New Trafford: can the free market promote regeneration in Manchester?
Readers' suggestions sought
By Keith Boyfield, Regulation Fellow at the Institute of Economic Affairs
As a teenager, I was lucky enough to see Bobby Charlton, Denis Law and that mercurial soccer genius, George Best, play at Old Trafford, the so-called ‘theatre of dreams’.
Manchester United is a global brand with a worldwide fan base. Sadly, it has suffered from years of neglect by the US owners, the Glazer family, who retain 48.9% of total outstanding shares.
Jim Radcliffe, a lifetime fan of Manchester United, and one of Britain’s wealthiest businessmen (albeit domiciled in Monaco), has warned that the club was in danger of going bankrupt this year if he had not taken decisive steps to cut costs (his company INEOS LTD now own 28.9% of the club’s shares).
Radcliffe has great ambitions for the club. As part of this strategy plans were recently announced for the wholesale redevelopment of the club’s ground. Indeed, a new stadium is envisaged, designed by fellow Mancunian Lord Norman Foster, at a projected cost of £2 billion.
But where is the funding to be found for this ambitious scheme?
Manchester United has accumulated debts of £1 billion.
Manchester’s Mayor, the loquacious Andy Burnham, reckons he’ll be able to raise £200 million from central government in its spending review, due to be announced on 11 June.
However, as we all know, the government is skint, so Mr Burnham’s confidence may be misplaced.
“A reasonable person may ask why the taxpayer should ever pay out for a football stadium?”, queries Professor Paul Cheshire CBE, the eminent LSE planning academic in an exclusive interview with your author. He adds: “One might make a case on the basis of social benefits of regeneration, but that is a hard sell”.
Funding has been raised for other stadiums and regeneration in the region in recent years. Manchester City’s new Etihad ground, on the other side of the conurbation, stands out as a shining example. The North Stand expansion is a £300 million project, aimed at increasing capacity to over 60,000 with a a hotel, club shop and museum scheduled to open in the 2025/6 season. Nonetheless, it is important to remember that the club was helped by the very deep pockets of Sheik Mansour bin Zayed Al Nahyan, a member of the Abu Dhabi Royal Family. Meanwhile, Everton is opening a new ground on the Liverpool dockside, but it is significant that the value of the club’s shares have plummeted this year following the sale of the majority stake held by the finance conglomerate Farhad Moshiri to the US Friedkin Group, which also owns the Italian club, Roma.
Furthermore, there are an array of worrying aspects surrounding Everton’s new stadium, due to officially open in August 2025. Located on the windswept Northern docks in Liverpool, the stadium, with a capacity for 53,000 spectators, is a considerable distance from the nearest rail station. Furthermore, car parking is limited, so fans have to struggle to reach the ground. It is important these mistakes are not repeated in Manchester.
Is there an opportunity for free market capitalism to play a pivotal role in funding the ambitious plans to redevelop Manchester United’s ground?
At first sight, the answer is shrouded in doubt. John Mills, a former partner at PriceWaterhouseCoopers (PWC) in Manchester, observes: “the circumstances are so different to the Etihad development. Third party private finance will weight highly, requiring a level of return the development is unlikely to provideiv”.
The redevelopment scheme requires a lot of upfront capital, not merely for the new stadium, but also for the associated infrastructure and transport links. For example, in order to build the new stadium an adjacent rail freight hub would need to be moved to IPL North, a proposed new logistics hub in St Helens on Merseyside. This relocation exercise is likely to cost up to £1 billion.
Yet, on the plus side, the ‘Red Devils’ brand can reach out to a fan base numbering hundreds of millions worldwide. Some form of bond could be issued to attract potential investors who are also committed fans.
But where are the sources of revenue generation to pay for such a bond, and, indeed, the scheme?
Besides the sale of tickets for seats and executive boxes, coupled with TV rights, the onus will be on retail, hospitality and hotel income. Clearly, some imagination will be required to fashion a compelling offer for investors.
Attractive housing may be one persuasive answer. It is important to recognise there is a substantial unmet need for housing in the greater Manchester area. What is more, there is a large (overseas) student population prepared to pay for appealing new housing. Given suitable incentives and the unshackling of burdensome planning regulation, the New Trafford regeneration scheme could well prove a litmus test for the UK’s Labour government’s commitment to enabling the private sector to construct attractive housing on a speedy timeframe. Indeed, as The Rt Hon Lord Brady of Altrincham mentioned to me, “It will be instructive to see how far our current Labour government will be prepared to streamline onerous planning controls to support this visionary development. After all, it claims to be pro-growthv”.
"Keith Boyfield is right: building high quality, high density housing is the best way to capture value in regeneration projects", says Professor Tim Leunig of the LSE and a former adviser to two Chancellors of the Exchequer.
“Keith Boyfield is more circumspect about this development (and a Man U fan to boot), but his analysis really does imply funding is a very tough sell”, says Professor Paul Cheshire CBE, the eminent LSE planning academic.
IEA Insider readers may opt to come up with their own innovative solutions to fund this ambitious urban redevelopment in the former heart of Britain’s industrial revolution (Trafford’s industrial park, where I once laboured as a fitter’s mate in my college vacations, ranked as the largest in the UK). If you do have thoughts, suggestions or ideas, please do get in contact with me. There may be opportunities to develop our thinking further with some of the key organisations involved.