Cost of capital's new indoor arena balloons to £300m

THE cost of Cardiff's planned new indoor arena has ballooned to £300m twice the original estimate.

- SION BARRY

Cardiff council has finalised its deal with US-owned Live Nation Entertainment over the financing of the 16,500-seat arena in Cardiff Bay.

McLaren Construction has been named as the lead contractor on the three-year project which is expected to be completed ready to open in 2028.

Once forecast at £150m, the cost spiralled following the pandemic and rising inflation. The current price tag of around £300m also includes £20m for the required relocation of the existing Travelodge hotel in Hemingway Road and the construction of a new one.

Live Nation will operate the indoor arena under a 45-year lease with the council. The entertainment giant has also agreed to provide capital investment of up to £150m towards the construction cost.

The arena will be located on the existing car park of Cardiff council's Atlantic Wharf headquarters building, with the required public realm also covering the opposite car-park site at the council-owned Red Dragon entertainment and leisure complex.

It will sit at the heart of long-term plans for a mixed-use development, delivering new council homes, private residential, hotels, offices, retail and leisure space, across a 30-acre site. A new multi-storey car park for the arena will also be built.

The initial projected cost of the arena pre-Covid was intended to be solely financed by the local authority borrowing from the UK Government's Public Works Loans Board (PWLB), with the arena's rental income from Live Nation offsetting the financing costs.

While the council's borrowing commitment is unchanged, why has Live Nation now agreed to provide such a huge capital contribution?

The company has projected, even with the required investment, significant long-term returns from operating the arena. Live Nation, which owns acts, ticketing (through Ticketmaster), and venues, is currently subject to an antitrust probe by the US Department of Justice.