club says no to deal to halve annual payments
COVENTRY City FC have rejected an offer from Ricoh bosses to dramatically halve their rent for playing at the stadium, the Telegraph has learned.
The offer of a new rent deal of £650,000-a-year follows the deficit-hit Division One club's refusal to make monthly payments since April, in a bid to force a renegotiated deal.
The stadium's management company Arena Coventry Ltd (ACL) took the Sky Blues to the High Court last week over nonpayment of five months of £100,000 instalments into a mutually arranged bank account.
The Telegraph understands ACL ­ joint owned by the Alan Edward Higgs Charity and Coventry City Council ­ has given the Sky Blues until September 13 to reach a deal.
Rumours have been rife the football club ­ which announced operating losses of £6.7 million for 2010/11 in June ­ could face liquidation unless it cuts costs and finds new revenue streams.
The Telegraph understands Coventry city councillors have been briefed by senior officers about the club's rejection of the offer to halve the rent.
One said: “It's a big offer to knock off 50 per cent ­ it's a big drop. There is a lot of frustration, and a concern that the club could try to paint the council, ACL and the Higgs charity as the big baddies who are effectively putting the club into liquidation, when in fact 70 per cent of its finances go on players' wages.“
Council chief executive Martin Reeves and finance director Chris West are directors on the ACL board.
Profits in ACL were just £470,000 last year, for a project designed to deliver a return to city taxpayers on the council's investment and create jobs.
Although profits are expected to rise to around £1 million this year, a £650,000 drop in rent would be a major dent in the stadium company's finances. Yet the hit would be doubled without a football club playing there.
Sky Blues directors, and the club's London-based hedge fund owners SISU, have maintained they can no longer afford annual rent of over £1.2 million, partic ularly after further lost income of several million pounds from to this year's relegation from the Championship.
The Sky Blues also want to obtain a 50 per cent stake in ACL by buying out the Higgs charity's shares, long believed to be valued at around £10 million.
A half-stake in the stadium would give the football club new income streams from the Ricoh's commercial activities, including hotel and conference bookings.
Sisu, the Sky Blues and ACL have held intermittent and “ongoing“ talks throughout the summer.
Until now, ACL has been able to draw on a reserve of £500,000 placed by the Sky Blues into the joint bank account for rent called the ESCROW account, which was set up under historic agreements over building the Ricoh.
But the reserves are expected to very soon run out.
The threat of administration or liquidation was alleviated in June when SISU boss Joy Seppalla belatedly agreed to sign off the football club's 2010/11 ac counts, by agreeing to underwrite any further losses this year.
But the club still insists reaching agreement with ACL, the Higgs charity and the council ­ which is also the stadium's freehold owners and would have to approve any deal on stadium ownership ­ are fundamental to stabilising its finances.
An ACL spokesman said: “We continue to work hard with Coventry City Football Club to secure a level of rent which is workable and sustainable for both parties.
“However, we feel it is appropriate not to discuss commercially sensitive matters in the public domain while negotiations remain on-going.“
Tim Fisher, chief executive of Coventry City Football Club, said: “Our stance, all along, has been to not comment on commercially sensitive negotiations and that remains the case. “Our talks continue and as soon as there is something concrete to report, we will communicate that to our supporters.“
COVENTRY City FC have rejected an offer from Ricoh bosses to dramatically halve their rent for playing at the stadium, the Telegraph has learned.
The offer of a new rent deal of £650,000-a-year follows the deficit-hit Division One club's refusal to make monthly payments since April, in a bid to force a renegotiated deal.
The stadium's management company Arena Coventry Ltd (ACL) took the Sky Blues to the High Court last week over nonpayment of five months of £100,000 instalments into a mutually arranged bank account.
The Telegraph understands ACL ­ joint owned by the Alan Edward Higgs Charity and Coventry City Council ­ has given the Sky Blues until September 13 to reach a deal.
Rumours have been rife the football club ­ which announced operating losses of £6.7 million for 2010/11 in June ­ could face liquidation unless it cuts costs and finds new revenue streams.
The Telegraph understands Coventry city councillors have been briefed by senior officers about the club's rejection of the offer to halve the rent.
One said: “It's a big offer to knock off 50 per cent ­ it's a big drop. There is a lot of frustration, and a concern that the club could try to paint the council, ACL and the Higgs charity as the big baddies who are effectively putting the club into liquidation, when in fact 70 per cent of its finances go on players' wages.“
Council chief executive Martin Reeves and finance director Chris West are directors on the ACL board.
Profits in ACL were just £470,000 last year, for a project designed to deliver a return to city taxpayers on the council's investment and create jobs.
Although profits are expected to rise to around £1 million this year, a £650,000 drop in rent would be a major dent in the stadium company's finances. Yet the hit would be doubled without a football club playing there.
Sky Blues directors, and the club's London-based hedge fund owners SISU, have maintained they can no longer afford annual rent of over £1.2 million, partic ularly after further lost income of several million pounds from to this year's relegation from the Championship.
The Sky Blues also want to obtain a 50 per cent stake in ACL by buying out the Higgs charity's shares, long believed to be valued at around £10 million.
A half-stake in the stadium would give the football club new income streams from the Ricoh's commercial activities, including hotel and conference bookings.
Sisu, the Sky Blues and ACL have held intermittent and “ongoing“ talks throughout the summer.
Until now, ACL has been able to draw on a reserve of £500,000 placed by the Sky Blues into the joint bank account for rent called the ESCROW account, which was set up under historic agreements over building the Ricoh.
But the reserves are expected to very soon run out.
The threat of administration or liquidation was alleviated in June when SISU boss Joy Seppalla belatedly agreed to sign off the football club's 2010/11 ac counts, by agreeing to underwrite any further losses this year.
But the club still insists reaching agreement with ACL, the Higgs charity and the council ­ which is also the stadium's freehold owners and would have to approve any deal on stadium ownership ­ are fundamental to stabilising its finances.
An ACL spokesman said: “We continue to work hard with Coventry City Football Club to secure a level of rent which is workable and sustainable for both parties.
“However, we feel it is appropriate not to discuss commercially sensitive matters in the public domain while negotiations remain on-going.“
Tim Fisher, chief executive of Coventry City Football Club, said: “Our stance, all along, has been to not comment on commercially sensitive negotiations and that remains the case. “Our talks continue and as soon as there is something concrete to report, we will communicate that to our supporters.“
