Football clubs’ business rates are, in part, determined by variables including the estimated cost of building a replacement stadium, as well as the football 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 Company Ltd v Roberts [24 July 2018] the football club argued that there had been a “material change of circumstances” entitling it to an immediate reduction in the rateable value of its stadium, before the next revaluation of the rating list, due to its relegation from the Premier League to the Championship and subsequent relegation from the Championship to League One.
The club had suffered a seismic reduction in its revenues. While it was in the Premier League, broadcasting revenue represented more than 80% of its income. This had fallen to 23% when the club was playing in the Championship and had reduced even further to around 13% in League One. So the club sought to have the rateable value of its stadium reduced from £1,100,000 to £454,000 while it was in the Championship and to £255,000 for its use in League One.
In order to achieve its objective, the club needed to persuade the Valuation Tribunal that one of the conditions in paragraph 2(7) of Schedule 6 to the Local Government Finance Act 1988 had been met. Paragraph 2(7) defines a material change of circumstances as including matters affecting the physical state or physical enjoyment of the hereditament, or the mode or category of its occupation, and 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 tribunal noted that the stadium, its media centre and broadcasting facilities had not altered. The club had closed its East Stand ticket office following its relegation from the Premier League and had covered several rows of seats with advertising banners or tarpaulins. But these were business decisions, not physical changes. A hotel may lose revenue if its star rating is reduced or thanks to poor reviews on TripAdvisor, but this would not affect the valuation of the property itself. Throughout the lifetime of a rating list, tastes change, as do fashion and demand for certain properties – but these are economic factors, to be considered at the next revaluation of the rating list.
The decreased attendance levels at games were not relevant either, because intangible decisions made by fans were not a physical matter falling within paragraph 2(7). On the other hand, it was relevant that the football club shared its stadium with Wigan Warriors, a rugby league club. The parties had disregarded the presence of the rugby club, but this offended the principle of reality. The football club was not the only possible hypothetical tenant who would be willing to pay rent to occupy the stadium and the rateable value should not be driven solely by what it was prepared or able to pay. Furthermore, the stadium could be utilised for other activities in the summer, including pop concerts and other sporting events.
The President of the Tribunal added that “it may be that someone needs to look again at the valuation approach to stadiums which are occupied by football clubs”. But any change in the rules was a matter for parliament, rather than the tribunal.
Allyson Colby is a property law consultant
