Written evidence submitted by Sport England
Wembley Stadium and the Future of English Football Inquiry
Executive Summary
1. Sport England is the Government agency for grassroots sport in England. It invests National Lottery and Exchequer funds and uses its insight and expertise to get more people active.
2. Sport England’s key role is to help as many people as possible benefit from the outcomes sport and physical activity can provide, in particular physical and mental wellbeing, individual, community and economic development. As well as supporting individuals and groups to access those benefits, it supports all those who help make sport happen in their local communities, such as coaches, volunteers, and the paid workforce. Its current strategy ‘Towards an Active Nation’ has a particular focus on getting more people from lower socio-economic groups more active, and working with partners in disadvantaged communities to reduce physical inactivity.
3. Football is by far the most popular team sport in England with over 2.2 million people playing the game regularly. It has broad appeal across different groups which other sports can struggle to reach. Football is one of a small number of activities where you are more likely to play if you are from a lower socio-economic group than from a higher one. Women’s football has been growing steadily and is currently the second most popular team sport for women, behind netball.
4. There is good evidence (see paragraphs 41-53 below) that more people could be engaged in sport and physical activity through football by continuing to improve facilities and increasing opportunities to play in the most disadvantaged communities in the country. This makes carefully targeted investment of public funds in football potentially good value for money.
5. Sport England invested £120 million of National Lottery funds in 1998 to help build Wembley Stadium. Since the public announcement of the bid from Shahid Khan in April 2018 to buy Wembley Stadium, Sport England has been in dialogue with the FA and other stakeholders to obtain information about the proposed sale and on how any proceeds would be invested.
6. In deciding whether to consent to the sale, Sport England will consider the original purpose of the National Lottery grant; the benefits to grassroots community sport; the protection of public funds; and relevant policy considerations as set out in further detail in paragraphs 29 and 30. Provided appropriate protections can be agreed, it appears that there is an opportunity to co-invest new funds strategically, for the benefit of football, and the wider community, at the grassroots or community level.
Investment into Football
7. Sport England already invests significant sums into football facilities on behalf of the Department for Digital, Culture, Media and Sport (“DCMS”) through ring-fenced exchequer contributions to the Football Foundation. This recently increased from £10m to £18m per year (until 2020/21) through the Government’s support for the Parklife Football Hubs programme (“Parklife”).
8. Sport England is already working with the Football Association (“the FA”), DCMS, the Premier League and Football Foundation to deliver Parklife and to implement the ‘National Football Facilities Strategy’ (“NFFS”) to ensure that joint funds are invested strategically to deliver maximum benefit for people and their communities.
9. The vast majority of central Government investment into football facilities comes from DCMS. Over the past four years, Sport England has invested a total of over £74 million of capital funding into community football facilities projects which includes £2 million a year via lottery awards where football has benefitted.
10. Sport England has also awarded £14.6 million of revenue funding to the FA for the four-year period 2017-21. This comprised £4.6 million towards talent (specifically to women and girls, and disability), and £10 million to support other interventions. The FA also receives £2 million annually for 2015-20 into coaching. This £10 million investment formed part of the additional £50m Parklife Exchequer Funding investment for football.
Background to Wembley Investment
11. Sport England was the major public funder when the new Wembley Stadium was built. Sport England granted the FA an award of £120 million in 1998 for the purpose of enabling the FA and its subsidiary, Wembley National Stadium Limited (“WNSL”) to build a national stadium at Wembley. This award was subject to detailed conditions set out in a Lottery Funding Agreement (“the LFA”) between Sport England, the FA and WNSL. These conditions were updated in an amended Lottery Funding agreement between Sport England, the FA and WNSL in 2002.
12. The new stadium was funded by a mixture of public money, private investment by the FA and WNSL and finance raised through financial institutions. The public sector contributed a total of £161 million to the cost of the project:
13. The FA contributed £148 million and WNSL provided £15 million. The remaining £433 million was raised as debt by the FA and WNSL through financial institutions.
14. The Sport England grant was subject to formal legal agreements to protect the public investment and objectives of the project, (which are summarised below in paragraphs 18 to 23) which means that Sport England’s formal consent is required to any sale. One of Sport England’s most powerful rights is that it holds an ‘A’ share in WNSL, which means its consent is required for any sale of the asset or change in the shareholders of WNSL. The consent of DCMS, through the Secretary of State, and the GLA is also required.
