Boston Money-Pit Lessons for Carmarthenshire
While Carmarthenshire’s residents are on the hook for Llanelli’s lofty Parc y Scarlets stadium, over on the far side of England, the people of Boston, Lincolnshire, have a salutary tale to tell, about the posh and pricey council-initiated venture, the Princess Royal Sports Arena (PRSA).
Back in June 2001, the Boston Standard was reporting Boston Borough Council’s high hopes for the arena, then in an advanced planning stage. The Finnish timber company Finnforest had agreed to invest £500,000, and the council was awaiting the results of applications for £1 million to the Europrean Union and £800,000 to the National Lottery. Boston Council’s chief executive, Mr Mark James (currently on ‘gardening leave’ from Carmarthenshire County Council) told the Boston Standard that the partners in the venture were in the process of buying the land for the arena. The chair of Boston and District Athletic Club, Beryl Clay, looked forward to hosting national and even international athletics competitions, for both disabled and able-bodied athletes.
Council was Back-Up Funder
The borough council had, in April 1998, endorsed plans for a new sports arena. The plans were developed by the council, Boston Rugby Club, and the Athletic Club, which together created the Disabled and Able-bodied British Sports Initiative, or ‘dabsi’. The borough council was on hand to provide the necessary cash, should other funding sources fall short. Mr Mark James, at the helm, had joined Boston from the London Boroughs Association as director of corporate services in 1993, and stepped up to chief executive in 1995. He left for the top job in Carmarthenshire in March 2002.
Most of the chequered history of the Princess Royal Sports Arena has affected the post-James Boston – indeed, the arena did not open fully until 2004 — but the tale is relevant to Carmarthenshire, where the council’s ‘vision’ also encompasses a grand — or grandiose — sports development, the Parc y Scarlets.
During 2003, it was clear to readers of the Boston Standard that the sports arena was a money-pit, consuming all the funds thrown at it and always needing more. “Around £600,000 of taxpayers’ money used to build a sports stadium in Boston is still owed to the borough council despite a recent cash injection to reduce the debt”, the paper reported on December 10th. The council had already lent £1.9 million for the venture, in part paid off with £790,000 from Sport England and £500,000 jointly from Lincolnshire Enterprise and the East Midlands Development Agency.
Criticism by Audit Commission
Insufficient funding for the arena remained a millstone for Boston Borough Council, and triggered an investigation by the Audit Commission, which in June 2007 published a report, stating that “It was envisaged that PRSA would be constructed without the need to borrow funds and once constructed, would break even earning sufficient revenue from activities to cover costs”.
The Audit Commission traced the inception of the arena back to 1997 and to the Boston Sports Forum, of which the borough council was a member. Initially the council proposed investing £3 million in the venture but, said the Audit Commission, “due to rising costs, lower than expected contributions from others and a resultant deficit for each year since opening the Council has ended up providing significant additional financial support than first envisaged”. It was concern about the deficits which had led to members of the public asking the Audit Commission to investigate.
The commission found that:
“The full extent of the financial exposure of the Council should have been more clearly identified in reports to members (councillors) when decisions on granting additional funding were made, especially with regards to revenue ‘operating’ support and interest charges.
“Whilst the Council considered the wider outcomes for the community which would arise from its contribution to the project, these need to be much more explicitly set out as targets and performance monitored against them in order for the Council to assess the success and overall value for money from its contribution.”
In other words, the councillors were not given sufficient information on which to make sound judgements.
When councillors were considering the appointment of external advisers, or extensions to contracts, the information before them “should have usefully contained more financial information”, the Audit Commission stated. In addition, “ the interaction of the Council’s governance arrangements with those of BSI (Boston Sports Initiative, the charity running the arena) have not always been clear”. The Audit Commission found two instances of the borough council entering into contracts for a period of months before they were transferred to BSI, during which time there was no trace of any approval by the councillors.
