A Wise and Justifiable Investment?

Rose Bowl Hotel

lt was July 2009 when it was first publicly announced that Eastleigh Borough Council was to borrow £30m and loan it on to The Rose Bowl Company to enable them to fund the building of their luxury Hotel. Its existence was said to be essential if Test Match Cricket was to be secured and the further development of the stadium site was to be achieved. (As it happens neither was correct).

The Council Leader was reported as saying:

“We have invested in this for the good of the community, not to make money, but the Council will not end up out of pocket”.

Win Win Win Win!

It was also stated that it would create up to 200 jobs, generate £14 to £20m of spending in the local economy, would be a great focus for “world” class sporting events — plus Test Match Cricket.

It had also been said that because of the crisis in the Economy, the Rose Bowl Company could not acquire sufficient credit. (Nothing was mentioned about other significant reasons as to why that was the case)

From the outset, I was intrigued as to how this proposal was processed and determined, and the reasoning applied in support of the loan request being granted.

Secret Business

It didn’t help that so much was said to be commercially sensitive, which meant that early on, the Council decided to treat the whole subject matter as “Exempt Business” which meant it would discussed behind closed doors, away from the scrutiny of the press and public.

It was an exceptionally large amount for a Borough Council to borrow and commit to ,for the benefit in the main of what I thought was known to be a financially fragile company.

County Clubs struggling

Its core specialist area was cricket, a sport in which just about every County Club in the country finds hard to avoid financial losses, and in Test Match terms, is struggling to maintain its credibility and popularity, let alone long term survival around the world.

When I started asking questions, I was shocked. There appeared to be numerous areas that hadn’t been properly evaluated, questions that wouldn’t and or couldn‘t be answered and an attitude that eventually seemed indicative of a “money no object“ policy towards obtaining the preferred answers required – post the decision having been seemingly already made and announced.

There has also existed what myself, and others I suspect, would perceive to be an unhealthy relationship between the two organisations which in my view, has contributed to the Council being seen to be commercially naive and biased. What was supposed to have been a Hotel project vital to be completed promptly, had developed into an expensive, complex, onerous and so far, as anyone would surely have to acknowledge, a “dogs dinner” of a process, flawed and altered in so many ways.

From my ongoing personal experiences and observations, I have been genuinely shocked at the lack of meaningful challenge, or for that matter, almost any challenge by Councillors, who passively exhibit no grave concerns whatsoever. How can such a contentious, hugely expensive, debt laden project be voted through “en-masse” by every single individual Liberal Democrat Councillor? Not even an abstainer amongst them! Only the few alternative political party opponents objected.

I believe the majority of members, and they do have my sympathy, have been unreasonably put upon to a point where it was impossible to properly assess the material being provided for analysis. Perhaps that is why the last Full Council vote taken, on 15 December 2011, (in agreement with the Council Leader’s proposal) delegated the ultimate decision to just five people – – three un-elected Executive Employees, the Council Leader, and one other. There were still 14 issues outstanding!

Final decision still to be made

Is that not simply amazing? Yet I would suggest that everyone throughout the Southampton media area would believe that Eastleigh Borough Council was already formally committed to this project. But actually it was not and still is not! The District Auditor confirmed as much, both at the newly formed Audit & Resources Committee meeting on the 31 May and previously elsewhere. I attended this meeting, and others, whereby members have shown themselves to be embarrassingly unsure of their position, let alone the facts. I have found it all very disconcerting.

Sit down and shut up

At the latest Hedge End, West End and Botley Local Area Committee meeting held on the 11 June 2012, (the Committee responsible for passing. or otherwise, planning applications by the Rose Bowl Company) I made another attempt to highlight some of the issues of concern. In the open-minded spirit of democracy, I am first told that I have 3 minutes to complete my address. I object on the basis that with no one else there wishing to speak in this, the Public Participation section, could or should I not be allowed longer, perhaps up to I5 minutes if needs be? After all, I may well have had things to say that could be significant and important, useful even. But no deal!

In fact, the atmosphere from thereon in felt quite hostile from some quarters.  Whatever could I say that Councillors would not want to hear? Nonetheless, I did my best. After a few points were made. I started to go through some figures, details of which I was unable to complete. My time was over and out. It felt like being on some kind of Beat the Clock Game Show.

The figures to which I was referring concerned aspects of the Councils first years’ external expenditure. (June 2009 to 2010) In this day and age, big numbers sweepingly trip of the tongue and become almost unreal. The following I believe starkly highlights amounts that were so easily and generously spent. Some are substantial amounts that I contend could or should have been avoidable.

