Whither the ‘Super Stadium’ conspiracy theorists?
23/02/04 | by Alex Walker

As Nottingham City Council pursue Nottingham Forest Football Club over their failure to make a £200,000 payment to cover the interest accruing on the Trent End loan, some had cynically speculated that the action was part of a cunning plan to do away with both the City Ground and Meadow Lane to create a Nottingham ‘Super Stadium’ to be shared between the Reds and Notts County. Now such fantastical conspiracy theories seem redundant as the City Council say that evicting Forest from their home of 106 years is the last thing they want to do.

In a meeting tonight between council officials and supporters’ group representatives, council leader Jon Collins said that although plans for a shared stadium remote from the current Trent-side sites had been investigated by all parties, it was down to the clubs where they played their future games and the authorities are keen to see both clubs remain in the current homes.

As far as the crisis surrounding the Trent End debts goes, the ball is firmly in Forest’s court. They have two more days to meet the £200,000 payment they reneged on two weeks ago or the council will have no option but to pursue the matter in the courts – a course of action that could see the club’s current lease of the City Ground put under threat. However, the council see this as a last resort and both parties are keen to negotiate a settlement.

It is the basis of this settlement that differentiates the two sides of this argument. While the situation only came to the fore last week when the Council issued statements to the press three days after Forest’s failure to meet their biannual £200,000 payment, negotiations had been ongoing for many months beforehand.

The current outstanding loan was guaranteed by the City Council in 1994 to fund the construction of the Trent End stand. It was agreed that the council would hold the loan for 10 years, by which time the club hoped to be able to pay it off. As we know, this transpired not to be the case.

In the meantime, Forest were to pay the interest gained on the loan so the council stayed in pocket. If the club missed a payment, the contract stated that the club would have to surrender the lease on the City Ground. They currently pay £30,000 a year in rent and the current lease has nine years remaining. This arrangement is undoubtedly favourable to Forest, especially considering properties in the immediate area surrounding the City Ground command as much as £450,000 per year.

Recently, Forest chairman Nigel Doughty asked the council to guarantee a new loan – worth £20million and to be repaid over the next 20 years. This money would be used to clear the club’s current debts (of which the Trent End bond is barely a quarter) and allow for long-term restructuring. The council admits that short-term debt is what currently holds the club back, but having taken advice from the club’s own auditors, KPNG, who said that there was “significant risk of default” in Doughty’s proposals, the council had their hands tied by law and had to reject the plan.

The biggest area of risk was considered to be that the club were unable to offer any kind of security on the loan. In Doughty’s business plan, all of the club’s assets had already been offered to other creditors as security, including a renewed lease of the City Ground. Considering Forest have now failed on their current obligations, higher yearly payments over a longer period of time were thought “too risky”.

The council are keen to support the club and appreciate the benefits of a successful local football team (or teams) to the community as a whole. The fact that they guaranteed the original loan for the Trent End in order for Nottingham to host Euro 96 demonstrates this. It was also pointed out that neither Nottingham County Council or Rushcliffe Borough Council have offered the club a penny, despite being geographically closer to the club.

The City Council share the chairman’s ambitions to have a 40,000-seater stadium in Nottingham, but say it is up to the club as to whether this will be the City Ground or a new stadium. They have been accused of conspiring to force Forest into a new ‘Super Stadium’ by selling the current ground. However, while this is an option open to them as they try to recoup the money owed, the City Ground plot is valued at only £15m, where as a new stadium could cost upwards of £100m. This is not money the council are prepared to spend.

Although they rejected Doughty’s proposal, the City Council put forward their own plan to extend the current arrangement for a further five years. The current deal expires this summer, leaving Forest with a £4.6m bill for the total of the Trent End loan. Clearly they do not have the money to start paying this, so the council offered them the chance to continue paying only the interest as they have been doing for the past 10 years.

They also wanted to extend the lease of the City Ground for a further 250 years, assuring the club’s long-term future at the famous stadium. Notts County recently accepted a similar offer for 110 years. Effectively this means that the Meadow Lane site cannot be sold unless the Magpies go bust or are relegated out of the Football Conference. Whatever happens to the City Ground, this makes it very difficult for the City Council to cash in on the prime land in order to build a new, shared stadium.

‘Donating’ money to the club has never been an option – no money was given to Notts during their recent financial crisis except for a small grant given to the supporters’ trust. Council tax has been increased by 10% this year, but in order to pay off Forest’s debts, they would have to increase this by a further 1%. As they struggle to keep schools open and other public services running, they could not afford to be seen pouring money into what is essentially a private business run by a man who could easily clear the debts with his personal wealth. Councillor Collins has already received a letter from a man refusing to pay his council tax, "in order to fund a football club", as he saw it.

The council are legally bound to chase up the money. Legally they cannot accept Doughty’s proposals because they have been advised not to. So the onus is on the club to find an acceptable solution or go to the courts. Collins says there are four possible ways the situation could now go:

The council are very keen to avoid this final option and reassure fans that they do not want to kick the club out. What is not clear is why Doughty allowed the club to miss this crucial payment and put its future at risk. Part of the agreement said that the club would set money aside to make their payments every six months. In this case they did not do this, preferring to spend money bringing in players.

Doughty is not unknown to push the legal envelope as far as possible to get his way in business. He is obviously upset that his long-term masterplan failed to get off the ground and is now testing the council to see how far they are prepared to go. The council have positioned their pieces and are now awaiting Doughty’s move. How this game of financial chess will be resolved is very uncertain, but a stalemate would be disastrous for both players.

What is clear is that neither party wants to see Forest move out of the City Ground for any reason. Councillor Collins says plans for a ‘Super Stadium’ will not be made during his term in office. Doughty has made similar pledges to keep the Reds in their current home. Only in the worse case scenario will Forest be forced to leave and that depends on how quickly those involved can come to a satisfactory agreement about the future of the club.