Council only got £16 a week for £46m Hull City stadium

A COUNCIL which spent £46m on building a landmark sports stadium received only £16 a week in lease payments last year despite the football team playing there paying its players up to £45,000 a week.

Senior members of Hull Council last night acknowledged the return on the KC Stadium represented poor value for taxpayers but after signing up to a 50-year lease with a private company to run the facility the authority finds itself effectively stuck with the deal.

The minimal returns on such a huge public outlay are compounded by the council agreeing to rent offices at the stadium for £72,500 a year – meaning taxpayers are subsidising the home of Hull City, who have been paying midfielder Jimmy Bullard £45,000 a week in wages.

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The latest figures on the returns on the lease, obtained from a freedom of information request, show the council received £850.15 for the year ending July 2010.

The lease is between Hull Council, which owns the stadium, and the Superstadium Management Company (SMC), which is owned by local businessman Assem Allam, who also owns Hull City.

The return 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 rugby league team but it has only made small profits since the stadium opened in 2002.

In total, the council has received just £47,846 over the period but paid more than £500,000 to rent office space in its own stadium.

Hull’s Labour council leader Steve Brady said: “It’s a surprisingly low return. The lease agreement was signed many years ago, way before my time, but it certainly doesn’t seem a good return for us.”

The council has previously sought legal advice on the lease but been told the terms are watertight. Coun Brady acknowledged it would be difficult to renegotiate the lease when the SMC has little incentive to do so.

The difficulties surrounding the lease have prompted speculation the council may be tempted to sell up and Mr Allam has already made public his plans to develop a sports village on adjoining land – if he is able to buy the stadium.

But councillors have concerns about the stadium moving into private hands and the subsequent loss of control of the home of the city’s two biggest sports clubs.

Coun Brady said: “There are worries and concerns about selling. You could say anything is better than £16 a week but it’s much wider than that. It’s about protecting the interests of sport in the city, protecting them from anyone who might come along and say we’re not going to have football and rugby here any more.”

The deputy leader of the opposition Liberal Democrats, Mike Ross, agreed the current terms represented a “poor return” for taxpayers but added: “We wouldn’t want to see the council essentially sell off the family jewels at scrap metal prices. If they did pursue it, it would have to be at the right price, rather than given away.”

Mr Allam reiterated he wants to buy the KC Stadium and substantially increase its 25,000 capacity but said he had not sought a valuation because the council had indicated it didn’t want to sell.

Plans for a £100m sports village adjacent to the stadium – including an Olympic-sized pool and ice arena plus squash, tennis and gymnastics facilities – would only go ahead if he took ownership, Mr Allam added. “You wouldn’t build an extension to your house if it was rented,” he said.

The council has set up a working group to look at potential options for the stadium, though the possibility of a joint venture rather than outright sale appears a more favourable proposition.

Coun Brady added: “In-built within anything would be a guarantee the stadium would always be available for football and rugby league.”