Liverpool City Council cabinet being asked to approve the go-ahead to create a Special Purpose Vehicle for the £300m north docklands project but the city will not contribute towards the cost. Tony McDonough reports.
A planning application for Everton FC’s new stadium in Liverpool’s north docklands could be submitted within months after the city council proposed an “innovative finance model” to push forward the project.
Next Friday, March 31, Liverpool City Council’s cabinet, will be asked to give the go-ahead to create a Special Purpose Vehicle (SPV) company that will act as a buffer between Everton and the financial backer of the stadium.
Under the proposed finance structure of the SPV the council will not provide any finance for the new stadium, which is anticipated to cost in excess of £300m.
The SPV will, however, take the lease for the stadium for 40 years from the funder and, in turn, sub-lease it to Everton.
This will provide an extra layer of security for the funder in the event of non-payment of rent. Everton will be required to create new bank accounts to which it will commit certain income streams. An example could be any parachute payments the club would receive in the event of relegation from the Premier League.
The city will benefit from an anchor development which it hopes will provide a catalyst for the wider regeneration projects such as Liverpool Waters and Ten Streets.
However, the challenge for Everton remains identifying investors willing to fund the stadium.
Deal with Peel
Earlier this week, Everton and Peel Land and Property agreed Heads of Terms to acquire a site at Bramley Moore Dock – which forms part of a £5bn Liverpool Waters scheme – from Peel, subject to planning consent.
The announcement follows detailed negotiations between Peel and Everton FC, brokered by the Mayor of Liverpool, Joe Anderson.
It follows months of talks between the local authority and the club and following advice from independent financial and legal experts who have reviewed Everton’s “robust business case”.
The proposed heads of terms for the SPV are:
- A funder will acquire a 200-year Head-lease of the land for the new stadium from Peel Holdings.
- The funder will lease the stadium for 40 years to a SPV, a company set up, owned and controlled by Liverpool City Council.
- The SPV will sub-lease the stadium to Everton FC (EFC) for 40 years, less one day.
- EFC will provide an annual rent to the SPV which will allow the SPV to pay its rent in full to the funder and to receive an annual fixed security fee on top of that.
- EFC will also provide a full security package that will create new bank accounts into which certain EFC incomes will be credited to deal with an eventuality of non-payment of rent.
- At the end of the 40 year lease terms, EFC will have an option to acquire the Head-lease from the funder.
The council will benefit from an annual security fee payable by the club in return for the council’s participation.
Critically, the support provided to the club will not impact the future borrowing needs and involves no financial outlay for the council.
‘A small step’
Mayor of Liverpool, Joe Anderson, said: “I understand that creating this financial arrangement is a small step in a long journey for the club, but it is the first step and for that reason it is a special moment in the city’s – and Everton’s – long illustrious history.
“If things progress as we all hope, it marks the beginnings of a new and exciting chapter.
“The proposed new stadium will be a landmark for the city’s spectacular north Liverpool waterfront and a powerful statement of intent for the club and the city of Liverpool that will resonate globally.”
Everton FC chief executive Robert Elstone added: “We can now move forward into the next phase of work with much greater confidence.
“Clearly, it is vital we have clarity on cost and we have to recognise that the stadium will be significantly more expensive at Bramley Moore Dock.
“To get that certainty, and ensure the stadium is affordable, we need to confirm stadium design, capacity and configuration. And to do that, we need to talk to fans, partners and all stakeholders in the project.
“We’re committing to that consultation. We’re also committing to keep fans fully informed as the project develops and as other milestones are reached.”