The power of wellbeing

Before listing these figures, which are more or less in date order, I would remind readers that within a short time of making the first announcement, the Councils external legal advice was that the proposal would fall foul of state aid rules and be open to challenge by others. (Primarily likely to be other Hoteliers) Hence, a different approach and new reasons would have to be adopted.

Subsequently a way was to be found to justify the Council being the “builder” and now also owner of the Hotel.

Consequently, the “Power of Wellbeing” rules were utilised under the Local Government Act 2000, and an embellished reference to the Rose Bowl Project was conveniently added to the new and upcoming Strategic Community Plan, 2009 to 2013, formally produced and launched in November 2009. This was a legal necessity if the venture was to be acceptable within the above mentioned Act.

Nice work if you can get it.

My main concentration was on Norton Rose, the Councils external legal advisors of choice in London. (Regarded as “as good as it gets”) Their general charges are for Professional Services and Legal Advice re Hotel Acquisition and Development Finance. I have also included some of the other key payments made.

Norton Rose.        15 Jun – 15 July       £ 58,112

Norton Rose.        20 July – 20 Aug      106,914

Norton Rose.        21 Aug – 18 Sep       131,463

Norton Rose.        19 Sep – 16 Oct        205,869

Douglas Grant Assoc

(consultancy services)                                9,940

Douglas Grant Assoc.                                   7,839

Norton Rose.        11 Oct – 13 Nov       150,531

Deloitte.                                                           11,500

Douglas Grant Assoc.                                 17,572

Vail Williams.

(valuation advice)                                        11,500

Deloitte.                                                            23,853

Douglas Grant Assoc.                                  13,881

Vail Williams.                                                    2,719

Norton Rose.         14 Nov-  18  Dec        86,420

Norton Rose.

(Judicial Review)    23 Nov – 18 Dec     83,191

Douglas Grant Assoc.                                   6,946

Norton Rose            19 Dec – 15 Jan        69,976

Norton Rose.       19 Dec – 15 Jan           12,701

Norton Rose             16 Jan – 23 Feb      93,253

Douglas Grant Assoc                                   14,485

Douglas Grant Assoc                                    7,343

Norton Rose              24Feb – 23 Mar    39,384

Deloitte                                                               5,375

Douglas Grant Assoc.                                    5,579

Norton Rose             24 Mar – 20 Apr     14,801

Norton Rose             21 Apr – 21 May     19,220

Norton Rose             28 May – 11 June      4,140

Note: The Judicial Review was decided on 4 March 2010.

Approximately £500,000 was spent in the first 4 months alone — and yet along the way, it’s been said that no money has thus far been invested in the project. Seems misleading to me. The Council has certainly got borrowings outstanding and payments to continually make, without income to offset.

Blank Cheque

Of course, it’s also been stated that all fees will be lumped onto the bill for the Rose Bowl to pay back on the ‘never-never’. Incredible. What sort of business would agree to such an “open ended blank cheque book” arrangement? And why isn’t anyone concerned at the sums being wasted? Many of the reports have been rendered useless, with other new plans and opinions and partners being introduced, new assessments and consultants reports to pay for, revised business projections being externally assessed, etc.

Even the Judicial Review could have arguably been avoided had the Council consulted with the Hoteliers, as they were obliged to, and in fact as they eventually did so in yet another private meeting held in June 2010, when apparently agreements were made.

Interestingly MacDonald Hotels Ltd (Boorley Green) who headed the Judicial Review, Meridian Leisure Hotels (responsible for the Holiday Inn Hotel situated immediately next to the Rose Bowl Stadium) and Daniel Thwaites plc.,(trading as Shire Hotels) all extremely experienced Hoteliers, were initially disregarded in terms of their concerns and know how, and yet Rose Bowl plc and Rose Bowl Hotels Ltd  were eagerly listened to.

Was I the only one who was nonplussed by the Councils later statement in which it was said “The Councils defence was successful with the Judicial Review being rejected at the oral hearing stage. This was an excellent result ……”? According to the figures I’ve provided above, the Judicial Review advice I defence costs amounted to a whopping £317,000. The costs awarded via the court, payable by the Hoteliers was as I understand, just £30,000. Can such an outcome really be described as being a success?

There becomes ever more other disturbing aspects that arise, not least in respect of the most recent position accepted and adopted by the Council. Apparently, there is now to be 520 odd “Full Time Equivalent “jobs created, and £55million extra spend in the Economy. (No longer the Local Economy you will note) I consider the basis on which these figures have been estimated to be inaccurate and flawed.

