Months of deadlock ends with groundbreaking `headline agreement'
A DEAL has been struck over Coventry City football club owning half the Ricoh stadium, the Telegraph can reveal.
Coventry City Council leaders have been briefed that a groundbreaking “headline agreement“ has been reached for Sky Blues owners Sisu to buy a 50 per cent stake in the Ricoh Arena company from the Alan Edward Higgs Charity.
The agreement follows months of deadlock over a deal considered a financial lifeline by the relegated Division One club incurring multi-million-pound annual losses.
Rumours of administration or liquidation for the club deprived of income from stadium commercial activities were alleviated when hedge fund Sisu agreed to pay any losses this season.
The Telegraph revealed in June an initial offer by Sisu had been rejected by the Higgs charity. The two parties have had secret talks intermittently since.
The breakthrough comes as John Mutton * leader of Coventry City Council which owns the other half-stake in Ricoh company Arena Coventry Ltd (ACL) * challenged Sky Blues chief executive Tim Fisher's claims Sisu has wiped out the club's debts by paying off creditors.
Coun Mutton said, while Sisu itself was the club's main creditor, he understood the club had still not paid six months of rent arrears worth £600,000 into a joint bank account, to enable ACL to continue receiving payments.
The council leader also revealed a deadline for an agreement between the club and ACL over a lower rent had been extended for a month, until October 13.
The Telegraph revealed last month the Sky Blues had rejected an ACL offer to half the annual rent to £650,000 after a High Court ruling ACL had the right to recover full rent under previous agreements.
Controlling Labour cabinet members at the council were briefed on Wednesday about the Higgs/Sisu shares agreement.
Council leader John Mutton, facing accusations by Tory opponents of secrecy over negotiations after councillors were forced to sign confidentiality agreements, told the Telegraph: “Sisu and the Higgs charity have had discussions. I understand a price has been agreed.
“...I believe they’ve reached headline terms. There is still agreement to be reached on how and when it is to be paid.
“I knew they had agreed headline figures. My group are aware of that now.” Coun Mutton said he had not had direct talks recently with Sisu or the Higgs charity, but council officers had been updating him. The council’s representatives on the ACL board are chief executive Martin Reeves and council finance director Chris West.
Coun Mutton said he was not aware of the price agreed between Sisu and the Higgs charity, who would have to agree the fineprint before the full council of 54 councillors would vote on the deal.
The council could use a veto
blocking any deal on Ricoh shares if it was considered not to be in the interests of city taxpayers.
At Tuesday’s full council meeting, Coun Mutton re-iterated evidence was requested this summer from Mayfair-based Sisu that it had a “proper business case” for both investment in the Sky Blues and the development of a leisure complex around the stadium, including hotels.
ACL recorded profits of just £470,000 last year, expected to rise to £1million this year.
The council has yet to receive any dividend from its 50 per cent share. Any profits would first be used to pay back a £21million ACL loan to Yorkshire Bank. The loan was originally taken out by the council to rescue the Ricoh project in 2003 and ensure the stadium was built on the contaminated former Foleshill gasworks site.
Development of the “leisure land” – including more hotels to support the stadium’s hotel and conferences, and events including concerts – is seen as crucial in raising Ricoh revenue. The council also wants the development to create jobs in return for taxpayer investment in the disadvantaged north-east of Coventry.
The 2003 deal gave the council and football club 50 per cent each of ACL shares. But the Sky Blues sold its half-stake to the Higgs
charity in 2007 for a reported £6million, to stave off a threat of administration.
A complicated formula giving the football club an option to buy back the shares has long been rumoured to price Higg’s charity’s 50 per cent at £10million.
The Higgs charity’s Peter Knatchbull-Hugessen told the Telegraph in June Sisu’s initial rejected offer had been outside the formula.
News of the headline agreement comes days after Daniel Gidney resigned as ACL chief executive, and was understood to be increasingly disillusioned over the prospect of a deal with Sisu over stadium ownership.
Coun Mutton said the council still had a “not for sale” policy on its 50 per cent share.
But he added, if “a fantastic offer came in” for the council’s shares, the full council could vote on a change of policy.
Tim Fisher, Sky Blues chief executive, said: “We have made an undertaking not to discuss this matter publically. It is a highlysensitive commercial negotiation which all sides have undertaken to conclude before speaking to other parties. On the issue of financial debt and creditor profile of the football club, I am more than happy to go through the appropriate details with Coun Mutton in person and in private.”
