St David’s Hall

Concepts

• st david’s hall
• cardiff
• recreation, culture and sport
• year lease of the venue
• cardiff council
• nil value
• theatrical producers', singer groups
• lower end of the potential net profit
• proposed arrangement
• original condition

Location

Cardiff and Vale of Glamorgan: St David’s Hall, Cardiff, CF10 1AH

Description

This notice relates to a proposed arrangement between the Cardiff Council (“Council”) and Academy Music Group (“AMG”) in respect of St David’s Hall (“Venue”) in Cardiff city centre. The proposed arrangement will involve the grant of a 45 year lease of the Venue at a peppercorn rent to AMG. Under the lease AMG will be obliged to repair and maintain the Venue, ensure its long-term future and that it remains open for the benefit of the people and City of Cardiff. The Council may also receive a share of Venue profits over the lifetime of the lease. AMG, as tenant will operate the Venue as an independent commercial enterprise in accordance with the lease requirements. The lease will have positive obligations imposed on AMG to deliver a range of services in operating the Venue including continuing the classical programme as described in more detail below. Continued below in II.2.4) Short description.

Total Quantity or Scope

Continued from II.1.4) The Council will also enter into a Business Sale Agreement (“BSA”) with AMG to enable service handover and continuity at the Venue. This will transfer the “book” of existing events and the assets of the business at the Venue to AMG for nil value. It will also transfer the benefit of relevant consents to operate the business. All current Venue staff are expected to TUPE transfer to AMG. The lease obliges AMG to manage and repair (in a manner that AMG determines) a list of defects. The cost to bring the Venue back to its original condition is estimated at 38mGBP. AMG will be responsible for maintaining the condition of the building and would have flexibility to invest in and improve the Venue. The lease requires (amongst other normal terms) AMG to keep the Venue open in a safe and operational condition in line with industry standards and as required by all statutory and licensing requirements. The estimated value in II.1.7 and V.2.4 represents the Council’s assessment of the lower end of the potential net profit that could be achieved for a venue of this nature over a 45 year term. The potential higher end net profit over the 45 year term could be in the region of 67mGBP. These values are based on the Council’s projections of total revenues that may be achieved over the maximum 45 years and assumes a 5-10% net profit (which is a common range in this industry). The actual value of the opportunity (and potential revenues and profit turns) will depend on many commercial factors (including but not limited to) the performance and success of the tenant’s business and market conditions. Continued below in VI.3) Additional Information.

Award Detail

CPV Codes

• 92000000 - Recreational, cultural and sporting services
• 92312100 - Theatrical producers', singer groups', bands' and orchestras' entertainment services
• 92300000 - Entertainment services
• 92312120 - Singer group entertainment services
• 92312130 - Band entertainment services
• 92312140 - Orchestral entertainment services
• 45000000 - Construction work
• 55120000 - Hotel meeting and conference services
• 55130000 - Other hotel services
• 55520000 - Catering services
• 55330000 - Cafeteria services
• 55400000 - Beverage-serving services
• 55410000 - Bar management services
• 55500000 - Canteen and catering services
• 70220000 - Non-residential property renting or leasing services
• 70332000 - Non-residential property services
• 70330000 - Property management services of real estate on a fee or contract basis
• 70332200 - Commercial property management services
• 79993000 - Building and facilities management services
• 79993100 - Facilities management services
• 90911200 - Building-cleaning services
• 75241000 - Public security services
• 79710000 - Security services
• 79950000 - Exhibition, fair and congress organisation services
• 79951000 - Seminar organisation services
• 79952000 - Event services
• 79952100 - Cultural event organisation services
• 79953000 - Festival organisation services
• 79956000 - Fair and exhibition organisation services

Legal Justification

The Council has structured the arrangements as a grant of a lease which does not involve an acquisition activity governed by the Public Contracts Regulations 2015 (as amended) or Concession Contracts Regulations 2016. The Council has obtained valuation advice in respect of the proposed disposal and will grant the lease for peppercorn rent. The market value of the rent acknowledges and takes into account the substantial building liability and remedial works that AMG will be required to take on as tenant of the Venue. The lease does oblige AMG to address defects, repair and maintain the Venue, but these are incidental and ancillary to the lease arrangements because: (i) the estimated value of the works at 38mGBP is small compared to the estimate potential value of the operator opportunity over 45 years of the lease; (ii) the main purpose of the transaction is to transfer the Venue to an independent operator and not the securing of the works; and (iii) AMG has a broad discretion to determine the manner, timing and specification of the works as a tenant of the Venue. Furthermore, it is not practical for the works to be severable to be delivered by an alternative contractor given AMG’s occupation and operation of the Venue. If AMG does not manage and repair the defects so that the Venue is safe and operational, the Council can terminate the lease or procure the delivery of those works at AMG's cost. AMG may voluntarily elect to carry out other works (including alteration upgrades, enhancements and other repairs and maintenance as may be needed) at the Venue in accordance with its own requirements. The lease also requires AMG to keep the Venue open in a safe and operational condition in line with industry standards and as required by all statutory and licensing requirements. This is a standard commercial tenant requirement and does not amount to a services contract under the procurement rules. The lease also requires AMG to maintain the classical music programme at the Venue and to provide the Services for those events and accommodate a community programme. Continued in VI.4.3).

Other Information

** PREVIEW NOTICE, please check Find a Tender for full details. ** Continued from II.2.4) AMG will be able to provide a range of entertainment events at the Venue across the year. The majority of these events will be provided by third parties hiring the Venue although some may be provided by AMG directly. The lease will require AMG to continue and maintain the classical music/community programme as part of the Venue’s annual offering, reserving at least 80 days per annum for hosting/staging such events. There is also an obligation on AMG to provide operational and venue management services (such as those listed in II.2.2 (above) to support the classical programme events (“Services”). There will be no service charge payable by the Council to AMG for the provision of these Services. AMG will make the Venue available for other events and hire by third parties outside of times reserved for the classical programme. (WA Ref:132101)