Taxpayer cashes in as star power pushes O2 sales to record £60m
Government gets 15 per cent of arena's profits, but still has to pay off its building bill of £600m
Sunday 05 December 2010
Sales at London's O2 arena rose 14 per cent to a record £60.3m last year after a string of sell-out concerts by stars including Beyoncé, Rihanna, Britney Spears and Paul McCartney.
The Government is a winner from the O2's success, as one of the conditions of the sale of the venue to US sports conglomerate Anschutz Entertainment Group was that 15 per cent of its net profits would be paid to the taxpayer for 25 years. However, it will be some time before the Government turns a profit on the O2, as it spent £600m building the arena, which first opened a decade ago.
The O2, run by AEG's UK company, Ansco Arena, is the world's most popular music venue. In the year ending 31 December 2009, it sold 2.3 million tickets.
Ansco's income is generated from a rental charge and from taking a proportion of ticket sales, which both vary depending on the performer. Despite the boost to its revenue, Ansco's bottom line suffered due to the economic downturn.
As interest rates crashed last year, it received £500,000 in interest from its £65.5m cash pile, compared with £1.8m in 2008. This led to its pre-tax profits rising by only 1 per cent to £15.8m. A £3.8m tax payment left the company with net profits of £12m, down from £15.6m the previous year.
Ansco's improved liquidity allowed it to cut what it owed trade creditors by 38 per cent, and it also made £2.5m of capital investments. The arena represents the bulk of the company's assets and is valued at £201m. AEG is now planning a £200m expansion, including a 450-bedroom, four-star hotel and conference centre.
When the venue was owned by the Government, it was known as the Millennium Dome, and housed a theme park. It took two years for AEG to transform it into a 23,000-seater arena which has 30 restaurants, bars and cafés, as well as an 11-screen cinema. AEG also managed to secure sponsorship, estimated at £6m annually, from the mobile phone company O2.
Ansco still owes AEG £416.3m, which it invested in the conversion, and the debt left the company with £213m of net current liabilities last year. However, the accounts state that this is not a business risk since it is repayable on demand, and AEG has committed to financially supporting the company if necessary for at least another year.
AEG operates a total of 51 venues around the world. It also owns Los Angeles Galaxy, the US soccer club that David Beckham plays for, and a wide range of other sports properties.
Diving in at the deep end is no excuse for shirking the style stakes
- 1 Game of Thrones author George RR Martin says 'f*** you' to fans who fear he will die before finishing Westeros saga
- 2 Loom bands: Bids for dress made from colourful rubber pass £170,000 on eBay
- 3 Why I'm on the brink of burning my Israeli passport
- 4 L'Oreal cuts ties with Belgium supporter Axelle Despiegelaere after hunting trip photographs
- 5 The true Gaza back-story that the Israelis aren’t telling this week
Sustained immigration has not harmed Britons' employment, say government advisers
War is war: Why I stand with Israel
7/7 memorial defaced on anniversary of 2005 attacks with ‘Blair lied thousands died’ graffiti
Australia facing international condemnation after turning around Sri Lankans at sea
Even when it brutalises one of its own teenage citizens, America is helpless against Israel
Socialist Worker called to apologise over ‘vile’ article saying Eton schoolboy Horatio Chapple's death is ‘reason to save the polar bears’
iJobs Money & Business
£70000 per annum: Harrington Starr: Information Security Manager (ISO 27001, A...
£75000 - £85000 per annum + ex bens: Deerfoot IT Resources Limited: Biztalk Te...
£60000 per annum: Harrington Starr: Trade Desk Specialist (FIX, Linux, Windows...
£35000 per annum: Harrington Starr: Service Desk Analyst (Windows, Active Dire...