£46m city stadium fails to net any cash for council

Assem Allam (right) with Hull City manager Steve Bruce at the KC Stadium
Assem Allam (right) with Hull City manager Steve Bruce at the KC Stadium
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A COUNCIL which spent £46m on building a prestigious sports stadium received a zero return in lease payments last year despite huge spending on players’ wages by the football club using the ground.

The 50-year lease Hull Council agreed with a private company to run the KC Stadium has previously been revealed to have delivered little in return to the taxpayer – but in the last completed financial year it delivered nothing at all.

The council acknowledged it was “disappointed” with the latest figures.

Opening the site to wider development would give the council the opportunity to increase returns but the authority’s Labour leader, Steve Brady, said a fresh approach to local businessman Assem Allam, who owns both Hull City and the company that runs the stadium, over redevelopment had been rebuffed.

Last year, Mr Allam announced multi-million pound plans to redevelop the area around the stadium through the creation of a sports village, including a range of new sporting facilities. He insisted then that ownership of the stadium was a prerequisite and Coun Brady said the businessman’s position remained the same.

The council leader said regeneration of the area remained a priority but the authority preferred a joint venture and retaining ownership of the stadium. He also said any change in ownership would have to go to a local referendum.

Coun Brady said: “We own the land and we still want to be involved in regeneration of the site to protect our interests.”

But Mr Allam said the relationship with the council was broken and said he remained angry with comments attributed to him by the council last year when talks over redevelopment of the site came to an abrupt halt.

He added: “I said at the time the matter was closed and that remains the case.”

Minimal returns on the huge public outlay have been compounded by the council agreeing to rent offices at the stadium for £72,500 a year – meaning taxpayers are effectively subsidising the home of Hull City football club and Hull FC rugby league club. At the same time, players’ wages at Hull City have run into tens of thousands of pounds per week.

In total, the council has received just £47,846 in lease payments since the stadium opened in 2002 but paid close to £600,000 to rent office space in its own stadium.

The council said it now plans to exercise a break clause in the rental agreement and expects to vacate the offices later this year.

Hull Council leases the stadium to the Superstadium Management Company (SMC), owned by Mr Allam. Under the deal, payment to the council is based on a small percentage of any annual profits made by the SMC. The company’s income includes rent from both Hull City and Hull FC but profits have declined since the stadium opened in 2002.

And in the SMC’s last accounting year, which ended in July 2011, the company made no profit at all, which left Hull Council with no return from the lease.

The council is bound by the terms of the 50-year lease, which was found to be legally watertight when it looked at the possibility of extricating itself two years ago.

A council spokeswoman said: “The contract between the council and the SMC was drawn up in a different financial climate and Hull’s sporting profile was much lower. Though disappointing there has not been anything in terms of profit share for the latest financial period, in the current economic climate it was unlikely to see an improvement.

“However, in reaching its objectives and raising the city’s profile the stadium continues to provide benefits to the city in terms economic regeneration.”