Wrexham AFC set to obtain full control of Racecourse as supporters trust ready to collapse lease
Fan involvement in the leasehold of the Racecourse ground looks set to end, with Wrexham AFC set to hold the full unencumbered freehold if a vote passes next month.
The Wrexham Supporters Trust Board say they are “pleased to announce that negotiations with the Club have progressed well with regard to the proposed surrender of the existing lease to the Racecourse Ground, to be replaced by a legally binding covenant so that the Ground will only be used as the home football stadium of Wrexham AFC’s men’s first team until 30 June 2115”.
The move will likely pass a debate at a special general meeting to be held 7pm on the 4th December – with voting open until 12th December.
WST Chair Barry Jones said, “Whilst the Trust board have complete faith in the current Club owners, we can’t forget some of our previous owners, so are determined to ensure that the protections against a change of use of the Racecourse Cae Ras conferred by the current structure are reflected in the revised arrangements.
“To facilitate funding of the redevelopment of the Ground, the Club has informed the Trust that the current leasehold structure must be collapsed, leaving the Club owning the freehold title to the Ground, free of any leases.”
The full details are below.
Wrexham AFC say they are “delighted” with the move, saying the surrender of the lease is “required by the Club to enable the funding for the Kop Development / UEFA Stadium Category 4 status to be secured”.
Co-chairman Rob McElhenney and Ryan Reynolds said: “We were delighted to receive the support of the Directors of the WST and share their understandable desire to protect the long-term future of the Club.
“Our legacy at the Club will not be defined while we are its custodians, so we wanted to address the anomaly in the WST lease for the Racecourse Ground that did not include the requirement for the team to actually play at the stadium, only not allow it to be used for any other purpose. We didn’t want anyone in the future to be able to exploit that position.
“The payment of £187,000, is an equivalent amount to that contributed by fans to save the Club. To know that we will provide the funding to effectively pay everyone back who contributed to save the Club is worth every penny and gives us a great deal of satisfaction.
“We would appeal to the 824 members who have a vote, to do so in favour of the proposal and allow the Club to continue on this wonderful journey we are all on.”
In documents made public the WST have detailed:
The Current Situation
The Club owns the freehold to the Racecourse Ground with the Trust holding a 99-year lease ending in July 2115, being the 2115 Lease, and the Club in turn holding an underlease from the Trust which runs to August 2045, being the 2045 Lease.
The 2045 Lease allows the Club only to use the Ground as a football and rugby stadium and for certain other ancillary uses (e.g. the club shop). If the Club proposed to use the stadium for other purposes (e.g. to build a retail park), the Trust could seek an injunction to prevent such use and ultimately terminate the Club’s 2045 Lease, with the Trust taking back possession of the Ground.
The 2115 Lease does impose certain obligations on the Trust including in relation to maintenance of the Ground and payment of £100,000 p.a. rent. These obligations are currently offset by the obligations assumed by the Club under the 2045 Lease, including £115,000 p.a. rent payable by the Club to the Trust. As a result, the Trust currently receives £15,000 p.a. more under the 2045 Lease than it has to pay out under the 2115 Lease.
If, for example, the relationship between the Trust and the Club broke down under new ownership of the Club and the Club acted such that the Trust had to terminate the 2045 Lease, these rental and other obligations under the 2115 Lease would remain with the Trust. In practical terms, that means that the Trust’s ability to enforce the terms of the 2045 Lease, and to terminate it, would be influenced by the Trust’s potential ongoing obligations under the 2115 Lease, including the £100,000 annual rent.
The Club’s Proposal
The Club has offered to provide a legally binding covenant to the Trust that it will use the Racecourse Ground as the home football stadium of Wrexham AFC’s men’s first team until 30 June 2115 and further agreed not to sell the Ground to any other person unless they enter into a similar binding legally binding covenant with the Trust. In contrast, the current leasehold structure does not impose any obligation on Wrexham AFC to continue playing at the Racecourse Ground. Further details on the terms of this proposal are set out in section 3.
The Club and the Trust are currently working hard to finalise the precise wording of these binding covenants and the associated legal documentation and very good progress has been made. You are being asked to approve the Lease Surrender and to authorise the Trust Board to negotiate and conclude the Lease Surrender on the terms set out in this information pack and, in particular, in section 3.
The 2115 Lease will not be surrendered until the Trust Board is satisfied with the detailed terms of the legal documentation and that they secure fans’ long-term interests in Wrexham AFC and its ground.
The Club and the WST jointly instructed a leading London King’s Counsel specialising in property law, Stephanie Tozer K.C. (no relation!) to advise on the differences between the current leasehold position and the Club’s new proposal. Her advice is that through the Club’s proposals, “it is possible to secure nearly equivalent protection for the Trust to that currently enjoyed”.
To compensate the Trust for the loss of £15,000 p.a. income which will result from the Lease Surrender, the Club have agreed to pay the Trust £187,000 upon the date of the Lease Surrender. This figure reflects the full amount of the Community Shares which were issued, some of which have already been repaid. The Trust anticipate applying some of these
monies for repaying the balance of the Community Shares and for community purposes. The Club have stated that they anticipate funding certain community projects each year, as approved by the Club Advisory Board, on which the Trust has a seat. The Trust Board expect the Trust to participate alongside the Club in one or more of these projects. In addition, the Club has agreed to pay the Trust £1,000 p.a. (to be increased by 3% each year) as a contribution towards the ongoing administrative costs of the Trust.
The key bit of information is the detail of what the terms of the agreement are:
3. Detailed terms of the proposal put forward by the Club
3.1 The Trust will surrender its current 2115 Lease of the Racecourse Ground. The Club’s 2045 Lease will also then be terminated.
3.2 The Club will provide legally binding covenants in favour of the Trust that:
(a) (subject to paragraph 3.3 below) the use of The Racecourse Ground will, until at least 30 June 2115, be as the home football stadium of Wrexham AFC’s men’s first team;
(b) the Racecourse Ground will not be used for residential purposes or student accommodation, consistent with the commitments provided to Wrexham University when the Club bought the freehold to the Ground; and
(c) the Club will not sell or otherwise dispose of The Racecourse Ground unless the buyer/transferee enters into a deed of covenant with the Trust undertaking to comply with the binding covenants referred to paragraphs (a) and (b) above. This will also apply to any party taking security over The Racecourse Ground.
3.3 The covenants referred to in paragraph 3.2 would be released if a new stadium of at least equivalent capacity which meets UEFA Category 4 Stadium status or equivalent was to be constructed as the home football stadium of Wrexham AFC in Wrexham County Borough within two miles of The Racecourse Ground. This is consistent with the undertakings given to the Trust when the Club was sold to the current owners.
3.4 The Club will make a payment of £187,000 to the Trust upon completion of the legal documentation.
3.5 The Club will pay £1,000 per annum to the Trust (to be increased by 3% p.a.), in advance, to ensure that there are funds available to meet the administrative costs of Wrexham Football Supporter’s Society Limited (or its successor body) being maintained on the register of companies in England & Wales. This is intended to protect the ongoing interest of fans to ensure the Covenants being given by the Club can continue to be enforced by the Trust.
3.6 The Trust will be entitled to assign its rights to enforce the binding Covenants to a supporters’ group that is a bona fide successor to the Trust.
3.7 The Club has agreed to pay the Trust’s professional and other costs incurred in connection with the convening of the Special General Meeting and the Lease Surrender.
Announcement of the outcome of the vote is expected on the morning of the 13th December.
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