Cardiff Blues push ahead with plans for £150m indoor arena
THE Cardiff Blues are close to putting ambitious plans to transform its existing BT Sport Arms Park home, which could see a £150m indoor arena built, to its landlord Cardiff Athletic Club (CAC).
The ebullient chief executive of the loss-making region, Richard Holland, said he is hopeful that the terms of a new 150 year lease with development rights to transform the ground can be put to members of CAC – drawn from its rugby, hockey, bowls and cricket sections – at an extraordinary general meeting before the end of the rugby season.
The Blues’ current lease with CAC expires in 2022. And both parties have been in negotiations for the past 18 months on a new deal, following the signing of a memorandum of understanding.
If a lease deal is struck the Blues will then have to decide on two redevelopment options for the ground, which could also be extended to take on the existing Holiday Inn Hotel site next to it. These are: An up to £150m indoor arena for 15,000 spectators, with flooring technology that would see a rugby pitch installed for games, but replaced for events such as concerts and conferences; and
A new stadium built at 90% degrees to the existing and ageing Arms Park arena at a cost of potentially up to £25m – part funded by commercial developments around it, including residential and office schemes.
If a new lease is agreed, and subject to planning consent on the preferred development option, CAC would receive a £8m payment from the Blues.
It would then have to agree a distribution formula for its four sections where in terms of membership the rugby section is by far the largest.
CAC could also potentially have an overage position in a new lease giving it a percentage of profits generated from commercial developments at the Arms Park.
And if Cardiff Blues are sold, as part of any development scheme, CAC would also stand to receive a further payment of £750,000.
The 15,000-seater indoor arena option could also incorporate a hotel, a gymnasium, as well as conferencing and banqueting facilities.
To to make it attractive to investors it would need to be in constant use, with concerts, conferences and other events taking place when the Blues and Cardiff RFC are not playing.
Cardiff council has a long stated aim of realising an indoor arena for the city. It has been looking at land, where it has a development option, at Dumballs Road for such a project. There are also plans for an indoor arena from property developer David Parry-Jones to sit alongside the proposed new School of Technologies for Cardiff Metropolitan University at Callaghan Square.
However, the reality is that the city can only support one indoor arena.
Whatever the development plans for the Arms Park the proposed new lease would ensure that rugby and its heritage - with a potential new rugby museum built - is protected at the Arms Park.
But until a lease deal is signed the Blues will not be able to enter into detailed negotiations with identified investors on its two options, as well as drawing up more in depth business plans.
For the indoor arena option the Blues are in discussions with a number of interested investors, including those based in the Middle East, as well as indoor arena operating companies.
Mr Holland said he is confident of securing a naming rights deal for any indoor arena, which could potentially be the springboard for further Middle Eastern investment in Wales.
He said of the two development option: “The economic impact for the city and wider city region is infinitely greater for an indoor arena than the stadium. If we spruced this place up [new 15,000-seater stadium] for say £20m to £25m we are going to end up with a modern version of what we already have now, which creates very few opportunities for new revenues.
“Global operators are already interested in terms of taking an operating lease on an indoor arena and paying a fee for exclusivity rights.
“So say we got 140 concerts and events a years plus rugby, banqueting, conferencing, car parking and a potential hotel built into the venue too, then you got have got a facility that is making a lot of money.”
Mr Holland wouldn’t be drawn on any potential public sector support, but that a state-of-the-art indoor arena would bring hundreds of thousands of visitors to the city each year and provide a huge direct and induced boost for the regional economy.
There is potential for the project to get backing from the £1.2bn City Deal for the Cardiff Capital Region, while the Welsh Government could also support the project, due to its wider economic impact and role in promoting Wales internationally. The Welsh Government recently provided finance to part fund the £83m International Convention Centre Wales at the Celtic Manor Resort in Newport.
Mr Holland: “You would probably get a return on £150m, but if that got that down to £100m for a required 5 to 7% return, it is going to have to generate around £5m [profit]. And we are confident that can be achieved.
“We have also got an interested party wanting to take on naming rights for an indoor arena.
“But it all rides, crucially, on getting the new lease. And if we do it will provide security for Cardiff RFC as whatever the development option this will be their home for matches and training. So, this is brilliant for Cardiff Athletic Club, as it gives them long-term security and £8m in the bank.”
Mr Holland said it could be between one and two years to secure planning consent, although an indoor arena could take longer than a new stadium.
It is expected that members of CAC will be given 20 days notice for a EGM.
If the ground is redeveloped it would mean the Blues and Cardiff RFC having to play elsewhere, potentially for two seasons.
On where the Blues and Cardiff RFC could play their home games, Mr Holland said: “People are of course interested as to where the Cardiff Blues and Cardiff RFC might play their home games if redevelopment of the ground happens, but at this stage it would be foolish to start exploring possible options until the lease is secured.”