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LOFT's EGM response
4/3/2005Before yesterday's match against Northampton Town, LOFT handed out a leaflet to publicise its response to the EGM called by the club for Wednesday 6 April (see story here). We felt it important that as many fans as possible be made aware of the issues and concerns surrounding the EGM, given that the only information published to fans who are not shareholders consisted of the summary published in the programme on Good Friday.
Below is the content of that leaflet:
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LOFT supported the ground redevelopment plans because they promised two new stands and future income for Leyton Orient in return for relatively little outlay. Two years later, one stand has eaten up all the budget and indeed is now massively over budget, and the promised future income is seemingly much reduced.
Barry Hearn's letter that accompanied the EGM notice (reprinted as his notes in last Friday's programme) does not go into a lot of detail about his proposal to sell off the West Stand space to a consortium of him and his associates. LOFT immediately sought further information from the club, and received a response yesterday. We sent further additional questions below to the club before receiving Barry Hearn’s letter dated 30th March. We believe this is information that should be made available to all Orient fans:
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What is the precise breakdown of the overspend, and with the benefit of hindsight could any of it have been anticipated or avoided? Given the disparity with the original estimate how confident is the club that there will be no further rises in costs?
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What is the market value of the long lease, and has the club attempted to find tenants for this proposed lease on the open market?
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There are discrepancies between the EGM notice and the covering letter; the former suggests a sub-lease purely of the office space and makes no reference to leasing back facilities to the club, whereas the letter suggests a sub-lease on the entire West Stand with a further sub-lease back to the club for its facilities. What is the precise detail of the proposed sub-lease (namely, what exactly is the 19,000 sq.ft., what are the "facilities" the club would be leasing back from the consortium). Secondly, what is the precise nature of the profit share?
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What are the implications of this proposal on the funding, the cost and the timetable for building the North Stand?
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Might it not be more sensible (and potentially more profitable for the club) to offer a shorter term lease to the consortium (say, 10 years) with an option to renew the lease and renegotiate the profit share based on how much profit the consortium has made in that time?
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Who are the other parties in the consortium?
We consider that, even in the light of the response now received from the club, many of these questions remain pertinent.
LOFT is an independent, democratic, supporters’ organisation that seeks to represent the views of the fans to the Club and help promote communication from the Club to the fans. Our influence can only increase as our membership numbers increase, so please consider joining LOFT if you haven't already done so. If you join before the end of the season, membership costs only £5 and lasts until May 2006 (£3 if you are unwaged, an OAP or a student).
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As mentioned in the leaflet, we received a reply in the post from Barry Hearn on Friday morning answering some of our original questions:
- The consortium will purchase the entire West Stand but lease all except roughly 19,000 sq. ft. back to the club at a rental of £1 per year in a 999-year lease. The area leased back to the club comprises around 26,000 sq. ft. and includes other office space and various club facilities.
- The club has received a valuation of the 19,000 sq. ft. of £800,000.
- West Stand costs have currently risen by over £1m, primarily demolition/enabling works £250K, build costs £500K and fit out £250K.
LOFT will be represented at Wednesday's EGM, and will seek to obtain answers to the remaining points outlined in our six questions above.
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