Dome goes for nothing in exchange for profits

Entertainment consortium agrees to build sports and concert arena as well as homes and offices

The sorry saga of the Millennium Dome limped to a close yesterday as the Government gave the site away for nothing in return for a slice of future profits.

Lord Falconer of Thoroton, the minister responsible for the Dome maintained that the deal, which is supposed to bring taxpayers about £500m over the next 25 years, was "the best we could have got".

Meridian Delta, an international consortium led by Anschutz Entertainment Group (AEG), signed the agreement with the government regeneration agency English Partnerships yesterday. AEG will spend £135m building a 20,000 sports and concert arena inside the Dome, where it plans to stage up to 150 events a year. The surrounding area, which covers 170 acres, will be developed into flats, offices, restaurants, parks and a school.

The Government admitted that more than £11m in consultants' fees for the Dome, which has already cost about £800m, will have to be paid from public funds.

The Government will also have to pay more than £250,000 a month for the upkeep and insurance of the Dome until planning permission is granted, which could be as far away as two years.

Despite forecasts that the deal will bring in £500m, questions remain about what will happen if the companies in the consortium are taken over or if no profits are made.

But Lord Falconer insisted that the agreement was "an excellent deal which secures a viable long-term future for the Dome and the rest of the Greenwich peninsula".

AEG said its Staples Centre arena in Los Angeles, home to the LA Lakers basketball team and the LA Kings ice hockey side, offered an example of the kind of performers that its venues could attract. As well as Madonna and Britney Spears, Barbra Streisand, U2 and Sir Paul McCartney have all performed there.

"AEG is very excited to be involved in a project of this significance," its managing director, Detlef Kornett, said. "The Dome structure, an iconic landmark for London, will remain, and the redesign will provide an entertainment facility of international repute to which visitors will flock and of which Londoners can be proud.

"We have had very positive discussions with a number of British promoters, such as Harvey Goldsmith, and they are very keen to have a state-of-the-art venue in London."

Philip Anschutz, the billionaire owner of AEG, has a history of making success from adversity. In 1967, when one of his oilfields caught fire, threatening to bankrupt him, he managed to make a tidy profit by inviting Universal Studios to film the famed firefighter Red Adair capping the wells. The $100,000 he earned covered all his costs and set him on the road to a vast fortune.

The other members of Meridian Delta are the UK-based Quintain Estates, and Lend Lease, an Australian company. Quintain is a fully quoted property company that develops and invests across Britain in all sectors. It has assets of about £640m. Lend Lease is the company behind the 240-acre Bluewater shopping and leisure centre in Kent and the Sydney 2000 Olympic Village.

Opposition MPs criticised the giveaway, pointing out that two earlier preferred bidders, Nomura and Legacy, had offered £150m and £125m respectively for the site in deals that subsequently fell through.

Last night, however, some independent experts were predicting that the deal would represent good value for money. Joanna Sumner, a senior policy officer for the Royal Institute of Chartered Surveyors, said: "This could become a flagship for what we call mixed use developments comprising shops, jobs, leisure facilities and transport infrastructure.

"The point of putting the Dome there in the first place was to regenerate the area. This is precisely what this new development will do. And with London property prices continuing to rise endlessly, it has the potential to more than recoup the money lost during the millennium year."