The “out of the blue” proposal to purchase the “peppcrcorn rent” lease on the land was also astounding. To then in combination, also want to purchase the stadium, whilst providing a multi -million pound cash injection into the Rose Bowl Company, which also meant imposing on them £35,000 per month rental payback, was staggering. Were we now as desperate as them to keep the Company alive?

There seems to be hardly any clear indicators to show how this extra monthly payment is to be met, and there is little in the way of regular income streams available over and above that generated in previous years. Evidently, the risks and costs were becoming bigger, hence the necessity to cut playing budgets and staff numbers etc.

Have these matters genuinely received intense scrutiny and challenge by Councillors?

Council steps in as borrower of last resort

It is generally accepted that the Country is over loaded with debt, Public Sector Borrowing being almost out of control. We are doing everything we can to reduce the deficit. Yet this Council is sprinting in the opposite direction, and on very unstable footwear! This £35m to £40m corporate orientated Hotel project is surely not the business of a Borough Council, but a venture only worthy of hardnosed private enterprise. Tellingly, business investors, previous partners, Banks and the like, have rejected and or walked away from involvement. Others seemingly comforted that the Council is now the guarantor and underwriter, (and direct payer of their invoices!)

This cannot be a balanced and prudent atmosphere in which to commit the Council and its resources. (Which effectively belong to and are those of its ordinary residents).

To try and conclude, surely there must be plenty of people out there who seriously share these many concerns? Over 90% of Eastleigh residents I suggest will rarely, if ever, stay over in the Hotel, with countless being unable to justify, let alone afford, the use of its expensive high-end facilities. Also, less that 0.5% – yes, less than one half of a percent, will benefit from one of the new future jobs predicted to be created in the distant years to come. ls this really proportionate? Should not Councils primary functions be to concentrate on and provide services, and to support socially inclusive projects, the less able and well off always being top of the agenda?

To Councillors who would relate to such thoughts, I would say it is not too late to find  a voice against those who wish you to think otherwise. To those who would take just the pragmatic approach, it is not too late to challenge the figures and outcomes you have been encouraged to accept. In both respects, there is still time to re-evaluate your decisions so far made.

Within realistic ambition and resources, The Rose Bowl /Hampshire Cricket will always continue, so long as its supporters and members, related sponsors, T.V broadcast media, the England and Wales Cricket Board and keen wealthy individuals, wish it to do so. Logic says Eastleigh Borough Council do not need to play, and indeed should not play, such an involved, costly, uncertain and risk loaded role. There is still time to change course.

Photo: © Stephen Slominski

SP man slams Rose Bowl plans

Read more posts on Rose Bowl here

  7 comments for “A Wise and Justifiable Investment?

  1. Stephen Slominski
    June 21, 2012 at 3:19 pm

    Thanks for sharing your thoughts re the Aegeas/Rose Bowl project and in such a thorough way, I’m sure you echo the concerns of many Eastleigh residents.

    I know you feel you have been frustrated in your attempts to put the case for withdrawing from the project and I sympathise however it might come as a surprise to learn that in some ways, EBC is quite liberal in its attitude to public participation at its meetings.

    Some local council’s insist on prior written notification of questions and at Eastleigh, Chairs often allow public speakers extra time, although of course such flexibility is discretionary.

    Even so I feel that the current mechanism for public participation in local government meetings in general is somewhat archaic.

    Participants are either left feeling as if they been tolerated or at best indulged.

    Three minutes might be enough time to register your dissatisfaction with a neighbour’s proposed conservatory extension but hardly enough time to detail objections to public projects that cost of millions of pounds, are subject to complex negotiations and where evidence can run to hundreds of pages.

    Some members admit even they can find the issues and the volume of material to be considered (sometimes at short notice) for capital projects overwhelming.

    So, although alarming, perhaps we should not be surprised that the discussion on £36 million worth of investment appears been delegated to just two elected members.

    Unfortunately, public participation is also limited because few people these days can spare the time to sit in on Council meetings (even among the local press).

    However I view the lack of public attendance as a sign that the system isn’t working and is no longer fit for purpose – not as a sign of contentment with the status quo.

    More worrying, as you have previously pointed out elsewhere, scrutiny panels have been reduced from four to one and the petition scheme looks set to be scrapped.

    This lack of public scrutiny combined with a chamber where the governing party enjoys a huge numerical advantage could, in my opinion, lead to poor decision making even though the starting point for the council , it’s members and officer, is a sincere desire to see the borough prosper and thrive.

    Objectors often forget this – as do those who wish to shape our future often lose sight that those who oppose them are equally sincere and share the same goal – the prosperity and well being of our borough.

    I’m afraid critics like you, are dismissed as ‘talking the town down’ but there has to be dialogue.

