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Kirklees Council is ready to hand over “full operational control” of the John Smith’s Stadium to Huddersfield Town.
The company which runs the stadium, Kirklees Stadium Development Ltd (KSDL), is facing administration if action isn’t taken urgently.
The council warned in March last year that KSDL was at risk of going bust and its financial position has since worsened, not least due to rising energy costs. The council says KSDL now faces “severe cashflow difficulties.”
Kirklees Council had wanted to set up a Community Trust and was prepared to lend the Trust up to £13 million to cover debts and invest in repairs to the ageing stadium, opened in 1994.
KSDL is owned by Kirklees Council (40%), Huddersfield Town (40%) and Huddersfield Giants (20%) and Town’s previous owner Phil Hodgkinson had supported the creation of the Trust.
It was approved by the council’s Cabinet but Town’s position changed when Dean Hoyle took back ownership of the football club from Mr Hodgkinson late last year. Mr Hoyle vetoed the move and the Trust deal was scuppered.
Mr Hoyle has since put the club up for sale and wants Town to have control over the stadium to make for a “cleaner” deal for a prospective new owner.
Mr Hoyle wants the club to have a long-term lease on the stadium which would mean the club was liable for all repairs and maintenance but would also receive all income generated.
The stadium has a backlog of repairs and needs between £8 million and £10 million to be spent to extend its lifespan through to 2050.
With the Trust scheme dead in the water, the council is now running out of options if administration is to be avoided.
The council is reluctant to take on the running of the stadium itself fearing it will become a liability for council taxpayers and a “source of reputational damage” for the council.
Huddersfield Giants aren’t in a position to take on the stadium and the council believes a sale of KSDL would be a non-starter.
A report to the council’s Cabinet says there are five options:
- Do nothing – if that happens KSDL is at risk of administration;
- Press ahead with the Community Trust idea – it’s not supported by Town so that’s no longer achievable;
- Transfer responsibility to an existing leaseholder – only Town could take it on;
- Sell KSDL – not seen as practical due to its precarious finances and the limited rents that can be charged to Town and the Giants;
- The council shuts down KSDL and becomes operator of the stadium – it’s possible but the council doesn’t want to expose taxpayers to “substantial and ongoing cost.” The council would also find itself effectively subsidising professional sport.
So what does that mean?
Dean Hoyle and Town hold all the aces and the council is ready to negotiate. If the council allows Town to take a lease of the stadium, it will retain the freehold on the land giving some control over what the land can be used for. The council admits that control would be “very minimal.”
The council report says: “This is an unfortunate situation, where the options now available are quite limited and the needs of the council need to be balanced against those of the occupiers of the stadium.
“Some decisions taken in respect of the stadium, at its formation and more recently were, with hindsight, not in the best interests of KSDL or of the council.
“It is important now to seek to achieve a solution which resolves some of the historical issues and creates a potentially sustainable solution to enable professional sport to continue to be played at the stadium, whilst not creating an ongoing liability for the council.
“A form of statutory resolution (administration) will arise if no other action is taken. The most sustainable solution seems to be to look to negotiate a revised operating arrangement with HTAFC as the major existing stadium occupier, whereby they take on full responsibility, and offer opportunity for continuing use by HRLFC (Giants).
“Achieving such a solution will involve the council and some other debtors agreeing to write off the historical liabilities.”
The report gives no details about who else, apart from the council, would have to write off debts.
At a meeting on Wednesday December 21, the Cabinet will be asked to allow senior officers, including chief executive Jacqui Gedman, to enter negotiations with Town with a view to the club taking “full operational control”; conduct negotiations with other leaseholders; and agree to write off debts.
The move has the support of Clr Graham Turner, Cabinet member for regeneration and growth, who said: “I am fully supportive of the recommendations contained in this report.
“KSDL has been an important part of the development of the stadium site and has, over the years, served the residents of Kirklees well.
“However, what was right all those years ago when KSDL was set up is now not the right way to operate the stadium complex and a different operating model should be adopted.
“This report sets out the preferred option and I am sure that the proposals to negotiate with the football club to become a long-term lease holder will help secure the stadium and allow it to develop and flourish in the coming years.
“The interests of all those who use the facilities at the stadium will be protected as the final negotiations take place.
“I would like to thank the current board of KSDL and all past members for the hard work and commitment they have shown over the years, especially given some of the challenges we have seen over the last 25 years.”
