Wembley Stadium is the most iconic sports stadium in the world. The home of English football and arguably the spiritual home of global football, its famous twin towers (now demolished) provided the backdrop for the “White Horse” cup final of 1923, England’s World Cup triumph in 1966 and the Live Aid concert in 1985.
Since it was rebuilt and reopened in 2007, it has also been the home of the England national team, hosted sold-out concerts and been used as a launchpad by the NFL to unleash American football on the world.
So when the Football Association (FA) – the governing body of the English game and owner of the stadium – announced that it had received a bid of £600m for Wembley from American businessman and Fulham Football Club owner Shahid Khan and was seriously contemplating the offer, it caused an uproar that reverberated around the globe.
The fact that the FA even countenanced selling a “national treasure” sent British sportswriters apoplectic with rage, despite the fact the association pledged to plough the proceeds from the sale back into the development of grassroots football. (Although paying off the debt of around £100m that the FA reportedly owes on the deal might impact that funding.)
But rather than ponder the more emotional question of whether the FA should sell Wembley Stadium, perhaps the better question is: if the governing body accepts Khan’s £600m valuation would it represent a good deal both for it and the nation? And, given the unique nature of Wembley, how would experts go about putting a value on the stadium sale?
In the property world, the tried and trusted method for valuing a property is to look for direct comparables, but in this instance there aren’t any.
“These types of assets are not traded often and when they are, they are usually mixed up with lots of other things such as training grounds and related facilities, so it’s quite difficult to reach a valuation on that basis,” adds Simon Jones, national head of valuation at Lambert Smith Hampton. Other experts approached by Property Week would only comment on the condition of anonymity as they have either worked for the FA in the past or hope to do so in the future.
What can be assessed to give an idea of the stadium’s value is the profits it generates, he says. “Essentially, you take the various different income streams from a stadium – gate receipts, retail units selling food and apparel, all the way through to private boxes – then you deduct costs such as security and insurance,” he explains.
The money raised from events such as music concerts would also need to be taken into account alongside any other rental income, but again this is not straightforward. We know from Valuation Office Agency records that the stadium has a rateable value of £6.2m and in theory Jones says you could “put a multiplier against that and escalate it”.
However, he warns: “That would be a bit dangerous – especially as it’s rumoured that Spurs paid the FA around £12m to use the stadium this year, so I’m not entirely sure how that rateable value was reached.”
Unfortunately, it is also impossible to isolate from the FA’s accounts how much money the stadium generates on an annual basis. Although we know that Club Wembley, the FA’s stadium hospitality business, is valued at around £300m, this business would not be included in any sale to Khan.
“I’m not suggesting for one minute that Wembley will be knocked down and replaced, but it is in inner London and it would make a great residential scheme”
Another method would be to use depreciated replacement cost (DRC), says Jones. “You take the building and then you look at how much it would cost to rebuild it and make an allowance for depreciation of assets for each year. To that you would add on the land value as well,” he says.
Wembley cost around £757m to build but it was heavily subsidised by public funds. Establishing an accurate valuation for the land it sits on is more difficult given the sheer scale of the site. The other consideration is the value of the land should alternative uses one day be created there.
“I’m not suggesting for one minute that Wembley will be knocked down and replaced with something else, but it is in inner London and it would make a great residential scheme,” says the national valuation expert.
Other non-property related elements that would need to be factored into any valuation include naming rights for the stadium, which could be worth an eye-watering figure, according to Tom Cannon, professor of strategic development at the University of Liverpool Management School and expert in sports finance and economics.
“I’m assuming the new owner is going to get a massive premium based on selling the name,” says Cannon. “It’s much more common and profitable in the States to come out with a naming rights deal and the naming rights for Wembley is going to be a big ticket partly because it is the most iconic stadium in Britain, but it’s also probably the best-known stadium in the world.”
Robert Wilson, a football finance expert at Sheffield Hallam University, agrees that the naming rights for Wembley could be incredibly valuable. “If a leading English Premier League team were located there then you could expect at least £20m per season – and that’s probably me being prudent. An NFL franchise may help leverage even more than that. It needs to be a club, though. If it were named as a national stadium the market potential is less.”
