New stadium thread

[tlg1903]

3 hours ago, Slim said:

If the club take ownership of the construction cost risk and the lease payments cover the borrowing costs, where’s the risk against the council that makes it unviable?

The risk of the club being liquidated and defaulting on the lease agreement is probably the main one. Another could be it impacting the council’s ability to borrow funds for other things (e.g. council house construction). Both could be addressed/dealt with.

Most private sector construction follows similar principles. Investor funds the construction cost against a firm long-term lease commitment. The council’s pension fund are likely to be investors in such developments.

Only issue I really see is if Cormack is expecting the council to underwrite the over-run in build cost and fix the lease cost up front. 

Also worth asking if the club can afford £1.5m (guesstimate) a year rent payments. I assume we have zero rent at the moment.

I imagine Pittodrie isn't cheap to upkeep these days, there would likely be some significant savings to be made by moving to a modern building (heating bill springs to mind).  I would also hope there would be enough financial benefits (e.g. we have no club museum but I bet we would in a new place) that would eat into the rental costs to make them fairly negligible.  The downside to it all is we never own the ground, we'll still be paying rent long after the stadium has been paid off and will not be able to profit from our home ground the way our rivals can.  

[Ajja]

Again, I’ll be over simplifying this and don’t pretend to know a lot about it. I’d say that the biggest risk for council is optics. The ‘funding’ of what appears to be in support of a private business when the council is strapped and not investing in public services is never going to be a good look. Even if the truth of it is that there is little risk in leveraging borrowing power to then have the club do the heavy lifting on repaying and the council get the upside of a community asset that drives wealth back into the city in some form. For this reason (optics) I’d be surprised if they pulled it off. I agree that there must be a handful of wealthy folks who can chuck in £10m each to build legacy. Cormack should really be writing the first cheque.