Labour deal earns £2.50 from £46m KC stadium

The deal Hull Council agreed to for the KC Stadium has led to the council taxpayers effectively subsidising the running costs, despite the former Labour council behind the deal stating it would not be a burden.

As well as minimal returns from the lease, the council is actually paying the private company which runs the stadium 72,500 a year to rent office space.

In all, the council has paid 578,000 to the Superstadium Management Company (SMC) in the eight years the stadium has been open – and received only 46,996.20 in lease payments over the same period. In one of those years, ending in July 2007, the council received just 126.85.

Earlier this week, the Yorkshire Post revealed the council's financial reporting was in disarray with the Audit Commission highlighting a failure to value assets and criticising accounting standards.

The terms of the stadium lease agreed by the council mean it also pays for the upkeep of its car park. But the SMC is allowed to keep the money it collects from the 1,110 capacity car park for all stadium events, with tickets at 5 a time for Hull City matches.

The stadium hosts Hull City football team, currently paying star player Jimmy Bullard 45,000 a week, and Hull FC, one of the biggest teams in rugby's Super League.

After spending 46m on building the stadium, the council set

up a lease with the SMC which based its intended return on a portion of the profits the company made.

The SMC, which is owned by Hull City's owners, charges rent to the football and the rugby team, but returned only small profits or none at all.

Naming rights to the stadium are also held by the SMC. In August, the SMC, in conjunction with Hull City, announced a "multi-million pound deal" with local telecommunications company KC to keep the brand name until 2025. The SMC declined to say how much it was worth.

The council has tied itself into the deal for 50 years been advised that the lease is watertight. It hopes further development of the site will open up the possibility of varying the lease to bring a better return.

Last night the Liberal Democrat leader of the authority acknowledged the council, run by Labour when the stadium was built and the lease agreed, had not got a good deal.

Carl Minns said: "This contract was agreed almost nine years ago – it's not something that has been in the best interests of the council. In terms of an ongoing lease, I would have expected something better. I wasn't on the council at the time but it appears they decided to build the stadium without giving any major thought into the implications of how it would be run."

Although they are paying for it, the local community has seen little benefit. An note to council's scrutiny committee in March reveals that although a clause in the lease provides an option for public use, "regrettably the discounted rate has often been beyond the affordability of community groups."

SMC and Hull City chief executive Mark Maguire said: "The stadium has been the catalyst of sporting regeneration in the city. Both the football club and Hull FC have come back from a chequered past to have great sporting success and that's very much down to the KC stadium and the city council."

He added: "It's a fantastic example of the private and public sector coming together for the benefit of the city."

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