Wembley National Stadium, a wholly owned subsidiary of the Football Association, made a pre-tax loss of £31m last year and could default on finance arrangements if wealthy patrons fail to renew their season tickets. The stadium hosts England football internationals, the FA Cup final and Football League play-off finals. The company made an operating profit of nearly £6m in the year to December 2008. However, there was a £26.6m interest bill and the £10.9m write off of bank fees associated with the stadium financing in 2002.
Wembley National Stadium, a wholly owned subsidiary of the Football Association, made a pre-tax loss of £31m last year and could default on finance arrangements if wealthy patrons fail to renew their season tickets. The stadium hosts England football internationals, the FA Cup final and Football League play-off finals. The company made an operating profit of nearly £6m in the year to December 2008. However, there was a £26.6m interest bill and the £10.9m write off of bank fees associated with the stadium financing in 2002. The overall loss was £23m after tax, an improvement on the previous year’s loss of £36m. The company said that its business plan had always forecast that it would not break even until five years after the stadium opened in 2007 at a total cost of £757m. During the year, management refinanced the business, although it still has debts of more than £320m. The deal cut its interest rate from 7.8 per cent to 6.9 per cent and extended the repayment dedaline from 2018 to 2023.
The downside risk is that the new arrangements include cashflow undertakings that it could default on if there is a fall in the number of Club Wembley licence holders, who pay annually for boxes and premium seats. This is possible in a recession. The company has said that the situation has been discussed with the FA who have assured them that they would bail them out if necessary, although this would presumably impact on the FA’s other football activities. The sale of boxes and seats is an important revenue stream, accounting for 59 per cent of the £900m annual revenue. Club Wembley’s 4,500 private members license the seats for an average of eight to 10 years and pay annual season fees. In 2008 about 87 per cent of the licensed seats were taken, up from 82 per cent the previous year. Corporate boxes are available on three to ten year licences, starting from £79,350 a year. These are the stadium’s most popular offerings. Deals on premium seats start from £950 a year. There is no doubt that the stadium is iconic, but that comes at a price which some corporate clients may find increasingly difficult or awkward to afford.
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