The Chair of Scrutiny Board stated that he had
requested the item considered by Cabinet on 16 October 2019 in
relation to the future operating model for the Civic Halls be
called-in. This was an important decision for the Council and the
City and he considered it important that Scrutiny Board scrutinise
the proposed solution and the market intelligence used to inform
The Board received a presentation from the
Director of Finance which provided the background to the decision.
The presentation had been prepared by the Council’s advisors,
IPW, who were unable to attend the meeting due to previous
IPW had been appointed to advise on the
different management options and to carry out market testing with
prospective operators. IPW were leading industry advisors and had
undertaken similar work for cities across the country (including
70% of UK arenas). IPW had also taken the lead on the development
and operation of mid-scale venues in Hull, Swansea and
IPW fed back that the Civic Halls was in a
strong location with a strong catchment and a higher capacity than
its competitors. The Hall was also known to have a good reputation
amongst artists and promoters. The Board agreed that maximising
income was critical and that it was vital to get what happened in
the building right. Income generation would need to consider areas
such as promoter relationships and secondary spends whilst also
taking into consideration social value.
Four primary operating models had been
Self-operation: In house through the Visitor Economy Team
External operation: Lease arrangement
External operation: Management agreement
Each of the above options had different
features in terms of control over the day to day operation, the
level of financial exposure, the certainty of financial income
(risk), the level of building risk retained by the Council and the
level of annual financial return to the Council to contribute to
the capital investment.
It was stated that an external operator would
normally be expected to generate higher revenue surplus due to
expertise, promoter networks and commerciality. Any external
operator would also have programming freedom. The Board considered
the different operating models and the associated levels of
control, risk transfer and cost certainty. It was confirmed that
the Council would be able to specify certain contractual
requirements such as payment of the living wage.
Market testing had been carried out and
discussions held with ten industry operators, with significant
interest being shown from eight (very high). Feedback had been
positive with operators considering that the venue would generate a
profit, that they would be interested in a lease agreement and that
there would be a strong guaranteed annual payment to the Council to
support repaying the borrowing. Competition, catchment and product
were key. It was confirmed that in any scenario, the Council would
retain ownership of the building.
The preferred option (option 3), was to have a
lease arrangement with a private sector operator, paying annual
rent to the Council. This ...
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