The Stadium - The Statement Build

The UK and Ireland’s bid for the 2028 Euros has highlighted stadia to host the games, which are to include in Scotland, Hampden Park; in Wales, The Principality Stadium; in Ireland, Dublin Arena and Croke Park; in Northern Ireland, Casement Park; in the English Regions, Sunderland’s Stadium of Light, Everton’s Goodison Park, Newcastle’s St James’ Park, Birmingham’s Villa Park, and Manchester’s Old Trafford and Etihad Stadiums: and in London, Tottenham Hotspur’s Stadium, The London (Olympic) Stadium and Wembley.

Of these, Everton is presently under construction, Casement Park has yet to break ground, Villa Park have gained planning permission for a new stadium, and Manchester City are seeking to expand the Etihad. Beyond these other major football clubs are proposing major extensions including Leicester City and Crystal Palace, as is Wrexham, and a new stadium is proposed for Ebbsfleet United in North Kent.

Outside football, Wimbledon Tennis has gained consent for an 8,000 seat stadium and 82 grass courts, and rugby league side Bradford Bulls propose a new 25,000 capacity stadium.

Clearly the building of a new stadium to support the growth of a Club is continuing its long and very expensive popularity.

Stadium development costs tend to be in the range £3,500 to £5,000 per seat but can be much more. Asset value cannot support the tens, and in many cases hundreds, of millions of pounds involved in construction expenditure, and justification for the investment can only be supported through value enhancement of the overall Club, or indirectly through the increased prestige attached to the development and its instigator. The recent sale of Wasps Coventry Arena at a reported £17m (C £500 per seat), Macclesfield FC ground (sub £100 per seat) and Yeovil Town FC ground (c £300 per seat) is indicative.

Nevertheless some internal sales have attempted to bridge the gap between Market Value and cost with examples including transactions between companies in common ownership at Reading, Aston Villa, Derby and Sheffield Wednesday at a minimum of c£25m and a maximum of over £80m. Many of these were subsequently subject to FA investigation to assess whether the sale was arranged to manoeuvre club accounts to stay within the FA “profit and sustainability” rules.

Club accounts often use Depreciated Replacement Cost as a stadium value attribution as this generally provides a far higher figure than Market Value and helps support the club’s financial position – it is not by its nature however related to potential sale value, but to build cost.

On the other hand, stadia are commonly rented and the level of rents are generally, if not always, related to affordability. Outliers excepted, Premiership rents per seat are generally in the £55 to £80 range, Championship £25 to £45, League 1 sub £40 and League 2 sub £20. Scotland, the English National League and below are generally in the £5 to £20 range per seat. These ranges may come under downward pressure as energy and other inflationary costs rise – this will include rates as the Valuation Office revaluation takes effect advising that average increases will be approaching 40% this year.

The affordability link and evidence base has led to the investment valuation method being usually employed to assess Market Value, except in the relatively rare circumstance where the stadium is operated very profitably, on an arms-length basis, when this can provide a sound basis for traderelated methodology.

Then again, financial prudence is rarely the reason that most owners get into football!