06.09.18
Salford considers loaning another £670k to firm behind rugby stadium
Salford City Council is set to approve a further loan to the company behind the AJ Bell Stadium as part of long-term generation plans – but has promised that the extra money will not come from council service pots.
The local authority will decide during a Cabinet meeting next week whether to loan the company another £670,000 in the form of a repayable interest loan.
CosCos, the firm behind the stadium, is jointly owned by the council and Peel Holdings. As part of the funding agreement, Peel Holdings will match Salford’s contribution.
If approved, the extra loan will take the council’s total investment in the development to almost £30m.
But deputy city mayor John Merry promised that the funds will not come from money allocated to public services, but rather from loan repayments made by CosCos.
“This is part of the long-term ambitions we have always had for this area,” he explained. “The stadium was built as the catalyst to regenerate over 36 acres of formerly derelict land now known as Salford Gateway and create new jobs and opportunities for local people.
“This year the AJ Bell Stadium will return another operating profit after hosting high-profile rugby matches, weddings, exhibitions and its first highly successful music concert. It is expected to continue in profit which will help the company meet its existing loan repayments but, while we progress the development of land around the stadium, the overall business still needs financial support.”
The CosCos business model relies on the sale of land to repay the loans, but the council keeps a reserve in place in case sale values fall short of the amount needed to repay the debt.
“The stadium is broadly at a break-even position on a trading basis. However, until such time as the land around the stadium is sold, allowing the repayment of existing development and working capital loans, there will continue to be a requirement for further working capital funding,” the Cabinet report explained.
(Top image c. David Dixon)