SIV bailout is added pressure on council budget, says officer
The trust which runs Sheffield’s major sporting and leisure facilities will see its “bank balance drained” without help from the council.
Sheffield City Trust, and its management arm Sheffield International Venues, has been “haemorrhaging cash” in the words of council officers.
The trust runs the major sporting facilities Ponds Forge, Hillsborough Leisure Centre and the FlyDSA Arena and a number of other venues including the City Hall, smaller leisure centres and golf courses via Sheffield International Venues.
The council has had to bail out the trust with £6m – more than half of which is for significant maintenance and health and safety work to keep facilities open for the public.
A report to the council’s cabinet said: “In 2018 a six-year business plan was received from the Trust that proposed to move to a zero subsidy by 2020. This relied heavily on plans to grow their income base over the first two years.
“This proposal was agreed, but is not being achieved by the trust, with deficits over the last few years averaging £2.8m and it is expected to continue at this level.
“Competition from low cost operators and the Leeds Arena entering the market has also impacted the trust’s financial position and contributed to this budget deficit.
“This means that more cash is being spent running the facilities – staff salaries, utilities etc – than is received from entrance and membership fees and will ultimately drain the trust’s bank balance if no subsidies exist to fill the gap.”
Eugene Walker, executive director of resources, told a cabinet meeting that the bailout of the trust had been an added pressure on the council.
“We are delivering 85 per cent of our savings so this organisation does manage to deliver what it says in terms of savings but our problems are the pressures that come up during the year that we are constantly dealing with.
“A significant issue has arisen with Sheffield City Trust and their ability to deliver a financial plan having been subject to pressures. We will come back later in the year with a revised plan on the future of leisure facilities in the city.”
The council approved and paid over £1m earlier this year as a loan to the trust.
Officers are now recommending the £2.8m subsidy plus a £3.5m grant for maintenance and health and safety work.
The report adds: “Officers are working with the trust on their financial position, and it is possible that further requests for cash flow support may be received in the future.
“In addition to these investments, this report requests approval for the council’s own costs, including consultancy support, that are being incurred to develop a long term leisure strategy. These costs are estimated at up to £250,000 this year.”