In future, said the Audit Commission, councillors must be given full contract details even when the decision has been delegated to officers, and when existing contracts are being extended, councillors have to be told both the contract cost to date, and the expected future cost.
Efforts to increase revenues from the arena were stymied by restrictive clauses in initial contracts. Sole catering rights for the site were granted to Boston Rugby Club when the council purchased the land, the Boston Standard reported on July 18th 2007. The payment for those rights, and for the club’s use of the pitch and its clubhouse, was too low, in fact “barely sufficient to cover the basic costs of grounds maintenance”, according to Boston Sports Initiative.
Ejection of Press and Public
The Audit Commission’s report contained information new to the local media. “Much of this information was not available to the public at the time, with the press routinely being ejected from council meetings whenever the PRSA came up for discussion under the pretext that ‘commercially sensitive’ matters were to be discussed,” the Boston Standard commented.
At the beginning, Mark James “led the planning of the project”, the Standard noted, adding that he was “involved in the appointment of Crescent Marketing as external advisers and fundraisers, and PGA Management as project managers”. However, Crescent Marketing did not raise as many funds as anticipated, and in the Audit Commission’s view made a “grossly inaccurate” prediction of future revenues to be achieved by the arena. As for PGA Management, the Audit Commission could not find any evidence that councillors had agreed to appoint the firm.
BSI, the Boston Sports Initiative managing the PRSA, was in 2007 claiming compensation from PGA Management, alleging weak project management.
Acrimony over the arena grew. The Lincolnshire Echo reported in September 2008 that Boston and District Athletic Club, one of the original backers of the project, had withheld rent payments for over a year, in protest at Boston Sports Initiative’s refusal to offer a permanent lease. The club was evicted late in 2008, thus depriving the PRSA of a potential revenue stream, and leaving it with a redundant athletics track.
By 2013, the arena was in need of urgent repairs (despite having been open for less than a decade). Boston Borough Council even considered closing it. There were problems with the lease. The Boston Target said in May 2013 that, according to the council’s chief executive Richard Harbord, “the original agreement was a 125-year lease with Boston Sports Initiative but, in fact, that lease was never entered into. What was entered into was a series of funding agreements. I can’t help saying perhaps the project was a little over-ambitious for a council the size of Boston. When it was initiated it became obvious fairly quickly it was not going to be straight forward.”
No lease, no agreement over responsibility for repairs! The backlog of repairs amounted to some £200,000.
In 2012 the council agreed to write off £2,059,820 in loans to the arena, which by May 2013 had cost the authority £6,239,298 in capital expenditures and £2,522,000 in contributions to operating costs — a total exceeding £8.76 million.
Elected Councillors to Blame for their Inadequate Information?
The error-strewn history of the arena is surely a serious reflection of the way in which the rules on commercial confidentiality are applied – or misapplied. Elected councillors are not given sufficient information on which to interrogate past decisions, or to make new decisions. This deficiency applies just as much to Carmarthenshire as to Boston, and probably to local authorities all over England and Wales. Councillors are at fault, just as much or more than officers, because they have often delegated their powers to officers far too readily.
After all, what is the point of elected councillors if they can transfer, to the employed officers, their responsibilities for prudent public spending?
Pat Dodd Racher
‘Sponsors boost for world-first stadium’, Boston Standard, June 21st 2001
‘Council is still owned £600,000 for stadium’, Boston Standard December 10th 2003
Princess Royal Sports Arena, Boston Borough Council, Audit Commission report June 2007
‘PRSA errors will not be repeated’, Boston Standard July 18th 2007
‘Athletics club’s closure threat’, Lincolnshire Echo, September 10th 2008
‘Plug pulled on leisure centre revamp’, Lincolnshire Echo, March 9th 2011
Boston Sports Initiative report of trustees and financial statements for year ended March 31st 2013
‘Future brighter for Princess Royal Sports Arena in Boston’, Boston Target, May 24th 2013