Official UK procurement notice
St David’s Hall · UK public procurement notice
Authority: Cardiff Council (Central government)
What is being bought
Published requirement descriptionThis 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.
CPV: Band entertainment services · Bar management services · Beverage-serving services · Building and facilities management services · Building-cleaning services · Cafeteria services · Canteen and catering services · Catering services · Commercial property management services · Construction work · Cultural event organisation services · Entertainment services · +17 more
The lotProcurement structure
single lot · no lot value publishedLot #1Continued from II.1.4)
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.
Procedure terms & legal framework
From the official record · publisher note attached- Procedure method
- Award procedure without prior publication of a call for competition
- Legal basis
- CELEX · 32014L0023 Concession Contracts Regulations 2016 (Directive 2014/23/EU)
- Procurement category
- Services
- Notice status
- Awarded without competition
- Procurement threshold
- Unspecified in notice
- Regulatory regime
- Standard
- Commercial structure
- Stand-alone contract (no framework)
- Competition type
- Direct award (no call for competition)
- GPA / WTO covered
- Yes (GPA)
- Recurring procurement
- Unspecified in notice
- First published
- 5 Jun 2023, 16:58 BST
- Last source update
- 5 Jun 2023, 16:58 BST
- FTS notice number
2023/S 000-015893- Classification (CPV)
- Delivery area
- Official registry OCID
ocds-h6vhtk-03d3caFind a Tender
- Why no open competition
- The procurement falls outside the scope of application of the directive
- Published justification
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).
- Review procedure
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.
Publisher note: 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)
Commercial outcome & contract awards
Published awards, contracts and bid statistics, not a forecast| Awarded to | Value | Date | Status |
|---|---|---|---|
| Academy Music Group Limited | £45,000,000 † | — | Awarded |
Contracts
Contract 015893-2023-1 · Academy Music Group Limited
- Signed
- 16 Dec 2022
- Value
- £45,000,000
- Status
- active
Contracting authority & participating public bodies
Dispute resolution & review bodies
- High CourtReview body
Bidders & participating suppliers
1 commercial party on the notice- Academy Music Group LimitedAwarded supplier
Official documents & specifications
Official links; attachments are not copiedNo document links were published on the notice.