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Friday, April 16, 2010

Wisdom of Pursuit of Retail Enabling Questionable

Following the collapse of the commercial property market, Liverpool One shopping developer, Grosvenor, has seen a £1bn reduction in the value of its portfolio.

The Grosvenor flagship £1bn Liverpool One development, which is attracting 24 million shoppers and as such will be vigorously protected by the regions retail hierarchy, contained within the regional spatial strategy, was written down by £165m in their 2008 accounts.

A combination of the fragile recovery of the retail sector and the protection of thousands of jobs associated with existing retail businesses in the city of Liverpool, added to developers’ understandable caution makes the possibility of significant retail developments in the city highly questionable.

This is bad news for Everton’s preferred stadium financing mechanism of a retail enabling package combined with the sale of Goodison Park to fund a new stadium development. In 2004 Sir Philip Carter stated that the Goodison land would be worth as little as £4m without the then interest of Tesco who it is understood had offered £12m on two separate occasions for the site.

Following Cushman & Wakefield’s report to the city council in 2003, which contained a warning over the effect Tesco’s planned development on Goodison would have on the local commercial centre of Walton, and therefore the need to refuse any planning permission, Everton decided not to pursue the offer at that time. Former Everton CEO claimed in 2007, as part of the latest stadium relocation financing explanation that up to £15m could be obtained from the sale of Goodison.

Everton’s board continue to be influenced by two giants of the retain industry, Sir Terry Leahy and Sir Philip Green. Tesco remain one of the few developers with commercial projects on the drawing board. In a bid to prevent a second public inquiry at Kirkby Tesco has now consulted with neighbouring authorities to identify an acceptable level of retail for phase one of their future Kirkby development; Tesco are understood to be submitting a revised planning application for Kirkby in July / August of this year. Tesco CEO, Terry Leahy, is on record as saying he is still open to including Everton in the plans for Kirkby.

Tesco are also embroiled in a legal argument over the Project Jennifer development, a scheme to regenerate the Great Homer St area of North Liverpool. The developer, St Modwen’s, who vigorously opposed Destination Kirkby, has replaced Tesco with arch rivals Sainsbury’s who now intend to build their biggest store in the city. Tesco, having been refused planning permission for their store, are mounting a legal challenge in a Manchester court on the 23rd of June. In a bid to avoid any further delay to Project Jennifer Liverpool City Council wrote to Tesco and offered to buy their land but a bullish Terry Leahy explained ““We own the land there and we would like to open a store which we would ensure trades very successfully. We would be happy to work with the city council on that.”

A KEIOC spokesman explained, “The wisdom of being led in place of taking the lead through dynamic innovation has resulted in two failures to address the pressing stadium problem. The continued strategy of utilising retail enabling and the sale of Goodison to deliver what is described as an “affordable” stadium is also highly questionable. According to KEIOC’s analysis Kirkby was likely to deliver just £10m of additional matchday income; we’re already £20m behind Liverpool and they have plans to generate an additional £50m; Arsenal and Manchester United already generate £80 more matchday income and Spurs, Chelsea and Manchester City, the teams we compete with at the top of the premiership all have plans in place which will leave Everton firmly behind. The chairman has long since admitted this boards impotence in terms of financial ability to deliver investment at the level required by a club of Everton’s stature, yet here we are, continuing down the same old tired road. It’s embarrassing that today the owners of Liverpool, faced with the same dilemma, don’t simply talk about a solution they act in an open and honest manner; they’ve announced to the world and his wife that they’re up for sale and have appointed Barclay’s capital to oversee it”

As has been widely reported KEIOC, with the support of academia and the city council, are advocating the establishment of a football quarter in and around Stanley Park, details can be found in a section on this website. As part of a football quarter a phased redevelopment of Goodison Park is put forward. This embraces the need to accept affordability, the concept seen here would cost less than £25m, for slightly more they could include facilities built into the structure that would ensure appropriate generation of income streams far greater than those seen in stadia built in inappropriate locations dictated by the need to accept enabling from retail and the premium from companies desperate to develop Goodison.

Structures as seen above can be constructed with no loss of capacity during the season and will enable Everton to compete in the future with the clubs who are now financially light years ahead of us and will remain there when the new UEFA financial regulations come in during this decade. Simply put we need to plan for the future; we need a fresh approach. KEIOC have one eye on the costs now but the other eye on the income streams of tomorrow.

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