‘It is going to cost us an awful lot of money’: Failed stadium gamble adds to council cash woes

A “long saga” over new restaurants lying empty at the community stadium is set to cost the council more than a million pounds.

Councillors said a debacle over three vacant restaurant units in the east stand has left them with the “least worst” option of accepting that the council will be nearly £1.4 million out of pocket.

Under a legal arrangement agreed in 2017 the council was counting on making £4.4 million from the restaurants if they were rented out.

Despite efforts to rent them out over the past three years, none of the units has been taken on. This leaves the council with a funding shortfall under the deal – and it will have to take out a £1.4 million loan to plug the gap with costs of £96,000 to service the loan.

And there is no chance that any of the units will be rented out any time soon, according to finance experts.

‘A salutary lesson’

Cllr Jonny Crawshaw, speaking at a council meeting to discuss progress at the stadium, said: “It is going to cost us an awful lot of money. We did seem to think that this outcome was a relatively low risk three years ago.

“In a way there’s no other option.

“It’s worth us considering this as a salutary lesson because it’s quite clear that this has been a long saga that started perhaps 20 years ago and has spanned a number of [council leadership] administrations.

“We can’t predict the future but we sometimes find ourselves caught in a Catch-22 situation of there not being a single good option.”

To move the project forward, a council report says councillors must choose one of three options – all of which will come at a cost.

Option one suggests the council accepts that none of the units have been let out – and that it will lose out on nearly £1.4 million. This would create a hole in the stadium’s budget and cash would need to be found to make up the shortfall.

Under option two, the council could take on the empty restaurants on a 25 year lease. This will not cost anything immediately – but would see the council take on all service and maintenance charges.

A third option would see the council take full ownership of the restaurants – losing the £4.4 million it was expecting to get back under the deal and “allowing Legal and General to walk away without further financial contribution”.

The council would then earn cash from the rent once the restaurants are let out.

‘We’ve tried to be honest’

The LNER Community Stadium at Monks Cross. Photograph: YorkMix

Cllr Nigel Ayre, speaking about confidential documents around the legal agreement, said: “We have tried, in a very difficult environment, to be as open and honest as possible. The figures have been changing on an hourly basis.”

He said it is unlikely the units could be used as anything other than restaurants under the contract.

Patrick Looker, council finance manager, said: “I would be surprised if they were let any time soon. Certainly the case since the pandemic is that there has not been significant interest in those units.”

And Nick Collins, who manages the council’s commercial properties, added: “The national operators who usually take these sorts of units have been in dire trouble. The notion of them actually being able to let the units at the moment is extraordinarily difficult.”

Cllr Kallum Taylor said accepting the loss was the “least worst” option of the three, and Cllr Stephen Fenton added: “The option that will expose the council to the least risk is option one, having looked at the potential consequences of the other options.”

The meeting heard the authority is already facing an £8.6 million hole in this year’s budget as a result of the pandemic.

A decision will be made by senior councillors at an executive meeting on Tuesday.