities for a variety of school based educational sessions which expands both their and the Stadium’s reach into local communities.

The Stadium also has the two secondary pitches at its disposal which it utilises bothcommercially and for community and charity use. These are used by both the SalfordRed Devils and Sale Sharks on match days to hold mini rugby festivals involvinglocal and regional schools and discounted rates are given to charities for their eventuse. Over the course of a year, approximately 2,000 children are involved in prematch events at the Stadium, not to mention the many thousands more involved in community events, soccer leagues and charity runs held at the venue.Approximately 400 individual bookings are made each year for the communitypitches and this level is rising. These include local sports clubs and individuals /groups just wishing to play sports with friends and work colleagues.

4. Development LandThe Stadium is surrounded by prime development land which belongs to the Stadium Company. It totals just over 17 hectares and makes it one of the prime development sites in Salford. The first plot of land (1.3 acres) was been sold to Greene King for the development of a pub/restaurant called the Barley Farm. The

new pub has generated approximately 90 jobs. Two further plots are in the process of finalising legal process.

Port Salford is under construction further down the A57 which will generate 3,000 jobopportunities and economic growth for the region. As part of this construction, theA57 road immediately adjacent to and feeding the Stadium is being modified underthe Western Gateway Infrastructure Scheme. This has seen a new road layout andapproach to the Stadium which will open in the autumn/winter of 2017 and will extend over the Manchester Ship Canal to the Trafford Centre complex. The Culina distribution company is now operating, forming the first tranche of the Port Salford development.

The Stadium has a two year plan to identify end users for the various developmentsites at the Stadium. Potential users will include budget retailers, fast food outlets,petrol filling stations, car showrooms and large ‘shed’ style retailers. Other uses mayalso include a hotel.

The breadth of eventual users will provide for an exciting mix of uses at the site andprovide for several thousand new jobs in the area.

5. Stadium Financing

The Council has made loans to the stadium totalling £25.776m to 31st March 2017.This comprised an original £22m of development and working capital loans in2012/13, and ongoing working capital loans totalling £3.776m between 2012/13 and2016/17. Peel Holdings has exactly matched the working capital loans with loans ofits own. The development loans and the original working capital loan are repayableover a 25 year term, whilst other working capital loans from the Council and PeelHoldings are repayable by 2022. The Council lends to the stadium at a commercialrate of interest (5.16%) but is able to use its size and position to borrow the moneyfor this purpose, on much more favourable terms. Over the past five years, this hasbrought an extra £1,300,000 (a conservative estimate) into the Council’s separaterevenue account.

The stadium has made its scheduled repayments to the Council fully in accordancewith the terms of the loans. The balance of the development loan - principal outstanding as at 31 March 2017 is £16.678m. This is typical for a loan arrangement of this kind. Like a home mortgage, the development loan will steadily reduce over time, with more of the principal paid off towards the end of the term and as the development land is sold.

6. SummaryFuture development will bring both major capital receipts for the Stadium Companyand the City Council will also benefit from additional business rates and council taxpayments.