The second attempt to find a worthwhile use for the Millennium Dome and associated land on the Greenwich Peninsula avoided many of the problems of the earlier abortive sale competition. It has led to a deal which looks capable of meeting government’s objectives as the Peninsula is developed over the next two decades, Sir John Bourn, head of the National Audit Office, reported today.
In reaching the deal with Meridian Delta Ltd and the Anschutz Entertainment Group, English Partnerships learned lessons from the first sale process and adopted a different approach. Given weak market interest, the decision not to run another open competition, but to inform the sale through comprehensive market testing, was reasonable. Although not in a strong bargaining position, English Partnerships avoided deal drift during negotiations with Meridian Delta and Anschutz and concluded from their appraisals that the proposed deal should be better than the main alternatives.
Achieving such a large and complex deal has taken since December 2001 when Meridian Delta Ltd became preferred bidder. It encompasses most of the northern Greenwich Peninsula and at 190 acres, including some 20 acres held by the private sector, is much larger and more suited to long term development of the site than the original offer of only the Dome and the 68 acres beneath and next to it. English Partnerships did not actively promote the full amount of publicly owned land that might have been available to any individual bidder. They did this in order to maintain interest in the Dome and its immediate surroundings, basing this on ongoing professional advice that this would be commercially prudent, as the process evolved.
The NAO concludes that the deal addresses the Government’s objectives: to realise receipts to the taxpayer (estimated returns to the public sector over the lifetime of the deal are over £550m in cash terms, or £216 million if discounted to present values), and to ensure the development of the Dome and the surrounding area. English Partnerships has contracted with a very strong private sector consortium, and it is good that the current scheme provides a comprehensive development plan for the northern Greenwich Peninsula.
The agreement requires the retention of the Dome until at least 2018, at which point the partners can decide to retain or demolish it. The report concludes that this is sensible, given the various constraints on development of the Peninsula site.
There are still obligations and risks that need to be managed. Doing the deal is only the start of the story. The ultimate success of the deal depends on how well those obligations and risks will be managed. But the agreement provides a contractual basis for achieving the government’s objectives.
The report also sets out the main factors which led to the failure of the first competition in 2001. Too many parties were involved in the decision making and key players such as the New Millennium Experience Company and English Partnerships did not have the same aims. Furthermore, the stated objectives which bidders were asked to meet were too complicated and difficulties at the New Millennium Experience Company, including the incomplete record of assets and liabilities, affected the first competition.