In terms of ballpark comparisons, Arsenal’s naming deal with Emirates airline, struck in 2004, was worth around £2.8m a year and Manchester City secured a deal with Etihad airline in 2011 worth £10m a year. Totting up these different elements might allow a valuations expert to create a final figure for the stadium, but because Wembley is considered a trophy property this figure would ultimately be pretty meaningless.
As a valuer at a leading agency group who has worked on the sale of sports stadia in the past points out: “There are lots of examples of trophy properties that have sold above their commercial value. For instance, Wentworth [golf course] went for quite a considerable value when it was sold and that was clearly a trophy price. Wembley is also a trophy property so you would have to go right to the top end of the range in terms of a premium.”
So back to the question we posed at the start: does the £600m bid from Khan represent a good deal for the FA? The association has set out its case in great detail and is clearly tempted by the offer. However, sports finance experts are far from convinced. Cannon contends: “It would be a real loss because [the FA] eventually paid more than £700m for Wembley [to be built] so it would be taking a hit on it.
“£600m is too low. Given the investment cost, I would have expected a price closer to £1bn”
Robert Wilson, Sheffield Hallam University
“I know there were a lot of government subsidies, but in my world losing the best part of £200m isn’t a good deal. And if he [Khan] gets a super-duper naming rights deal then it becomes even less of a wonderful deal for the FA.”
Wilson agrees. “£600m is too low. Given the investment cost, I would have expected a price closer to £1bn. We’d look at the size of the stadium as a key indicator of value – it’s bigger and more appropriate for team sport than the Olympic stadium so it must be worth more.”
Of course, the FA could be playing a canny hand by revealing the details of Khan’s bid to flush out other buyers and spark a bidding war. As an investment source says: “I’m not aware that the stadium has been widely marketed, so the FA could be putting this out to test the water and see what turns up.”
Even if Khan’s bid is the only one on the table, ultimately it might not be the worst deal ever struck given the strange nature of football finance. As Cannon points out: “In football, the best deal is the deal you end up with. Whether it’s the sale of a player, a club or an iconic stadium. And this may be the only deal in town.”
By the autumn, we’ll find out whether that’s the case – the saga is certainly not all over yet.
How the Wembley sale saga unfolded
At the end of April, the Football Association (FA) announced to the association’s board that Shahid Khan, owner of the Jacksonville Jaguars American football team, had made an offer of £600m for Wembley Stadium and would allow the FA to retain revenue generated by its hospitality business Club Wembley, which is worth an estimated £300m.
It is rumoured that the sale had been in the pipeline for more than 12 months after Khan met with FA chief executive Martin Glenn at the 2017 Superbowl.
Last month, the association canvassed the opinion of its members regarding the sale via an online survey and in late May, the FA issued briefing notes outlining its position on the proposed sale.
Property Week asked the association to respond to a series of questions about the sale, but was told to refer to the notes.
In the notes, the FA says it is considering selling Wembley because the offer is “serious and credible” and presents an opportunity to address the “poor state of community football facilities”. The funds raised from the sale would be invested in improvements to these facilities.
Responding to the question of whether or not the sale represents a fair value for Wembley, the FA says: “Valuing a national stadium is not easy, which is why we have worked on this for many months with Rothschilds. This was not the first offer we received from the bidder, but it is the first one to the value we were prepared to present to the FA board and council.
“The valuation is higher than the value registered in the accounts and is made up of an initial cash payment of £600m… if accepted, the FA would no longer be responsible for the significant operational and capital expenditure costs of the stadium.”
As for the question of whether or not the association is open to other offers, it says: “It is important that in considering this deal, which of course involves public money, we are as transparent as possible. If we do decide to proceed, it is important we can demonstrate that this is an open process that ensures best value. However, at the time of writing we have not received any other bids.”
The FA also states that it would put in place a number of restrictions should it decide to sell Wembley, including a “block on renaming Wembley Stadium, sell-on approvals and future usage”.
In terms of next steps, the FA says it is continuing its consultation process “across the game” and if the terms of a deal can be reached it will be reviewed by the FA board and council. This is likely to happen “in the autumn at the earliest”.