Purpose

The report:
 

1.   
Provided an update on the procurement and contract award for a
provider to operate the Utilita Arena Sheffield
(“Arena”) and the transition of such operation
from Sheffield City Trust (“SCT”) to the new
operator.

2.   
Sought approval for the contract award to SMG (UK) Limited
(“SMG”) and entry into associated documents

Content

 

That:
 
1.   
The contract award to SMG (UK) Limited (“SMG”)
trading as ASM Global for the Utilita
Arena Sheffield (“Arena”), including the Council
entering into the transfer agreement, be approved;
 
2.   
the grant of a 25-year lease of the Arena to SMG, including the
Council entering into the agreement for lease, lease and licence
for alterations, be approved;
 
3.   
the award of £5.7m capital grant funding to SMG for
enhancements to the Arena, such award to be included in the lease,
be approved;
 
4.   
the Council entering into the Local Government Pension Scheme
admission agreement. The admission agreement sets out the
responsibility for payment of pension contributions and related
terms, i.e. what SMG is responsible for and must pay directly to
SYPA, be approved; and
 
5.   
Notes the description of the material points within the transfer
agreement and other documents as noted in Appendix 5 (DWF Documents
Report).
 

 

Reasons for the decision

1.   
The award of the contract and investment into the Arena will
enhance the offer to customers and communities.  An improved offer will attract and retain
increased participation and usage of the Arena.
 
2.   
Agreeing a fixed contract (including the lease) with SMG will
provide a greater level of financial certainty since a management
fee will be set as part of the contract procurement, financial risk
can be transferred to the SMG and the Council’s future
liabilities will be reduced.
 
3.   
The procurement strategy was designed to deliver the benefits
outlined in the report strategy of November 2021 and there have
been no material changes to this strategy.

Alternative options considered

Alternative Option 1 - Do nothing
 
This option was discounted as the current
arrangements with SCT will end in 2024 and we are therefore unable
to continue to operate under existing arrangements.
 
Alternative Option 2 - Operation via an
‘At Risk’ Management Agreement
 
This option was discounted because under a
Management Agreement the Council is exposed to the operating risk
of the venue with potential variations in income that would impact
the Council’s ability to provide investment and could impact
on wider Council budgets. In addition, the operator potentially has
less incentive to optimise the building's financial performance
than it would under a lease arrangement, and they would be less
likely to provide their own investment into the facility.