15. Sport England was notified in April 2018 that the FA had received an offer from Shahid Khan to buy Wembley Stadium for approximately £600m through an acquisition of 100% of the shares of WNSL.
Position on Consent
16. The consent of both Sport England and the GLA is required to either an asset sale or a sale of the majority of the FA's shares in WNSL; DCMS consent, through the Secretary of State, is also required where there is a sale of the FA's shares.
17. Sport England's rights derive from its holding an ‘A’ share; the conditions of the LFA; and subsequent documentation entered into with WNSL and the FA in relation to 2015 re-financing.
18. GLA's rights derive from its funding agreement, and subsequent documentation entered into with WNSL and the FA in relation to 2015 re-financing.
19. DCMS' rights derive from its funding agreement, and subsequent documentation entered into with WNSL and the FA in relation to 2015 re-financing.
Current Protections and Conditions
20. In order to protect the public funds granted by Sport England, DCMS and the GLA, core objectives and conditions were laid down as to how Wembley Stadium should be managed in order to protect its status as a national stadium, preserve public benefit and provide security over public funds. Many of the conditions serve more than one purpose. Please see Appendix 1 for a full list of the conditions which are in place for the lifetime of the project.
Condition and use of the National Stadium
21. The LFA requires priority to be given to sporting over non-sporting events, for certain important events, known as ‘Flagship Events’ to be given precedence. The Flagship Events include:
22. The following restrictions were also imposed on WNSL requiring Sport England’s prior consent to:
23. The FA and WNSL are also bound by mandatory technical requirements, which include making Wembley Stadium suitable for a number of different events as well as maintenance to ensure Wembley Stadium remains a stadium capable of hosting Flagship events.
Security
24. Sport England required the FA and WNSL to agree to a number of restrictions over their right to sell or transfer Wembley Stadium and WNSL shares, which has resulted in the requirement to obtain Sport England’s consent to any proposed sale. Through the LFA and documentation entered into in 2002 and again in relation to 2015 re-financing, WNSL is also required to have a minimum capital of £100 million in order to maintain its financial stability.
25. The FA also undertook to Sport England, DCMS and the GLA that any new shareholders in WNSL would be commercial financial institutions or established providers of stadium content so that WNSL’s ability to deliver its obligations was not hindered; this commitment also applies to future shareholders. An assessment of any purchaser has not yet been undertaken by Sport England (see paragraph 28). The FA is also required to provide Sport England, DCMS and the GLA with information to enable Sport England to be able to monitor the financial situation of WNSL.
Wembley National Stadium Trust (“WNST”)
26. WNST is provided with one percent (1%) of WNSL’s annual turnover (subject to certain adjustments in certain circumstances) amounting to approximately £1 million per annum. A sizeable proportion of this sum is invested in football related activities however WNST also invests in wider sport participation projects. Currently, WNST invests into community sport in LB Brent as well as disability and girls/women’s sports initiatives across London. The WNST also funds disability football projects England-wide, in partnership with the English Football League Trust. Sport England would expect the interests of WNST to be considered in the negotiations.
Circumstances in which Sport England would consent to a sale
27. Sport England’s Board will make the final decision on whether to give its consent to any sale. Sport England is giving careful consideration to the issue, and is investigating in detail the approach being taken by the FA, and the conditions to which it and the proposed buyer would be willing to agree before deciding whether to give its consent. It is also working closely with the other public sector funders, DCMS and the GLA.
28. In deciding whether or not to consent to the sale, Sport England will consider:
29. In particular, Sport England’s consent is conditional upon being satisfied on the following issues:
Due Diligence
30. Given Wembley Stadium’s status as a ‘national stadium’ and the investment of public funds, it is important, in Sport England’s view, that the purchaser (both personally and corporately) is an appropriate person to own a national stadium, has the skills, experience and resources to run it properly and has a robust business plan for doing so. Sport England have instructed Grant Thornton to carry out an assessment of any proposed purchase and their business plan.
31. The level of forensic due diligence carried out on the proposed buyer will be of the standard expected in a transaction of this nature, with the object of ensuring the continued viability of WNSL and the FA.
