LOFT calls for halt to proposed stadium sell-off
The Leyton Orient Fans' Trust (LOFT) is today calling for a suspension to the proposed sell-off of the leasehold interests in Leyton Orient FC's Brisbane Road stadium, to allow reasonable time for both shareholders and supporters to clarify the effect of the sale on the long-term sustainability of the football club.
The news that the club are in negotiations with a consortium led by Terry Byrne to sell the club makes it all the more important not to transfer any assets out of the ownership of the football club at this time.
Under proposals sent out to Leyton Orient shareholders (which include LOFT) on 27 January, the club would sell its home of over 70 years to Matchroom Sports Limited - the main trading company of the club's current chairman Barry Hearn - for £6m. However, £3.4m of this would immediately be used to clear Matchroom's loan to the club (the result of ongoing annual deficits at the football club), leaving £2.6m of "working capital".
Matchroom would then grant only a 20-year lease to the club, rent-free only for the first five years, then £180,000 a year for the next five years, and reviewed again (and no doubt increased) in years 10 and 15.
LOFT has taken legal advice on the proposal, and is continuing to do so. LOFT's view at present is that shareholders have not been sent enough information to come to a considered decision. The proposal refers to "advice from a leading firm of valuers" regarding the offer, but unlike a previous EGM no actual valuation has been provided to shareholders for consideration. Until the full text of a full and proper valuation is received, shareholders cannot possibly consider whether the proposal represents good value to Leyton Orient FC.
In the past four years, two Extraordinary General Meetings have been held to agree to selling off land around the ground to a consortium led by Hearn, yet for arguably a far more important decision shareholders are only being given 28 days to register a postal agreement to the proposal, with no opportunity for discussion at an EGM.
The proposal also reflects badly on the club's communications with its supporters. At a time when the club, and particularly chief executive Matthew Porter, are keen to have better two-way communication with supporters, the club's chairman now proposes to effectively sell himself the stadium and wipe out his loan to the club without any consultation or communication with supporters.
Without further information or discussion between the club, its shareholders or supporters, LOFT objects to the proposal on the following grounds:
- the proposal removes the link between the club and ownership of its ground. While Barry Hearn remains owner of Leyton Orient at the time of writing, any future sale of the club would place Orient in the same difficult situation that the likes of Crystal Palace or Oxford United have faced in recent years, where the previous owner holds an enormous - and usually negative - influence over the financial wellbeing of the football club;
- the proposal would leave Leyton Orient with no certainty as to its future in the London Borough of Waltham Forest, whereas at the moment it has over 990 years remaining on its current lease from the local council at an annual rent of just £1;
- the proposal contains no information as to the financial sustainability of Leyton Orient as a Football League club once the £2.6m has been spent (which, based on the current annual deficit, would be in the next two to three years);
- the proposal makes no reference to what plans, if any, the club has in place for relocating (either to an Olympic stadium or elsewhere), yet refers to "the sale" of the ground in the future;
- the proposal comes at a time when property prices are at a low at the beginning of a period of economic recession, with no indication as to the possible value of the land once any ground relocation takes place (say, in approximately five years time when a possible Olympic stadium move could take place, and when hopefully the property market has recovered). Given that the land in the four corners of the ground sold for £7.35M to Bellway Homes in 2003, and that Hearn's consortium paid £1.5m and £1.25m respectively for undercroft space in the West Stand (2005) and the land behind the North and South Stands (2006), a value of £6m for the entire ground seems incredibly low for what it could be worth for potential development;
- the proposal allows for 50% of the profit on "any future sale" of the ground during the term of the lease to come to Leyton Orient; if the ground remained in Leyton Orient's name, 100% of any future sale would come to the club and Matchroom's loan could be repaid from that.
LOFT calls upon the club to halt the current proposal and arrange an open meeting with supporters to discuss the proposal and all its future implications for the wellbeing of the club. Then, and only then, should the club hold a formal meeting - either by EGM or within the next AGM - to allow shareholders to come to a reasoned decision based on a full and proper valuation of the stadium, not a throwaway phrase in a letter.
LOFT's chair, Doug Harper, said "Leyton Orient is in a period of major uncertainty, and this proposal seriously calls into the question the future of our football club. This is exactly why Supporters Trusts exist at football clubs up and down the country, and LOFT urges all O's supporters to join us if they agree with our standpoint. We're only as strong as the backing we get from fellow Orient fans."