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Salford Council backs £22m Peel loan

Salford Reds stadium will be a long-lasting community asset, claims authority – but Peel stays silent.

Published on August 13th 2010.

Salford Council backs £22m Peel loan

The news that Salford City Council is lending £22m to Peel Group - one of the UK’s largest private companies with an asset base of £4.5bn – to fund the new Salford Reds stadium in Barton, came as a surprise to some people.

The council has already signed land worth £6.7m over to Peel, so it can have a long-lasting stake in the project and view it as an asset.

The decision to loan £22m to the joint venture building the stadium – The City of Salford Community Stadium Ltd, made up of Peel and the council – has raised a few eyebrows, however.

The job didn’t go out to tender. Peel offered to build it, the council accepted. So the question is: why didn’t Peel directly fund the project? Alternatively, why didn’t Peel go and source a loan on its own, backed by its strong balance sheet?

The council stands by the decision to lend public money to the developer, and referred Confidential back to an article John Merry, its leader, wrote for the Salford Advertiser last December.

He said there was ‘a strong business case’ to support the decision and the costs would be ‘recouped (for the public) through the sale of part of the site for retail units.’

What the council wouldn’t tell Confidential, however, was how much cash it expects to make from selling the retail space, which totals around 220,000 sq ft. Those figures were “commercially sensitive.”

Confidential also asked Peel the same questions. They didn’t come back to us, despite having two days to respond. The group’s most recent accounts showed an operating profit of more than £100m.

A senior source at a property firm based in Greater Manchester, who asked not to be named, said it was “not a conventional arrangement” although local authorities were coming under more pressure to try and fund developments in their own areas to try and boost their local economies.

“As a developer, you’d normally be expected to fund the build yourself through capital investment or a grant perhaps. Peel is a big company but it’s always fairly canny at sourcing funding and I suppose as grants dry up, the council may feel that if they don’t find the money for it, nobody else will.”

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Eddy RheadAugust 13th 2010.

I dont pay my council tax to Salford City Council but if i did i would be asking some very serious questions about where they can find £22m to lend to a hugely profitable company when, for as long as can remember, SCC have always pleaded poverty. Only on July 3rd this year they claimed they are having to save £39m over the next three years and will have to shed jobs to do so. If they find £22m to lend to Peel why cant find £22m to safeguard jobs? Like the Davyhulme Sewage works that gives Peel's Dumplington Precinct its distinctive character - everywhere Peel goes they leave a nasty stink.

NeilAugust 16th 2010.

This is a complete vanity project for Salford City Council who simply want to have a professional sports team and a modern stadium within its borders. If Salford RL don't have a modern stadium then they will lose their right to a Super League franchise.

Putting aside the questionable finances you have to worry that this will be a true white elephant. I go every now and again to the Willows to watch Salford and I think the average attendance is somewhere around 3,000. A large proportion of the hard-core fans walk to the ground and from chatting to people there's going to be a sizeable proportion who'll not bother going across to Barton when they start playing there. Certainly not when the only practical option will be to drive and there will be no pubs nearby either. OK, some families may now be attracted but they're going to be relatively few and far between. Add in the problem that every other sport has (over-saturation with every game being shown live on Sky TV or in pubs) and the continual rise in ticket prices and you're going to see a very empty stadium.

Rugby League is a true minority sport. Salford is not like Wigan or St Helens or even Leeds. My experience is that we're a football town with rugby a very distant second.

Then you have to turn to the idea that retail shops will bring revenue; this place is going to be minutes away from the Trafford Centre. You've already got West One (which has failed although there's going to be a Tesco there soon - probably) and Dumplington Circle for white goods within five minutes of this place so which stores are going to commit to the units? There were also plans of a casino (abandoned) and a hotel (scaled back).

One sensible answer would be to think about ground-sharing with Sale Sharks but the powers that be won't even consider that. Or even scaling the stadium back and opening up talks with FC United but again that's a no-go.

squirrelitoAugust 16th 2010.

Oi, Man Con, that's the wrong stadium. That's the last Salford stadium not to get built. The new one that won't get built is nowt like that one. Well, other than the fact that neither will ever see light of day. In that way, they are identical.

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