New arena 15,000 to With capacity for
A NEW 15,000 spectator capacity indoor arena for Cardiff is on track to open in 2024 in a private sector led project that is expected to inject £100m into local economy each year.
Next week Cardiff council’s cabinet will announce the preferred developer and operator of the £150m project earmarked for Cardiff Bay on the existing car park site of the council’s County Hall HQ and the adjoining Travelodge Hotel on Hemingway Road, which will have to be relocated.
The bidders have been whittled down to two in US-owned AEG and Live Nation.
Live Nation is already invested in the city as the operator of the 7,500 capacity Motorpoint Arena. AEG’s global portfolio of stadia and indoor venues includes the O2 Arena in London, the AO Arena in Manchester and the Staples Centre in Los Angeles.
The council said the arena would attract more than one million visitors a year. It will create 2,000 jobs during its three-year construction period once operational another 1,000 direct jobs and a further 600 jobs supported in the local economy.
While it will have 12,000 seats, the arena will have capacity for 15,000 spectators.
The project, championed by cabinet member for investment and development Russell Goodway, is seen as the missing link in the city’s entertainment and leisure infrastructure, will be financed by the winning operator.
However, the council is expected to provide a capital contribution of between £15m to £20m, which it has ring fenced funding for, towards the cost.
The council is also expected to provide a so called wrapper lease, or effectively a guarantee that the operator’s repayments on its borrowing to finance the project will be met.
Having a strong guarantee from a public sector body would allow the operator to finance the project in the marketplace on more favourable terms.
Most indoor arenas in the UK do receive some form of public subsidy.
Council leader Huw Thomas, said: “We remain committed to delivering a new indoor arena and today we have taken a big step forwards. We believe the new arena will have a similar impact on Cardiff Bay, as St David’s 2 had on the city centre. It will act as a major catalyst for the next-phase regeneration of Cardiff Bay delivering new jobs and opportunities where they are most needed.
“It will also help with the case to improve public transport links to Cardiff Bay and will provide the impetus for a complete re-imagining of the Red Dragon Centre area. It’s an incredibly exciting opportunity for Cardiff, especially as we look to emerge from the economic damage of the pandemic.
“I know there will be voices asking ‘how can the council afford to be involved in a project like this at this time’, that’s why it’s important they know that this is a private-sector led proposal which the council is supporting. That means the private sector will be covering the lion’s share of the costs and taking the vast majority of risk associated with delivering this project.
“The council’s capital commitment will be less than 15% and could be significantly lower by the end of the process, and instead we will use the strength of our covenant to enable our partner to access funding at a more affordable rate.”
Cardiff Council’s cabinet will receive a report next Thursday when it will be recommended to appoint a preferred bidder for the arena and to authorise the preparation of the final detailed designs and costs, before entering into a development
contract in the summer.
Cabinet will also be asked to approve the acquisition of a number of additional pockets of land needed to facilitate the development.
Mr Goodway, said: “The city’s strategy is to establish the Cardiff Arena as a top tier UK arena and to make it the premier arena in the south west region of England and Wales. Both bidders have been keen to progress the proposals at pace which means the new arena is aiming to be open by 2024. Both bidders are confident of a full return to live entertainment well in advance of this date.
“Sound Diplomacy, the internationally-renowned advisors on the music industry, believe the arena will also become a fundamental component of Cardiff’s Music City strategy. They say it will have a positive impact at all levels of the live music ecosystem from the grassroots venues to our major spaces and it will support the development of a homegrown industry.”
Mr Goodway said the council has secured commitments that jobs and training will be available for local people throughout the construction of the arena and when it become operational.
He added: “There will be a key focus on helping the unemployed into work and engaging school leavers through new entrant, apprenticeship and graduate employment opportunities. It’s really important residents benefit from this project.”
The council is also expected to soon announce plans for its existing County Hall HQ.
This could see the existing building being refurbished, or demolished and a new HQ built.
It has though ruled out a relocation from Cardiff Bay to a new HQ at land owed by the Welsh Government at Callaghan Square.
Whatever the outcome it will be a be part of a separate procurement exercise to the arena and relocation of the Travelodge project.
The same will be the case for the future of the Red Dragon entertainment and leisure venue next to County Hall.
The council could look to demolish the existing facility and create a new complex, or partially redevelop it, as part of a wider £500m masterplan for the area, which with the county hall site expands to around 30-acres.
This could see other commercial developments such as new residential and leisure space developed around an arena.
Last year the council acquired the Red Dragon centre from British Airways Pensions Fund.
The value of the deal was not disclosed, but is understood to have been around £55m. It financed the deal with low interest and long-term repayable borrowing afforded local authorities through the Treasury’s Public Works Loan Board.
It is understood that the PWLB loan currently has a repayment cost annually of £2m.
Pre-Covid annual rental income from the Red Dragon Centre was around. £3m. It is understood that due to the pandemic some tenants have struck rent deferral deals with the council.