Structure of the deal
32. Whilst negotiations are still at an early stage, Sport England has advised the FA that in order to obtain its consent, the structure of the deal must include the conditions and protections set out in paragraph 28. Sport England has instructed Hogan Lovells to advise on the structure to ensure the on-going conditions and protections are both retained in any potential onward sale, and are legally enforceable by Sport England.
Future protections
33. Sport England’s consent to the sale will be conditional on negotiating appropriate protections including naming rights and the protection of existing Flagship Events.
34. Given that Wembley is the national stadium and received such significant public funds, Sport England believes it will be important to retain active oversight which may include access to management information.
Proceeds of Sale
35. In discussions with the FA, Sport England has set clear parameters as to the use of the proceeds of sale for reinvestment into grassroots community football facilities across England. Sport England has been clear that agreement on the approach to the reinvestment of the full proceeds is a condition precedent to Sport England providing its consent to the sale.
36. Sport England has discussed with the FA, DCMS and the GLA a co-investment framework for how any funds would be disbursed.
37. In particular, Sport England is seeking:
38. Sport England acknowledges the importance of ensuring that the reinvestment does not flood and/or distort the current pitch market (for example by causing prices of AGPs to be increased), and must be in response to needs based on local demand as identified through local playing pitch strategies in accordance with the NFFS.
Benefit of investment into football
39. Sport England’s data and insight suggests that a significant increase in investment in football at the community level, in accordance with the approach outlined above, could bring significant benefits to people and communities across England, reaching some of the most under-represented groups in sport and physical activity as a whole, and helping to deliver the outcomes set in the Government’s sport strategy, Sporting Future.
40. Football is by far the largest team sport in England, with Sport England’s Active Lives Survey reporting over 2.2 million people aged 16+ playing the game regularly (twice a month), and 5.6million adults identifying themselves as participants in the past year (2016/17). The breadth and scale of football plays an important role in the overarching activity levels in England, especially amongst young people. The Taking Part survey shows that of all 11-15 year olds that have played sport in the last week, 58% of boys and 20% of girls played football. FA research shows this figure to be even higher in younger age groups.
41. Participation habits are changing. Sport England’s Active People survey showed a steady decline in participation of the traditional 11-a-side game as once a week 16+ participation fell by nearly 20% (to 561,000) between 2010 and 2016, whilst small sided football (outdoor) grew by 5% in the same period (to 785,300). This is attributed to a range of factors such as changing lifestyle habits, an overall decline in the quality of facilities and customer demand for a more flexible offer. However, football remains extremely popular.
42. Whilst the 11-a-side game still plays an important role for certain audiences, recent research commissioned by Sport England, the FA and Premier League has estimated the size of the small sided football market (everything other than 11-a-side football) to be 13.2m adults, with the ability to reach a much broader and more diverse audience.
43. The FA is seeking to transform the women’s game by doubling female participation by 2020 to 12,000 affiliated teams. There are positive signs that this can be achieved with a steady growth in affiliated teams and new tailored fun programmes to attract young girls to the game.
44. Sport England’s Active Lives Survey shows us that 14% of adults who play football twice monthly fall into lower socio-economic groups (NS SEC[1] 6-8), which is the highest proportion for any team sport and shows the potential of football to change activity habits for this audience.
Current Facility Investment
45. Football is played in a wide range of environments, from local parks to formal multi-pitch hub sites, on a range of surfaces and, when locally provided in safe, quality spaces, can be a lifelong component of an active community.
46. When considering the breadth of participation and levels of engagement in different environments through various formats of the game it is important to recognise that not every player or potential player shares the same facility needs. However, there is a clear link between poor facility experience and participation: it is continually the number one issue affecting participation cited by respondents to the FA’s Grassroots Football Survey.
47. According to the Active Places database, there are over 30,000 grass football pitches in England, of which nearly 80% are publicly owned and managed. Pitch quality is a significant issue. Approximately 40% of Local Authorities have Playing Pitch Strategies which were developed within the last three years, all of which recommend improving pitch quality. For example, a recent quality assessment of a national sample of 676 pitches by the Regional Pitch Adviser Network, rated 63% as ‘poor or standard’ (i.e. having the capacity for only 1 to 2 matches a week).
48. Research shows that people who have access to good quality pitches will play a third more often than average, whilst those playing on poor pitches play 21% less. The quality of pitches has been in decline over recent years due to the challenges of providing good quality maintenance regimes and this remains an ongoing problem.
