Signing up with a football club client? Watch out for prima donna chairmen and financial trick shots. Phil Clark reports from the sidelines on the pitfalls of building a stadium.
FOR MANY IN THE INDUSTRY, TODAY'S FOOTBALL stadium construction market has as much appeal as going into a one-on-one challenge with Roy Keane.

Witness the plight of Birse, one of the leading contractors in the market. Last month, the firm had to write off £5.5m after Leicester City Football Club was forced into administration. Relegation from the Premier League in the summer meant the club could no longer afford the £17.5m Walkers stadium it was planning. Even the late intervention of former England star-turned-TV commentator Gary Lineker will not help Birse now.

Those with slightly longer memories will recall the ugly spat between contractor Longley and Chelsea Football Club over the redevelopment of its stadium and the construction of Chelsea Village in the late 1990s. The dispute – publicly aired by outspoken club chairman Ken Bates in match-day programmes – led to Longley's collapse in summer 2000. "It was the Chelsea contract that brought Longley to its knees," says Mike Gurner, the venture capitalist who tried to save the firm after the dispute.

The financial woes – not to mention the egos – of the football world are making the construction industry wary of stadium jobs. Selectivity is now the buzzword among contractors, specialists, architects and consultants as clubs' TV revenue vanishes in the wake of the collapse of the ITV Digital deal in April – so far, Portsmouth, Plymouth, Macclesfield and Norwich have all been forced to cancel schemes because of lost TV income. "Vanity" projects instigated by overambitious club owners are also a concern.

"I suppose you could say some of the people involved are unconventional," says Doug Barrat, consultant for Ballast, a contractor whose sporting track record includes Sunderland's Stadium of Light. "We have had some good projects over the years, but we've also looked at projects with unrealistic expectations."

Martin Robinson, a director at sports architect KSS Design, is more forthright in summing up how firms are now approaching football jobs. "Stadium projects are relatively high risk," he says. "Most people now go into this market with their eyes wide open."

One stadium contractor, who had talks last month with a Nationwide League club considering building a new stadium, underlines the new mood in the industry. He met with the club's bosses the week after the Birse losses emerged. "I told them I wanted to make something quite clear from the start," he recalls. "I said I didn't want to spend two to three months negotiating with them and I wanted a guarantee for them to trust us."

The issue of payment is not unique to Birse.

Contractor Barr spent much of the earlier part of this year chasing payment from AFC Bournemouth for part of its £5.5m contract to build the second division club's Dean Court stadium. Another contractor says: "One of my rivals is owed £400,000 on a job. The club is paying them £20,000 a year – with interest it will take them 15 years to pay it off."

To offset payment problems, one consultant suggests clubs should put all the money promised to contractors in an "escrow" bank account (a third-party account specifically for the project that neither party can touch until it is completed), to make sure payment is available and avoid a Leicester-type shortfall. Contractors' attitudes need to change, he says: "The clubs are always asking for bonds from contractors but it should be the other way round. It's one-sided.

Clubs are always asking for bonds from contractors but it should be the other way round. I would be questioning the clubs and their financial health as much as they do me

Industry consultant

If I was a contractor I would be questioning the clubs and their financial health as much as they do me."

One stadium contractor has an even stricter policy. "We ask for a 110% guarantee," he says. "The extra 10% will cover any changes to the project, which usually happen when the scheme gets going. And if the money is coming from outside funds we negotiate directly with the banks – it doesn't go through the clubs."

Some clubs are responding to the industry's concerns. Stadium projects currently under way in Swansea and Hull are examples of a more realistic approach; both are funded by a mix of private and public sector cash. Swansea's will be backed by Miller Developments. "It is a bit more stable when there's a mixture of funds going behind these projects," says Peter Miller, business development director at specialist firm Watson Steel, which is working on the Hull scheme.

Bolton Wanderers Football Club, which is currently building an office complex within the north stand of its Reebok Stadium, is earning praise in the industry as a business-savvy client. "They are a club that's realised you have to spend more on the property asset than on players' wages," says KSS Design's Martin Robinson. "Football, as a business, cannot rely on 20 match days a year."

Ballast consultant Doug Barrat says clubs can be even more radical when approaching new construction. He cites the example of the Amsterdam Arena, built by Ballast in the mid-1990s. The stadium is owned by a private consortium and is leased out to Dutch football club Ajax, which has no ownership of the ground.

The venue incorporates a leisure complex, with a cinema, nightclub, shops, a hairdresser and 25 restaurants. "It's like a corporate PFI," says Barrat.

But he admits that UK football clubs are still too conservative to consider anything as radical as divesting their property assets to third parties. "There are still some very traditionally-minded people in football. Many of the people involved have had ambitions to take over their clubs for a long time."

When contractors and consultants are up against conservatism at best, and bad practice at worst, why stay in such a market? "Football is still a great business to be involved with," says Robinson, summing up the continuing appeal of working for football clubs.