Football clubs’ business rates are, in part, determined by variables including the club’s ability to pay based on its income. So how does relegation from one league to another affect the rateable value of a football stadium?
In Wigan Football Co Ltd v Cox VO [2019] UKUT 389 (LC); [2019] PLSCS 239 the club argued that there had been a “material change of circumstances” for the purposes of paragraph 2(7) of Schedule 6 to the Local Government Finance Act 1988 due to its relegation from the Premier League to the Championship, and from there to League One, which caused a seismic reduction in its revenues. While the club was in the Premier League, broadcasting revenue represented more than 80% of its income, but had fallen to 23% in the Championship and had reduced even further, to around 13%, in League One. Consequently, so its argument went, the club was entitled to an immediate reduction in the rateable value of its stadium, before the next revaluation of the rating list.
But the Valuation Tribunal ruled that paragraph 2(7) of the 1988 Act did not apply. This was because a “material change of circumstances” is defined as including (a) matters affecting the physical state or physical enjoyment of the hereditament; (b) the mode or category of its occupation; and (d) matters affecting the physical state of the locality in which the hereditament is situated or which, though not affecting the physical state of the locality, are nonetheless physically manifest there. The change in the club’s economic fortunes did not qualify.
The Upper Tribunal has upheld the decision, despite parting company with the Valuation Tribunal’s suggestion that there was another possible hypothetical tenant who would be willing to pay rent to occupy the stadium. The club was the only possible tenant for the stadium: Tomlinson v Plymouth Argyll Football Co Ltd [1960] 6 RRC 173 applied. But the fact that the rateable value would be found to have changed on the next revaluation of the rating list was not pertinent to whether there had been a material change of circumstances for the purposes of paragraph 2(7).
Paragraph (a) did not apply because there had not been any change in the intrinsic characteristics of the hereditament. And paragraph (b) did not apply because the mode or category of the occupation of the stadium had not changed as a result of relegation. The stadium was still used for professional football – and, although the broadcasting exposure of a Premier League club is vastly greater than that of Championship or League One clubs, it would be an abuse of language to describe the stadium as having once been used as a broadcasting studio and as now being used predominantly to entertain spectators in the stadium. The success of a business does not place it in a different category of occupation. Finally, paragraph (d) was also inapplicable because Merlin Entertainments Group Ltd v Cox (VO) [2018] UKUT 406 (LC); [2019] PLSCS 3 had established that a change in the economic fortunes of a ratepayer does not meet the requirements of paragraph (d).
The tribunal could not ignore the plain words of the statute or the authorities. And the change in the team’s performance did not satisfy the statutory conditions that must be met to trigger an alteration to the rateable value of the stadium ahead of the next revaluation of the rating list.
Allyson Colby, property law consultant