A DEAL has been struck over Coventry City football club owning half the Ricoh stadium, the Telegraph can reveal.
Coventry City Council leaders have been briefed that a groundbreaking “headline agreement“ has been reached for Sky Blues owners Sisu to buy a 50 per cent stake in the Ricoh Arena company from the Alan Edward Higgs Charity.
The agreement follows months of deadlock over a deal considered a financial lifeline by the relegated Division One club incurring multi-million-pound annual losses.
Rumours of administration or liquidation for the club deprived of income from stadium commercial activities were alleviated when hedge fund Sisu agreed to pay any losses this season.
The Telegraph revealed in June an initial offer by Sisu had been rejected by the Higgs charity. The two parties have had secret talks intermittently since.
The breakthrough comes as John Mutton * leader of Coventry City Council which owns the other half-stake in Ricoh company Arena Coventry Ltd (ACL) * challenged Sky Blues chief executive Tim Fisher's claims Sisu has wiped out the club's debts by paying off creditors.
Coun Mutton said, while Sisu itself was the club's main creditor, he understood the club had still not paid six months of rent arrears worth £600,000 into a joint bank account, to enable ACL to continue receiving payments.
The council leader also revealed a deadline for an agreement between the club and ACL over a lower rent had been extended for a month, until October 13.
The Telegraph revealed last month the Sky Blues had rejected an ACL offer to half the annual rent to £650,000 after a High Court ruling ACL had the right to recover full rent under previous agreements.
Controlling Labour cabinet members at the council were briefed on Wednesday about the Higgs/Sisu shares agreement.
Council leader John Mutton, facing accusations by Tory opponents of secrecy over negotiations after councillors were forced to sign confidentiality agreements, told the Telegraph: “Sisu and the Higgs charity have had discussions. I understand a price has been agreed.
“...I believe they’ve reached headline terms. There is still agreement to be reached on how and when it is to be paid.
“I knew they had agreed headline figures. My group are aware of that now.” Coun Mutton said he had not had direct talks recently with Sisu or the Higgs charity, but council officers had been updating him. The council’s representatives on the ACL board are chief executive Martin Reeves and council finance director Chris West.
Coun Mutton said he was not aware of the price agreed between Sisu and the Higgs charity, who would have to agree the fineprint before the full council of 54 councillors would vote on the deal.
The council could use a veto
blocking any deal on Ricoh shares if it was considered not to be in the interests of city taxpayers.
At Tuesday’s full council meeting, Coun Mutton re-iterated evidence was requested this summer from Mayfair-based Sisu that it had a “proper business case” for both investment in the Sky Blues and the development of a leisure complex around the stadium, including hotels.
ACL recorded profits of just £470,000 last year, expected to rise to £1million this year.
The council has yet to receive any dividend from its 50 per cent share. Any profits would first be used to pay back a £21million ACL loan to Yorkshire Bank. The loan was originally taken out by the council to rescue the Ricoh project in 2003 and ensure the stadium was built on the contaminated former Foleshill gasworks site.
Development of the “leisure land” – including more hotels to support the stadium’s hotel and conferences, and events including concerts – is seen as crucial in raising Ricoh revenue. The council also wants the development to create jobs in return for taxpayer investment in the disadvantaged north-east of Coventry.
The 2003 deal gave the council and football club 50 per cent each of ACL shares. But the Sky Blues sold its half-stake to the Higgs
charity in 2007 for a reported £6million, to stave off a threat of administration.
A complicated formula giving the football club an option to buy back the shares has long been rumoured to price Higg’s charity’s 50 per cent at £10million.
The Higgs charity’s Peter Knatchbull-Hugessen told the Telegraph in June Sisu’s initial rejected offer had been outside the formula.
News of the headline agreement comes days after Daniel Gidney resigned as ACL chief executive, and was understood to be increasingly disillusioned over the prospect of a deal with Sisu over stadium ownership.
Coun Mutton said the council still had a “not for sale” policy on its 50 per cent share.
But he added, if “a fantastic offer came in” for the council’s shares, the full council could vote on a change of policy.
Tim Fisher, Sky Blues chief executive, said: “We have made an undertaking not to discuss this matter publically. It is a highlysensitive commercial negotiation which all sides have undertaken to conclude before speaking to other parties. On the issue of financial debt and creditor profile of the football club, I am more than happy to go through the appropriate details with Coun Mutton in person and in private.”
