Fulham's new stand

This summer, the borough of Hammersmith & Fulham granted planning permission for Fulham FC to make some big changes at Craven Cottage.  It all revolves around the Riverside stand, which is going to be enlarged – and transformed beyond recognition in the process.  Below is an artist’s impression of what it will look like; there are more images here. So, what are the economics of all this? 

 For a start, the capacity of the ground will be increased by 4,300 – from 25,700 now to 30,000.  At present, each Craven Cottage seat generates an average revenue of about £23 per (domestic) home match.  So if the new seats can be filled at that kind of rate, they would generate just over £2m of extra revenue each season.

But it might actually be more than that, because the new stand will provide better spectator and corporate hospitality facilities than those currently on offer at Craven Cottage.  And that means that the seats should command commensurately higher prices.  That’s one reason why, for example, seats at Stamford Bridge bring in over £40 per domestic home game (that’s my best estimate, anyway – Chelsea are a bit cagey about disclosing their gate receipts).  So, with a bit of extra pricing power and a fair wind, the new Riverside stand might earn Fulham an extra £2.5m a year.

(Incidentally, seats at Loftus Road appear to bring in just under £20 per domestic home game, or about 15pc less than at Craven Cottage.  Again, that’s a best estimate based on incomplete disclosure by the club – but it would seem to tie in quite nicely with what we know about Loftus Road’s relatively dilapidated condition.)

So, how important would an extra £2.5m a year be for Fulham?  Well, I’ve argued here before that the club has been more or less self-financing ever since the Great Escape season of 2007-08, when Lawrie Sanchez blew £20m-odd in the transfer market (not all of it wasted, by the way – the likes of Davies, Konchesky and Baird have served the club well).  And cash out has also been balanced by cash in on an underlying basis – i.e. stripping out the buying and selling of players (invariably a net cash outflow) and earnings from the two Europa League campaigns.  On that basis, an extra £2.5m points toward a small underlying cash surplus each season – enough to prime the transfer kitty, but basically still obliging the manager to finance player purchases with player sales.

That leaves one question outstanding – where’s the money going to come from?  Because make no mistake – this is going to cost.  The planning application documentation puts the cost at a staggering £30m.  You could build a whole new stadium for that – Southampton, Stoke City, Sunderland, Swansea City and Wigan already have.  But the site here is a particularly tricky one, hemmed as it is by the river, the park, and the houses.  Arsenal had a similarly cramped site at Ashburton Grove, and it cost them nearly £400m to put a new stadium on it.  

It’s just about conceivable that Fulham could borrow £30m from a bank.  If I’m right about the enlarged stand generating £2.5m of income a year, then that would be enough to cover the interest on a £30m loan, and leave a bit left over for paying down the principal.  But it would be a slow process, and banks aren’t all that keen to lend to anyone at the moment, least of all football clubs.  So it looks to me like this is a job for chairman Mo and no-one else.  No wonder he felt the time was ripe to cash in on Harrods.  The Mohammed Al-Fayed Stand, anyone?  For the financial support he’s given the club down the years, it’s the least he deserves.