Liverpool Council “should consider the sale” of the M&S Bank Arena, according to the city’s opposition leader - after it was revealed the venue’s operating company owes millions to the local authority.
Over a period of five years dating back to 2015, The ACC Liverpool Group which operates the event complex on the King’s Dock including the arena, racked up debt worth millions of pounds to the council. A repayment plan to recover the finances is yet to be finalised as the group confirms its business plan for the next 12 months.
Liverpool Council is owed around £7.1m by the group, which it wholly owns, for what it described in a statement as historical debt relating to property transactions between 2015 and March 2020. Of that, £2.6m is in year trading sums.
Last month, the group warned its operating environment will "remain extremely tough through to the end of 2024" as its losses widened during its latest financial year. In response, Cllr Richard Kemp, leader of the opposition Liberal Democrat group, said it was time the local authority looked at disposing of the venue which will host the Eurovision Song Contest in three months time.
He said: “The report on the finances of the Arena shows just how poor the council has been in controlling the huge commercial assets that we have created. “The time has now come when we should consider the sale of the asset to the private sector who have the skills and commercial knowledge to be able to control a vast undertaking of this size.
"This may also have the effect of releasing capital back into the council that we can use for other projects internally or externally.” In December, a review of the ownership of the arena and other facilities found the local authority could look to sell up next year to reduce financial risk.
Cllr Kemp said questions needed to be asked over what the ACC Liverpool Group was doing during 2015 to 2020 “to control potential losses and report problems back to the council so that they could be examined and incorporated in the council’s base accounts."
He added: “We should also question the ability, skills, and knowledge of the directors that we have placed on the board to oversee a complex commercial operation.”
The opposition member also queried the “commercial skills and knowledge” of the company’s directors and whether they can “adequately oversee this asset which is so important to the tourism and visitor economy of the city.”
A cabinet report in December revealed the council had put aside £2.5m in reserves to cover against non-payment of outstanding lease rentals. Addressing a meeting of the council’s finance and resources select committee last week, Ian Duncan, Liverpool Council’s interim finance chief, said it would be “irresponsible” for the council to “ignore that risk.”
Mr Duncan said he would hope it wasn’t called upon but the reserves “were something you would expect to see in the event of a potential default.”
Cllr Tom Crone, leader of the Liverpool Green Party Group, said the council needed to "get to grips with how their arms length and wholly owned companies are operating." He said: ACC Liverpool went ahead and hosted an arms fair in 2021, despite opposition from most councillors, and now it turns out they haven't been paying their rent.
"This is why Greens have been leading calls for the adoption of an ethical charter and why I have recently volunteered to take part in a new companies governance sub-committee. It is essential that we get council companies operating for the benefit of the city without costing the council a fortune.
"Years of mismanagement by Labour is costing the council millions and it can't go on." In a statement, Faye Dyer, managing director of The ACC Liverpool Group, said: “The £7.1m balance due comprises £2.6m of in year trading sums, which will be paid prior to the financial year end, alongside £4.5m of historical debt.
"The debt relates to property transactions from 2015 to March 2020, following the expansion of the campus and facilitating a period in which the group successfully grew its market share and presence. The benefits of this support are being recouped over the longer period of investment.
“We have set out a number of options for the council to recover this historical debt in our recent business plan and look forward to finalising this, alongside signing new leases, later this year. Our trading results continue to recover after a successful return to full capacity live events following the pandemic and our financial performance now facilitates the transfer of further property related cost obligations to ourselves, reducing future expenditure for Liverpool Council.”
A Liverpool Council spokesperson added: “The ACC Liverpool Group has set out a number of options to recover the sums in its business plan. In line with our risk-based approach to setting reserves, we have prudently set aside a proportion of the money owed until it is paid.
"The repayment plan forms part of wider changes to Liverpool Council’s governance and oversight of the ACC Liverpool Group, following a recent review. For example, responsibility for the cost of repairs and maintenance of the complex is being transferred to the organisation as part of a new lease, to reduce the financial burden on the council.”