Wembley Stadium Feels The Pinch

Wembley Stadium made a pre-tax loss of £31 million ($51 million) in 2008 and is relying on season ticket renewals to avoid defaulting on its finance agreements.

Accounts filed at the end of October show Wembley National Stadium Ltd., a wholly owned subsidiary of the Football Association, made an operating profit of nearly £6 million.

It plunged into debt because of a £26.6 million interest bill, £10.9 million worth of bank fees associated with the original financing in 2002, which added up to a £23 million after tax. It was an improvement on the £36 million it dropped in 2007.

Management refinanced the business during 2008, though it still has debts of more than £320 million. The new deal, which includes new banking covenants, cut the interest rate from 7.8 percent to 6.9 percent and stretched the repayment deadline from 2018 to 2023.

The stadium opened in 2007 at a total cost of £757 million, after eight years of rising costs, delays and friction with Aussie builder Multiplex.

Wembley says its business plan has always said it would take five years to break even but admits it could default on the new banking covenants if there is a decline in Club Wembley license holders, who pay annually for boxes and premium seats.

“I believe that 2008 will be seen as a watershed year in our history as the stadium reclaimed its place on the world events circuit,” company chairman David Bernstein told The Sunday Times. “I am confident that 2009 will further underline the status of Wembley as one of the world’s premier venues.”

The paper reckons the sale of boxes and seats is an important revenue stream, accounting for 59 percent the venue’s £90 million annual income.

Club Wembley’s 4,500 private members license the seats for an average of eight to 10 years and pay annual season fees. In 2008, about 87 percent of the licensed seats were taken, up from 82 percent the previous year.

Corporate boxes are available in licenses for three, five, seven and 10 years, starting from £79,350 per year.

Wembley says these are its most popular offerings. Deals on premium seats start at £950 a year.

Last year the stadium hosted 1.7 million people at 27 events, including four England football internationals, the FA Cup final and concerts by Madonna and Foo Fighters.