Council wins Court of Appeal battle over stadium and state aid

Coventry City Council has won a Court of Appeal case in the latest round of a four-year long litigation saga over the city’s sports stadium the Ricoh Arena.

In Sky Blue Sports & Leisure Ltd & Ors, R (on the application of) v Coventry City Council & Ors [2018] EWCA Civ 2252 the Court dismissed an application for judicial review made by Sky Blue - owner of Coventry City football Club and originally known as Sisu - to challenge the council over whether a loan it made to the arena’s then owner was unlawful state aid.

The council sold its half share in the stadium to Wasps Rugby Club and granted a 250 lease extension on the ground. Both Wasps and the football club at present play home fixtures at the arena.

Sky Blue sought to challenge as unlawful state aid a loan made by the council to its then half-owned subsidiary, Arena Coventry, which operates the Ricoh Arena.

The Court of Appeal found the loan was not state aid because a private market operator in the council’s position might also have made the loan on the same terms.

Sky Blue also sought - said a commentary by the 11 Kings Bench Walk chambers, which acted for the council - to challenge the council’s decision to extend the arena’s lease to 250 years.

Singh J refused this in July 2017, ruling that this transaction too did not involve state aid as the council had achieved a price consistent with an independent market valuation.

Giving the lead judgment in the Court of Appeal, Lord Justice McCombe said a public authority does not have to use a tender or open marketing process in every case to avoid granting state aid if it achieves a price that is consistent with an independent market valuation.

In a joint statement the council’s Labour leader George Duggins and Conservative opposition leader Gary Ridley said: “Sisu has continually sought to re-open decisions taken by the council on 7 October 2014. We have always remained steadfast in our belief that those decisions were appropriate, lawful and in the best interests of Coventry taxpayers.

“We hope that this will be the last stage of the litigation and that Sisu will accept this as the end of all legal action so that further unnecessary costs are avoided for all parties involved.”

A statement by Coventry City Football Club said it intended to agree a new deal to play matches at the Ricoh Arena beyond the end of the current season.

It said: “Without agreement of a stadium to play at next season, the club’s place in the English Football League is at risk. The Ricoh Arena is currently the only suitable option available for the club to play home matches in Coventry.”

The statement added: “This is not about our owners and not about court cases.”

Mark Smulian