Twist over Arms Park’s future as details emerge of why Blues talks failed
Any redevelopment of Cardiff Arms Park cannot be an exercise in “repairing the balance sheet” of the Cardiff Blues, the organisation which owns the stadium has said.
A dramatic statement last week from the Blues revealed the region is exploring “exciting options” for a possible new home. The Blues’ current lease on the ground in the centre of Cardiff expires in 2022.
Now Chris Nott, pictured right, a member of the management committee of Cardiff Athletic Club (CAC), owners of the Arms Park, said its tenant had walked away from the negotiation table about a possible deal to stay.
Mr Nott said the initial offer to enter into a 150-year lease with rights to build a new stadium on the Arms Park site – including commercial developments – was in effect just centred on securing a three-year option and would give the Blues time to develop a more in-depth business plan.
He said that the proposed offer of £8m from the Blues to the Athletic Club, which is made up of the sporting sections of rugby, tennis, hockey, bowls and cricket, would only have kicked in if the Pro14 region had secured planning consent for such a scheme during the option period.
And while he said CAC would still do a deal with the Blues, he said that future discussions should also involve the Welsh Rugby Union. He also raised the prospect of CAC having to consider an agreement with any other bidders that might emerge to run the next Blues franchise to play at the Arms Park.
The current six-year franchise with the Welsh Rugby Union, along with those with the other Welsh professional regions, expires in June 2020.
Mr Nott also doubted whether the building of a new stadium on the site would provide enough developer profit to realise any substantial return for directors of the Blues who have provided loans to the business. The biggest provider and underwriter of debt is its chairman Peter Thomas. The combined director loan position, which is no longer interestbearing, is around £14m.
The Blues’ current lease with CAC expires in 2022.
Mr Nott, senior partner of one of Wales’ most successful commercial law firms, Capital Law, said: “The Blues have been portraying Cardiff Athletic Club as being at fault in the breakdown of negotiations, but that is simply not true.
“Originally the Blues offered £8m but once we got into documenting that, it turned out to be actually an option and all they wanted to do was to pay a modest amount [around £85,000 a year] for three years, that would give them the right to buy at that price if they could secure planning permission.
“We then learned that they didn’t intend to provide the £8m themselves, but that they planned to find another organisation to acquire the investment in any development scheme, who also might take over the Blues.
“So all the option did was give them to right to buy at £8m. However, if it turned out that the development opportunity was not as valuable as that, then all you would have at that phase is another set of negotiations, whether with the Blues or whoever they sold it to [investment in the scheme].” Mr Nott, who represents CAC on the board of Cardiff Blues, said that negotiations then “floundered” when chairman of the Blues, Mr Thomas, floated the idea of the WRU taking over the Blues. He added: “When the Blues said they wouldn’t do that, alternative negotiations broke out about the possibility of there being some kind of joint venture. Those negotiations have been toing and froing for quite some time. The last proposal about doing a joint venture was actually made by the rugby section of CAC.
“Then last week the Blues decided that they are now going to look at other options [a new home].”
He added: “The perfect outcome is having a successful regional side playing in a refurbished ground at Cardiff Arms Park, but you cannot do that at any price. The ownership of Cardiff Arms Park wasn’t given to the Blues when it was created so that the value in Cardiff Arms Park couldn’t be speculated upon the playing of professional rugby.
“And the position of CAC is that Cardiff Arms Park cannot be used to repair the balance sheet of the Blues, until we have a new stadium and a regional team playing in it. If there is then a development profit, then so be it.
“But it is in the interest of everyone, including Cardiff Council, the Welsh Government, the WRU and the supporters of the Blues, for the Arms Park to have a gorgeous and appropriate stadium for the playing of top-class regional rugby... That has to be a goal of everybody.
“But that requires a lot of parties, including the WRU, to be involved in discussions about how to achieve that. It has not proved possible to do that in negotiations with the Blues. And if you were to enter into a joint venture then you need finances to do
it. But you have to question that if they cannot even pay the rent.”
After its statement last week the Blues confirmed they were in arrears on rental payments to their landlord, but that the shortfall would be made up. The current lease sees the Blues paying around £150,000 year to CAC. However, it then also benefits from the car-parking income at the ground, which can be in the region of £300,000 a year.
While still open to recommencing talks with the Blues, Mr Nott said CAC now had no alternative but to explore other options, including the possibility of it looking to redevelop the ground itself, as well as talking to any new bidder or bidders that could emerge seeking to take on the next franchise for the Blues. He said any future discussions with the Blues should also involve the WRU.
Mr Nott said: “There are a number of options, but they are regrettable. We would first of all like to do a deal with the current incumbent, but if we cannot do that deal, then who knows if somebody else will come in and try and take over the Blues franchise.
“We have got a lease on the ground with the Blues for the next four years. In that there is an obligation to maintain the ground and to return it to its original state. So under the current lease, we should get a repaired stadium anyway.
“So in this period [the next four years] we need to conduct discussions with other parties to see what other opportunities might arise. And it may be that the Blues might come up with some alternative arrangements.”
With an indoor arena now planned for Cardiff Bay, there is little, if any, prospect for the Arms Park having, as initially planned, a similar complex that could accommodate the playing of rugby.
But even with a less costly new stadium, which could cost in the region of £30m, Mr Nott said he believes that securing any significant developer profit wold be a challenge.
This also has to be set in the context that Cardiff Council would be unlikely to give consent to any highly profitable high-rise residential development around a new stadium.
Mr Nott said: “It is difficult to see how a substantial development project can be made from that site, given the requirement to have a rugby ground on it. There may be experienced property developers who can see a way to do that, but as it stands that would be a challenge.”
As for the proportion of what developer profit would go toward the rejuvenation of the ground, Mr Nott said: “Well therein lies the nub of the commercial issue.”