Council sees legal costs reach £500k in football stadium loan dispute

Coventry City Council has spent some £500,000 to fight a legal case over the convoluted saga of the city’s football club and now faces a further appeal.

The amount came to light after Mr Justice Hickinbottom dismissed the grounds for judicial review brought against the council by the club’s owner Sisu, which argued that a £14.4m loan made by the authority to the owner of Coventry’s Ricoh Arena was unlawful state aid.

The status of the arena and its ownership is at the heart of the dispute. Coventry City FC originally played at the Ricoh but as part of a series of disputes between Sisu and the ground owners – which include the council – now plays in Northampton.

Sisu is reported by the Coventry Telegraph as seeking leave to appeal Mr Justice Hickinbottom’s ruling.

The council this week agreed to fight any appeal, feeling it was on strong ground after the original judgment.

Leader Ann Lucas said: “We were always confident we could robustly defend our unanimous and cross party decision at full council in January 2013 to support the new loan arrangement to [the arena].

“The decision was taken in order to protect an important asset – the Ricoh Arena – which belongs to the people of Coventry. We had no choice about defending this decision in the courts.”

Sisu had argued that a private investor in the council’s place would not have entered into the loan transaction on the terms agreed and that it was also state aid not notified to the European Commission in advance and therefore unlawful.

A council report said the judge could not say that the loan extended by the council would not have been entered into, on the terms agreed, by any rational private market operator in the circumstances of the case, and that the transaction “fell within the wide ambit extended to public authorities in this area and was therefore not state aid”.

It added: “It is currently difficult to estimate how much it will cost to defend an appeal at this stage but the costs of defending an appeal will need to be met from existing budgets.

“The council has incurred substantial legal costs to date in the region of £500,000 and will be seeking recoupment of as much of those costs as possible.”

Mark Smulian