September 26th, 2016

Indebted Wasps may seek fans’ loans and pay back council taxpayers

Indebted Wasps may seek fans’ loans and pay back council taxpayers Indebted Wasps may seek fans’ loans and pay back council taxpayers
Wasps at Ricoh Arena
Updated: 4:50 pm, May 07, 2015

INDEBTED rugby club Wasps want to raise up to £30million including in loans from ordinary fans – partly to pay back a taxpayer loan from Coventry City Council, the Observer understands.

Our council sources say councillors have been briefed by senior council officers on Wasps’ latest proposals to raise loans from a mixture of institutional investors, and fans – through a ‘retail bond’ scheme.

The ‘retail bond’ scheme would invite ordinary people, fans and possibly local companies to invest money as an “I owe you”, with the expectation it would be returned by Wasps at some point in future.

It follows unconfirmed speculation for months that Wasps have been trying to raise similar monies from traditional lenders in the finance markets, partly to enable them to re-finance the loan and pay off the council in full.

Hotel Chocolat is among companies to have issued a ‘retail bond’ scheme. As a return on punters’ investment, they issued free chocolate as a type of interest payment.

It is understood a third part of Wasps’ plan is to raise money from the naming rights in the Ricoh Arena from a sponsor, who would pay potentially millions of pounds for the stadium to be re-named using their company name.

There is speculation that Jaguar Land Rover could be interested in the naming rights, which it is understood are due within the next two years.

Council sources say income from the naming rights could help pay off the £13.4million loan owed to the council since a secret deal in October last year. That deal saw indebted London Wasps Holdings Limited buy the Ricoh company Arena Coventry Limited on a massive 250-year lease for £5.5million – plus the loan – from previous ACL joint owners, the council and Alan Edward Higgs Charity.

Council sources say it is hoped the council loan could be paid back in full within months – rather than the planned 20 years – when Wasps intend to issue a prospectus for the retail bond scheme.

The prospectus would claim business has significantly increased since their Ricoh move. Wasps maintain their turnover is increasing – albeit from a low base – since their switch from Adams Park in High Wycombe. Their Ricoh attendances have been bolstered by free, cheap and ‘buy one, get one free’ ticket offers.

It is not known if Wasps might seek to borrow to pay off the council loan against the future income they expect from the naming rights next year.

We revealed the latest 2013/4 accounts for London Wasps Holdings Limited – owners of stadium operating company Arena Coventry Limited – show £22million debt, including loans which have been borrowed against future rugby Premiership income.

The last ACL accounts, for 2013/4, recorded £400,000 losses. The Coventry Observer has exposed inaccurate public claims by council leader Ann Lucas about ACL’s finances. We have also highlighted how the council’s Labour leaders had repeatedly stated they would only expose city taxpayers to risk from loans in viable and sustainable companies.

News of the possibility of the council loan being paid back in full comes three weeks before council and general elections in which Labour insiders fear some political fall-out from the secret deal, which both Labour and Conservative councillors agreed in private.

While Coventry City fans are divided over the entire saga, many on social media have expressed fury with the council for selling the Sky Blues’ Ricoh home – which always depended on Sky Blues’ income to be viable – to an out-of-town rugby club.

Coventry City’s future is uncertain. Its current owners say the club cannot continue as tenants of Wasps at the Ricoh and want to build a new stadium to maximise commercial income. That would see the club playing nearby but outside their traditional domicile home city.

Council sources also say the ‘retail scheme’ could enable ordinary punters to place their bonds in ISAs to enable them to get tax breaks.

Sky Blues’ owners Sisu have an appeal outstanding against their failed attempt at last year’s judical review to claim the original council loan to ACL in January 2013 was an unlawful use of taxpayers’ money.

Council sources claim if the loan is paid off it would bolster the council’s ongoing argument that the loan was made at a commercial rate, and was not ‘state aid’. The council still owns the Ricoh freehold.

Twenty-five high-profile Coventry City fans and professionals including academics, business people, lawyers, accountants and writers have called for a wide-ranging independent review into the Wasps deal, false council claims, use of taxpayers’ money and other aspects of council conduct.

A response is awaited from communities secretary Eric Pickles, now held up until after the election. Councillors have said the council’s independent auditor will scrutinise the deal later this year as part of an annual inspection of council accounts – which opponents say would be too limited.

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