Voluntary ex ante transparency notice
Directive 2014/23/EU
Section I: Contracting
authority/entity
I.1) Name and addresses
Cardiff Council
County Hall, Atlantic Wharf
Cardiff
CF10 4UW
UK
Telephone: +44 2920873732
E-mail: corporate.procurement@cardiff.gov.uk
NUTS: UKL22
Internet address(es)
Main address: https://www.cardiff.gov.uk
Address of the buyer profile: https://www.sell2wales.gov.wales/search/Search_AuthProfile.aspx?ID=AA0422
I.4) Type of the contracting authority
Regional or local authority
I.5) Main activity
General public services
Section II: Object
II.1) Scope of the procurement
II.1.1) Title
St David’s Hall
II.1.2) Main CPV code
92000000
II.1.3) Type of contract
Services
II.1.4) Short description
This notice relates to a proposed arrangement between the Cardiff Council (“Council”) and Academy Music Group (“AMG”) in respect of St David’s Hall (“Venue”) in Cardiff city centre.
The proposed arrangement will involve the grant of a 45 year lease of the Venue at a peppercorn rent to AMG. Under the lease AMG will be obliged to repair and maintain the Venue, ensure its long-term future and that it remains open for the benefit of the people and City of Cardiff. The Council may also receive a share of Venue profits over the lifetime of the lease. AMG, as tenant will operate the Venue as an independent commercial enterprise in accordance with the lease requirements. The lease will have positive obligations imposed on AMG to deliver a range of services in operating the Venue including continuing the classical programme as described in more detail below.
Continued below in II.2.4) Short description.
II.1.6) Information about lots
This contract is divided into lots:
No
II.1.7) Total value of the procurement
Value excluding VAT:
45 000 000.00
GBP
II.2) Description
II.2.2) Additional CPV code(s)
92312100
92300000
92312120
92312130
92312140
45000000
55120000
55130000
55520000
55330000
55400000
55410000
55500000
70220000
70332000
70330000
70332200
79993000
79993100
90911200
75241000
79710000
79950000
79951000
79952000
79952100
79953000
79956000
II.2.3) Place of performance
NUTS code:
UKL22
Main site or place of performance:
St David’s Hall, Cardiff, CF10 1AH.
II.2.4) Description of the procurement
Continued from II.1.4)
The Council will also enter into a Business Sale Agreement (“BSA”) with AMG to enable service handover and continuity at the Venue. This will transfer the “book” of existing events and the assets of the business at the Venue to AMG for nil value. It will also transfer the benefit of relevant consents to operate the business. All current Venue staff are expected to TUPE transfer to AMG.
The lease obliges AMG to manage and repair (in a manner that AMG determines) a list of defects. The cost to bring the Venue back to its original condition is estimated at 38mGBP. AMG will be responsible for maintaining the condition of the building and would have flexibility to invest in and improve the Venue.
The lease requires (amongst other normal terms) AMG to keep the Venue open in a safe and operational condition in line with industry standards and as required by all statutory and licensing requirements.
The estimated value in II.1.7 and V.2.4 represents the Council’s assessment of the lower end of the potential net profit that could be achieved for a venue of this nature over a 45 year term. The potential higher end net profit over the 45 year term could be in the region of 67mGBP. These values are based on the Council’s projections of total revenues that may be achieved over the maximum 45 years and assumes a 5-10% net profit (which is a common range in this industry). The actual value of the opportunity (and potential revenues and profit turns) will depend on many commercial factors (including but not limited to) the performance and success of the tenant’s business and market conditions.
Continued below in VI.3) Additional Information.
II.2.11) Information about options
Options:
No
II.2.13) Information about European Union funds
The procurement is related to a project and/or programme financed by European Union funds:
No
Section IV: Procedure
IV.1) Description
IV.1.1) Type of procedure
Award of a contract without prior publication of a call for competition
Justification for selected award procedure:
The procurement falls outside the scope of application of the Directive
Explanation:
The Council has structured the arrangements as a grant of a lease which does not involve an acquisition activity governed by the Public Contracts Regulations 2015 (as amended) or Concession Contracts Regulations 2016.
