Can supermarkets escape the out-of-town planning stranglehold by piggybacking on stadium developments? Liz Hamsom assesses breakthroughs by Asda and Tesco.
It should have been the perfect signing. When it became obvious cash-strapped football clubs desperately needed new sources of income and did not have a hope of redeveloping unprofitable grounds without serious money from outside sources, they wooed the food retailers and property developers.
More than amenable to joining Redevelopment City FC in exchange for new superstores in out-of-town locations otherwise out of bounds, the likes of Sainsbury began regular reviews of opportunities, while developers talked excitedly of "synergies".
Last week these efforts seemed vindicated. The Stadium MK Consortium submitted an eagerly anticipated planning application for Wimbledon FC's new home in Milton Keynes. A new 30,000 seat stadium and 6,500 seat arena will be "enabled" ­ or part-financed ­ by a 100,000 sq ft Asda Wal-Mart Supercentre.
But has the government's hard line stance on out-of-town redevelopment really been relaxed?

Enabling expertise
Asda senior development surveyor Mark Turner thinks that the pairing of football club and major food retailer can work well. "Asda has experience in enabling sporting facilities to become a reality," he says, citing Eastlands in Manchester, where Asda built a superstore as part of the enabling development for the Commonwealth Games stadium.
The multiple is also in talks with Sheffield Wednesday to develop a new store on the club's current training grounds, which would be relocated. And it is also still the only named party linked with the proposed redevelopment of Leeds United's football stadium at Elland Road.
The logic of the mix is hard to dispute. Many proposals used to be predicated on leisure offers ­ which sounded good but did not deliver the real estate value.
Supermarkets, on the other hand, produce the highest values and can offset much of the development cost. They also have the upper hand on the property developers. James Bulley, partner at Drivers Jonas Sport, a division of one of the only surveying firms offering specialist advice on sports arena development, explains: "Developers like to take 15% to 20% returns, but arenas make a loss ­ they cost more to develop than the end value, and proposals have mostly been council or club-led.
"If a supermarket is involved it is usually the anchor, so the discussions tend to be direct with them."
Unfortunately, supermarkets are also the highest risk, thanks to an unsympathetic planning regime. To make any leeway, they are more and more likely to have to pay through the nose. Asda declines to comment on the funding terms at Milton Keynes, but it is reportedly stumping up significantly more than originally mooted.
It is a similar story with Tesco in Coventry. After months of uncertainty, Tesco's plans for one of its biggest stores in the country ­ a 100,000 sq ft store adjacent to the proposed Highfield Road arena for which it won planning consent three years ago ­ were back on track this month as the council went out to tender for a contractor to replace Birse, which pulled out earlier this year. It is understood it was the multiple's decision to contribute 70% to 80% of the estimated £60m cost of the stadium that encouraged the council to go back out to tender for a new contractor. Construction is expected to be under way by September.
A Tesco spokesman refuses to confirm the terms of the deal, but says: "We've always maintained our confidence in the council. Sometimes the value of the land is enough to push the deal, sometimes you have to build the stadium."
It is an unusual case, he concedes: "You have to look at the government's planning regime. Generally you need to be as close as possible to the town centre to justify retail. Only in exceptional circumstances are [opportunities] like Coventry going to come round. And it's no good thinking you're going to get permission just because you're building the stadium."
Bulley, who advised on the feasibility of the project, agrees: "This was a special case. You have to justify the benefit to the community." Even then the local authorities are not necessarily going to be more favourable.
Bulley's colleague Graham Fryer points out: "Coventry has always been thought of as a fantastic planning decision for the club and Tesco, but whether it is likely to be repeated is another question."

£1,000-a-seat price tag
The stark reality is that for every Milton Keynes or Coventry, there are five or six proposals that don't make it past the qualifiers. As Fryer puts it bluntly: "It costs an estimated £1,000 a seat to develop a stadium: that is £20m for a 20,000-seater. You are going to have to build one helluva supermarket to achieve that value and it won't deliver the whole cost. You only have to think of a third division football club that is in administration. How is that going to raise the rest of the money?"
This is before the wildly varying attitudes of the local authorities are taken into account. Where one might be amenable to the regeneration benefits redevelopment can bring, another will stick to the letter of PPG6 or PPG13 stipulating strict controls on out-of-town or major retail developments.
Consider Asda's interest in developing what would be its biggest store in a new Leeds Utd stadium complex. After a feasibility study last year, the multiple was linked to the scheme along with two other proposals ­ a mixed use development and an out-of-town retail format that would suit the likes of Ikea or B&Q.
But so far it has been no-go. The council has made it clear it is opposed to a food store and the whole discussion has been put on the backburner while the club attempts to resolve its financial problems.
Bulley comments: "The Asda proposal was the high planning risk, but potentially highest value option. The medium risk, high value scenario was out-of-town retail, and the low risk scenario was mixed use."
Sainsbury director of property Chris Fenner agrees football clubs are not easy bedfellows. Sainsbury is involved in "one or two proposals at a very early stage", he says. "We're all aware these are possible opportunities.These are big space users that tend to be on the edge of town."
However, he adds: "While most clubs are open to discussion, that is a million miles away from getting something off the ground. The opportunities tend to founder either on planning issues or price. Most of the time, there is just not any margin."
One thing the the multiples can take comfort from is the fact that as little as the government likes their attempts to get round out-of-town planning restrictions, they are often the preferred option to a property developer. And they are more likely to make the deals stack up financially.
But, it is increasingly clear that the football/food retailer combination is not the dream partnership it looked to start out with. As Fenner puts it: "There are huge issues to be addressed ­ particularly what the government wants."
And as always in the beautiful game, the class players are pricey.