    There must be a genuine consensus and not just a process by which popular consent is manufactured through ‘spin’ and the voices of dissent are stifled.

    Regarding the proposed plans I too am surprised that what was described as a “Win,Win ,Win, Win” situation for the borough by the council leader in 2009 has still not been finalised.

    I’m sure you will recall in the December 2012 full council meeting one member going as far as to liken the enterprise to the Apollo moonshot, hailing the Council Leader as a visionary on the lines of John F Kennedy.

    Although the councillors voted unanimously to support the plans with many declaring it a blindingly obvious money-spinner, we are six months on and no finance seems to be forthcoming.

    Surely lenders would be falling over themselves to back a sure bet?
    You have highlighted some the costs that have been incurred so far and I too fear is the reason the council is persisting with the project is because so much money has been expended in its pursuit, to withdraw now and write it off would result in ‘significant reputational issues’ for the council.

    In using the expression ‘significant reputational issues’ I am repeating language that the council has itself used in describing the potential consequences of a failure to relocate the Waste Recycling centre from its current location on Woodside Avenue to Chestnut Avenue in order to accommodate house building on the allotment site – another contentious project which appears to have gone into suspended animation.

    Clearly the matter of ‘reputation‘ should be of concern to the council, but it is not just reputation that will be at stake if the Ageas bowl plan fails.

    At least you can say that by highlighting your concerns to members, you have done ‘your bit’, even if they don’t want to listen.

  2. Stephen Slominski
    June 21, 2012 at 7:42 pm

    A reader sent me a flyer for this month’s t20 matches at the Ageas Bowl.
    Seems they are trying to shift tickets by offering 10 for £120 – a considerable saving on the £20 a ticket match day price.
    Hard to see a significant income been generated from those kinds of sales – seems to bear out John’s comments.
    Apparently ticket sales for last Sundays one day international against the West Indies were also going slow until it was announced that Chris Gayle was to be included in the WI team after which they sold out in days.
    In underlines the need for big names and big matches – Test matches – to fill the place and shift tickets.
    Perhaps its just as well they have some major rock concerts lined up (as reported by Keith Day on his Hedge end blogger blog here)

    Ageas bowl friends t20 flyer

    • Jenny Schwausch
      June 26, 2012 at 9:44 am

      ‘Three minutes might be enough time to register your dissatisfaction with a neighbour’s proposed conservatory extension but hardly enough time to detail objections to public projects that cost of millions of pounds, are subject to complex negotiations and where evidence can run to hundreds of pages.’

      Having attended the meeting, I noted that Mr Martin was given barely three minutes to speak (as Councillors conspicuously yawned and talked amongst themselves), whilst a West End resident was allowed 9.30 minutes (I timed it) on a minor planning issue. Fair and open?

  3. Judith Grajewski
    June 25, 2012 at 3:30 pm

    Well worth reading, Mr. Martin raises serious concerns shared by many borough residents. A couple of corrections, if I may – firstly, the final decision has been delegated to ONE member. The second member in the “group of 5” has only consultee status as do the 3 officers.

    Extract from minutes of Full Council Dec.2011:
    (c) Delegate to the Leader of the Council in consultation with the Chair of Resources Scrutiny Panel, the Chief Executive, the Corporate Director (CFO) and the Head of Legal and Democratic Services authority to proceed with the transaction subject to the satisfactory resolution of the outstanding issues as set out in paragraph 82 of the report;

    Secondly, Mr. Slominski states in his comment that councillors voted unanimously to support the plans. This was not the case. The plans were supported by a majority of members. Conservative councillors have voted against the proposals at every available opportunity.

    • Stephen Slominski
      June 25, 2012 at 10:38 pm

      “Secondly, Mr. Slominski states in his comment that councillors voted unanimously to support the plans. This was not the case.”

      Quite right, both the Conservative group and two Independents voted against it.

      I course meant to say the Ruling Lib Dem majority voted unanimously in favour.

      Yes, there are some members who have expressed serious misgivings over the plan but not one out of the 40 Liberal Democrat Councillors has.
      It’s win win win win for them.

  4. Peter Stewart
    June 27, 2012 at 8:34 pm

    Am I alone in not understanding the full complexities of this (yawn, yawn) cricket based subject? Would it be possible for someone to explain in fewer than 100 words (50 if possible) what this is all about (for those of us who feel sleepy at the mere mention of cricket? Sorry to all you cricket fans.
    P.S. Even if cricket is no good for this venue, would it not be a pretty good place for live music?

  5. Stephen Slominski
    June 27, 2012 at 9:04 pm

    No, you are not alone failing to understand the full complexities of the subject.
    Councillors have been struggling too.

Comments are closed.