ARENA CASH FLOW WORRIES DISMISSED

4 March 2005

Swansea Council has dismissed cash flow concerns at the city's new £27 million stadium. The authority has agreed a £2 million loan to StadCo, the company set up by the council and the city's football and rugby teams to manage the facility.

It will be used to buy equipment to fit out the stadium and cover the budgeted £800,000 that was expected to be generated through naming rights at the stadium.

This week an annual price tag of £250,000 was placed on the deal, raising concerns that there was a serious cash shortfall.

But a council spokesman played down the concerns.

He said: "The £800,000 is a total budget for the naming rights sale, not an annual figure."So it is entirely consistent with the quoted estimate of £250,000 per annum being our targeted value."

There have also been concerns about the security of the £2 million loan to StadCo.

A source at Swansea Council, who didn't want to be identified, said: "Some are worried that two of the three parties making up the company, the Swans and the Ospreys, have no sizeable assets so if StadCo was to fail to make the repayments only the council would have any worthwhile assets."

But the council spokesman insisted that public money was not at risk.

He said: "The loan from the council to StadCo will be at a full cost recharge rate, that is no cost to the council.

"The business plan for StadCo allows for the cost of payment of the loan repayments and interest. The detailed loan terms will ensure that the repayments and interest must be met by StadCo with a legal charge on the equipment in favour of the council.

"In the unlikely event of default on the payments, then the equipment would revert to the council."

Council bosses have also insisted there are no problems with the marketing of the stadium.

Bastion, the company now in charge of selling the naming rights, this week announced it was opening the bidding process and was expecting firm offers from major brands.

It says it expects to be able to name a headline sponsor by the end of June and said that the £250,000 price tag would buy £500,000 worth of advertising.