PLANS are being drawn up to hand control of a taxpayer-funded £32m stadium to a professional football club to try to halt spiralling losses hitting the public purse.
Doncaster Council is in talks with Doncaster Rovers over transferring responsibility for Keepmoat Stadium to the football club because the council-owned company currently running the facility is on the brink of financial collapse.
Estimated losses for the Stadium Management Company (SMC) have now reached £2.5m, with the SMC now no longer considered financially viable.
As a result, the council is formulating plans to pass control of the Keepmoat Stadium to the football club under a long-term agreement. Talks are continuing on a lease of between 50 and 100 years which would effectively mean a flagship public project being taken over by a private company – albeit with ultimate ownership retained by the council.
A report to the council’s scrutiny committee makes clear protections for community use and the continued use of facilities by the town’s rugby league team, athletics’ club and women’s football team would be in any long-term agreement.
The report does not reveal how much Doncaster Rovers would pay under the terms of any lease and the issue remains politically sensitive given the scale of public-funding involved.
The club currently pays £281,000 a year to the SMC to use the stadium under a 25-year agreement – an amount the report describes as “relatively low”.
But Rovers maybe unwilling to pay anything more – and possibly may want to insist on less – as the club would be taking on a loss-making scenario.
The club’s operating director Gavin Baldwin, said: “We are keen to further explore the opportunity to take over the running of the Keepmoat Stadium.
“We hope to develop initial conversations into negotiations which would result in a deal that would benefit Doncaster residents and tax payers.”
The report also lays bare the financial predicament facing the SMC and how its failed business model has brought it to the brink of financial collapse. As well as funding the building of the stadium, officially opened in 2007, the council has also provided almost £1.5m in overdraft guarantees, grants and loans to keep the SMC going.
The report also refers to further money the council will have to find shortly to pay for inspections, surveys and works required to ensure the stadium retains its operating licence.
Although no figure is provided, it is understood this will cost hundreds of thousands of pounds.
Outlining the financial concerns, the report says: “The Council’s continued funding for the SMC is likely to run out very early in June 2012 and the SMC’s accounts up to March 2011 are likely to be signed off on the basis that it is not a “going concern”. This does not mean that it is bankrupt or needs to be in administration or liquidation, but does mean that it does not have funding secured to allow it to operate for another 12 months.”
It was originally envisaged the SMC would make an annual surplus of about £300,000 with income from clubs using the stadium supplemented by cash from other facilities on the site.
Instead, staff wages have been up to £600,000 a year more than planned and income from facilities has been hundreds of thousands below what was expected.
The report says detailed discussions over the transfer are due next month.
Director of finance and corporate services Simon Wiles said “current arrangements are not sustainable,” and added: “We have identified a number of options for the future of the stadium and will be speaking to the main users over the coming month. No decision has been made.”