Monday 3 September 2012

Car Park Magic

Cneifiwr is not a financial adviser, but a regular reader wrote in recently on behalf of a "friend" with the following question:

My friend is feeling the pinch and needs to sell something to raise quite a lot of cash, ideally something in seven figures. Unfortunately, my friend has no assets to speak of. What do you suggest? Mrs E., Llanelli

A tricky problem indeed, Mrs E., but news reaches me of some truly amazing financial magic which is in the pipeline down in Llanelli. As always with anything that sounds too good to be true, special terms and conditions apply, but I hope this may be of some help.

Scarlets Regional Ltd has told us in its accounts for each of the last two years that it is expecting to sell a "significant asset", but has been very coy about what that asset might be. Since the club has very little in the way of assets, local people have been left scratching their heads and wondering which particular rabbit would be pulled out the hat.

According to reports, it seems that the asset in question is one of the club's car parks, or rather a car park leased to the club by Carmarthenshire County Council. Leased at a peppercorn rent to the club for 150 years.

Back in May the council's chief executive told the Western Mail that the land on which the stadium, car parks, etc. stand had "no value" until the council decided to develop it for the club, and we can probably safely assume that this highly unusual phenomenon of worthless urban land would have been part of the rationale for a generous lease.

After all, if the land wasn't worth anything prior to development, it hardly made sense to demand a commercial rate for a leasehold on the same land with a thin covering of tarmac, now did it? Moreover, the car park would be needed to accommodate the tidal wave of visitors who would be crucial to the predicted economic boom brought about by the new stadium.

And as Mr James told the Western Mail earlier this summer, even if the whole shebang went bust, the council still owned the freehold and could redevelop the site as something else.

Redeveloped as what would have been an interesting question. Empty office space? Yet another shopping centre? Another leisure facility run by Christian evangelicals, perhaps modelled on the Colisseum but this time with critics and doubters being thrown to the lions?

There is much to be said in favour of the Colisseum option, since the stadium would not have to be demolished.

According to the reports, a deal is now being hammered out between the club and Marston's plc, the brewery and pub group, under which Marston's would buy the leasehold on the car park and build a mega-pub cum hotel on the site.

There are a couple of minor problems with this, but nothing the council's department of spin will struggle with.

First, the club's strategy for survival is based on enticing more and more visitors to the stadium. Cutting car parking capacity does not really seem consistent with that, somehow.

Second, and more importantly, Llanelli needs more watering holes like polar bears need warmer seas.
Excessive alcohol consumption is a major problem for the town, so much so that the County Council announced in July that it was planning to introduce a Designated Public Places Order on parts of the town to try to curb drunkenness and associated anti-social behaviour.

Third, the new drinking establishment will need planning permission and a licence. But then, that will hardly be a problem at all, will it?

The council will almost certainly be privy to these discussions as owner of the freehold, but while Marston's and the Scarlets may celebrate with a big corporate High Five, council taxpayers will be left with a worthless scrap of paper with "Freehold" written on it, proving Mr James right when he told the Western Mail that the land had no value. Quod erat demonstrandum.

Sadly the chances that the Wales Audit Office will finally grow a pair and remind the council of its duty to put the interests of the people of Carmarthenshire ahead of the shareholders of Scarlets Regional Ltd. are nil.

And as Caebrwyn reports, supporters of Llanelli AFC football club can only look on in envy.

So there you are, Mrs E., that is how to make money from something that was apparently not actually worth anything and that you don't actually own..


Anna Mosity said...

The Scarlets had an "attendance" of 6559 on Saturday, which I understand includes season ticket holders that couldn't be bothered to go and watch them playing the European Champions Leinster.

If they don't need this car park then it should be returned to the council so that CCC can sell the land and it can be ploughed back in to Social Services, Education, etc.

The Scarlets rent is based on a land valuation of £210,000 for all the land used by them at Pemberton. How much are they getting for this car park? If the land is actually worth something then they should be paying a hefty rent on it (which they can then make an arrangement with Mark not to pay at all of course).

Anonymous said...

Why hasn't this story appeared in the local press?

Anonymous said...

The Pemberton site was included in the UDP as "Development Land” for housing, offices and retail long before the new stadium idea came along.

This “worthless” piece of land could have raised CCC a lot of money for housing in particular. As usual Mark James is simply spinning his rubbish out and we don’t have any local or national press or any effective audit organisation to pick him up on it.

If it wasn’t for blogs like this how would anybody know?

caebrwyn said...

Incidentally, the letter from the Scarlets director supporting the Marston's application refers to the car park land as 'in our ownership'. Not quite true really.

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