The Council has obtained valuation advice in respect of the proposed disposal and will grant the lease for peppercorn rent. The market value of the rent acknowledges and takes into account the substantial building liability and remedial works that AMG will be required to take on as tenant of the Venue.
The lease does oblige AMG to address defects, repair and maintain the Venue, but these are incidental and ancillary to the lease arrangements because: (i) the estimated value of the works at 38mGBP is small compared to the estimate potential value of the operator opportunity over 45 years of the lease; (ii) the main purpose of the transaction is to transfer the Venue to an independent operator and not the securing of the works; and (iii) AMG has a broad discretion to determine the manner, timing and specification of the works as a tenant of the Venue. Furthermore, it is not practical for the works to be severable to be delivered by an alternative contractor given AMG’s occupation and operation of the Venue.
If AMG does not manage and repair the defects so that the Venue is safe and operational, the Council can terminate the lease or procure the delivery of those works at AMG's cost. AMG may voluntarily elect to carry out other works (including alteration upgrades, enhancements and other repairs and maintenance as may be needed) at the Venue in accordance with its own requirements.
The lease also requires AMG to keep the Venue open in a safe and operational condition in line with industry standards and as required by all statutory and licensing requirements. This is a standard commercial tenant requirement and does not amount to a services contract under the procurement rules.
The lease also requires AMG to maintain the classical music programme at the Venue and to provide the Services for those events and accommodate a community programme.
Continued in VI.4.3).
IV.1.8) Information about Government Procurement Agreement (GPA)
The procurement is covered by the Government Procurement Agreement:
Yes
Section V: Award of contract/concession
V.2 Award of contract/concession
V.2.1) Date of conclusion of the contract/concession
16/12/2022
V.2.2) Information about tenders
The contract has been awarded to a group of economic operators:
No
V.2.3) Name and address of the contractor
Academy Music Group Limited
003463738
211 Stockwell Road
London
SW9 9SL
UK
NUTS: UKI
The contractor is an SME:
No
V.2.4) Information on value of the concession and main financing terms (excluding VAT)
Total value of the concession/lot:
45 000 000.00
GBP
V.2.5) Information about subcontracting
Section VI: Complementary information
VI.3) Additional information
Continued from II.2.4)
AMG will be able to provide a range of entertainment events at the Venue across the year. The majority of these events will be provided by third parties hiring the Venue although some may be provided by AMG directly.
The lease will require AMG to continue and maintain the classical music/community programme as part of the Venue’s annual offering, reserving at least 80 days per annum for hosting/staging such events.
There is also an obligation on AMG to provide operational and venue management services (such as those listed in II.2.2 (above) to support the classical programme events (“Services”). There will be no service charge payable by the Council to AMG for the provision of these Services.
AMG will make the Venue available for other events and hire by third parties outside of times reserved for the classical programme.
(WA Ref:132101)
VI.4) Procedures for review
VI.4.1) Review body
High Court
Royal Courts of Justice, The Strand
London
WC2A 2LL
UK
Telephone: +44 2079477501
VI.4.3) Review procedure
Precise information on deadline(s) for review procedures:
In accordance with Regulations 88 – 104 (enforcement of duties through the court) of the Public Contracts Regulations 2015 (as amended) and Regulations 49 – 64 of the Concession Contracts Regulations 2016.
Continued from Annex D4:
The Services that the Council requires AMG to provide (based on the minimum 80 day classical/community programme above) amounts to approximately 22% of the event days available in each year. The Council’s assessment of the estimated gross revenue potential for AMG for the Services during these days is estimated to be in the region of 750,000GBP per annum, before taking into account the costs incurred in providing those services and other general costs associated with operation and maintenance of the venue.
The Council considers that the obligation to provide a classical programme and supporting Services is incidental/ancillary to the main purpose of the transaction, for similar reasons to those given above because: (i) the value is small compared to the potential value of the operator opportunity; (ii) the main purpose of the transaction is to transfer the Venue to an independent operator and not the securing those activities; and (iii) these requirements would not have been pursued if the Venue was not being disposed of.
VI.5) Date of dispatch of this notice
05/06/2023