49. Grass pitches are one of the most important natural resources for sport in this country yet the quality of the pitches coupled with poor weather (as over the recent winter and spring) can have a severe impact on overall engagement with sport and physical activity. Over the last season, 1 in 3 postponed affiliated football matches was attributed to pitch quality, a total of over 50,000 matches. Pitch improvement schemes and increased focus on maintenance regimes are key to the long-term improvement of grass pitches as well as innovations such as strategic investment in hybrid pitches (a mixture of natural and artificial grass) can help redress the balance.
50. We know that the declining quality of grass pitch stock along with the growth in popularity of more recreational and informal play and flexible access times has put an increased emphasis on Third Generation Artificial Grass Pitches (“3G AGPs”). There are now over 750 full size 3G pitches in England. The NFFS aims to deliver 1,000 3G AGP ‘equivalents’ (mix of full-size and small-sided provision, including multi use games areas) through either single pitch sites, such as schools, or multiple pitch sites such as Parklife hubs, but 3G is not the only facility solution.
51. We know from research into small-sided football that the ideal venue is close to home (under 20 minutes) and provides an accessible, welcoming and family friendly environment. Also, cost can be major barrier to participation and a large proportion of people want to play for free which means that parks and open spaces become valuable community resources for more informal play. Sport England is also working closely with the FA and Premier League on recreational football facilities to support a more informal offer, and that must be a key element of any further investment at the community level.
52. The NFFS supports the wide breadth of football activity and changing habits. The strategy is clear that traditional, affiliated football remains a core component of the game, whilst recognising and supporting the more informal environments used for the community and recreational game.
June 2018
Appendices
Appendix 1 Commitments from FA and WNSL
Appendix 2 Government’s Sport Strategy - Sporting Future
Appendix 3 Sport England - Strategy Towards an Active Nation
Appendix 4 National Football Facilities Strategy
Appendix 1 Commitments from FA and WNSL
FA/WNSL Commitment | Description |
|---|---|
Flagship event priority | Flagship Events and Bid Events given priority over all other events. Sporting events given priority over non-sporting events. |
Minimum public seating | Minimum of 71,200 seats available to general public. |
Consent to naming rights | No change to Stadium name without Sport England consent. |
No anchor tenant | No anchor tenant at the Stadium without Sport England consent. |
No Stadium disposal | WNSL not to dispose of the Stadium without Sport England consent. |
Public benefit and access | Primary purpose is to maintain a national stadium enabling public to buy tickets for Flagship Events and Bid Events, and allow public access without discrimination. |
Community use | Use of facilities (other than the pitch) by the community. |
Recognition of Lottery funding | WNSL to endeavour to recognise Lottery funding. |
Majority share disposal prohibition | FA undertakes to Sport England, the GLA & DCMS that it will not dispose of a majority interest in WNSL. |
Majority disposal prohibition | Holder of "A" share (TBC if this is the Trust) can block any transfer that would mean the FA no longer has control of WNSL. |
Minimum investment in WNSL | FA to maintain a minimum level of investment in WNSL. |
Lifecycle maintenance reserve | WNSL to maintain a lifecycle maintenance reserve. |
DCMS consent to minority disposal | FA must not, without DCMS consent, dispose of any interest in WNSL; this restriction is modified for the period beginning on 26 September 2018 so that a 15% interest can be disposed of without DCMS consent and then from 27 September 2022, DCMS consent would be required to the disposal of a majority interest in WNSL. |
Excess distributions for community projects | Any excess distributions received by the FA from WNSL must be used for community projects. |
Identity of new minority shareholders | FA undertakes to Sport England, the GLA & DCMS that any new (minority) shareholders in WNSL will be commercial financial institutions or established providers of stadium content who will not adversely affect WNSL's ability to deliver its other material contractual obligations. New shareholders also to be bound by such commitment. |
Provision of compliance certificates | FA undertakes to Sport England, the GLA & DCMS to provide the financial covenant compliance certificates it provides to commercial lenders |
Appendix 2 Government’s Sport Strategy - Sporting Future
https://www.gov.uk/government/publications/sporting-future-a-new-strategy-for-an-active-nation
Appendix 3 Sport England - Strategy Towards an Active Nation
https://www.sportengland.org/active-nation/our-strategy/
Appendix 4 National Football Facilities Strategy
[1] National Statistics Socio-Economic Classification (NS-SEC)