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The creation of the FA Premier League in 1992 has led to an increasingly polarised situation. Clubs regularly competing in the Premier League have benefited from its increased exposure and the lucrative television agreements. They have also been best placed to benefit from the increase in merchandise sales and to exploit other commercial opportunities.

Clubs relegated from the Premier League are often in a position of either having to gamble on achieving a speedy return, and therefore retaining a Premier League squad at appropriate wages and sustaining a (hopefully) short-term loss or accepting that they must sell players to cut costs to a level more appropriate to a club outside the Premier League.

The increased players wages in the Premiership, and increased cash available from the TV deals, sees overseas footballers playing in the English leagues. This is in turn causing difficulties for those lower division clubs which have traditionally relied on incoming transfer income to remain profitable, spotting and developing young players and selling them on to the larger clubs. In some cases clubs have developed ground-sharing arrangements, for example with rugby league clubs, to maximise use of the stadium.

Trends in design of football stadia

In the 1970s and 1980s in particular, a number of disasters, mainly at football stadia, led to additional safety measures to avoid a repeat. The deaths of 66 people in a crush at an exit staircase at Ibrox Park in Scotland resulted in the Wheatley Report of 1972 which itself led to the Safety of Sports Grounds Act 1975. The Popplewell inquiry followed the Bradford City fire disaster of 1985 and the Taylor Report arose from the Hillsborough disaster of 1989.

The recommendations of the Taylor Report, which were accepted, apply to all sports grounds designated under the Safety of Sports Grounds Act 1975, in effect those capable of accommodating more than 10,000 spectators. The requirements resulting from the recommendations are that spectators are only to be admitted to seated accommodation at designated grounds, although this requirement was subject to phased timing so that all English First and Second Division Clubs and those in the Scottish Premier Division were required to have all-seater grounds by 1994, and all other designated grounds by August 1999. The latter requirement was later relaxed in respect of stadia occupied by second and third division clubs.

The result of the Taylor Report has therefore been a replacement of terracing with all-seater stands. At the same time, the larger clubs saw an opportunity to exploit additional revenue trends, and the new stands built often incorporated significant hospitality and conference facilities, executive boxes, and other catering outlets. Also, the increased demand for merchandise connected with football clubs has led to an increase in the size and quality of club shops, with some clubs also opening outlets away from the stadium itself.

The rating of football stadia has been the subject of a number of appeals before the Lands Tribunal and above. The attention of valuers is drawn to the following cases:

Hardiman (VO) v Crystal Palace Football and Athletic Club Ltd (1955) 48 R&IT 91in which the Lands Tribunal effectively rejected the contractors test valuations presented by the parties in favour of a close scrutiny of the Clubs accounts.

West Ham United Football Club Ltd v Smith (VO) (1957) 59 R&IT 313where the relationship between net annual value and net gate receipts was first canvassed.

Tomlinson (VO) v Plymouth Argyle Football Co Ltd and Plymouth City Council (1960) LT 51 R&IT 815, CA 53 R&IT 297 At the Lands Tribunal the VO defended a valuation based on a contractors test, whilst the ratepayers contended for an assessment based on a percentage of gate receipts. The Tribunal rejected the latter approach and adopted the contractors test of the VO, but the Court of Appeal held that the Tribunal had misdirected itself in not taking cognisance of the fact that the club was the only possible occupier of thehereditament. The Court of Appeal remarked

here on the evidence it seems clear that the ratepayers were the only possible tenants and I can find no evidence that supports the possibility of any other. It has been argued by counsel for the VO that it would be possible that a reconstructed club could arise if the ratepayers got into inextricable difficulties, but that would still leave only one bidder, since both clubs would not be in existence simultaneously. It is of great importance that one should ascertain the exact state of the market in an unusualhereditamentof this kind. Thehereditamentis not hypothetical and must be valued as it is rebus sic stantibus; but the landlord and the tenant are hypothetical. The Court must not assume hypothetical tenants for thehereditamentif there is in respect of that particularhereditamentno reasonable possibility of such tenants existing.

The Court went on to conclude

therefore, it was important for the Tribunal to try to decide what in the higgling of the market would be the resulting rent of this specialhereditamentas a result of the probable negotiations between the lessors and the ratepayers. Each had powerful bargaining arguments. The lessors needed a tenant for a valuablehereditamentwhich demanded some thousands of pounds to be spent on it annually by way of repairs. On the other hand, theratepayers existence depended on their taking thehereditament. I cannot but think that they would have arrived at some reasonable compromise and that compromise would represent the rent.

Although this case was decided in 1960, when football operated in a very different financial and economic environment than at present, the principle set out in this decision will still hold true for the majority of clubs.

Wigan Football Club Limited v Wayne Cox (VO) [2019] UKUT 0389 (LC)

The Upper Tribunal concluded in Wigan Football Club Limited v Wayne Cox (VO) that relegation of a football club does not constitute a material change of circumstances (MCC), confirming the decision of the VTE.

In considering whether relegation was a material change within the meaning of para 2(7) of Schedule 6 to Local Gov Finance Act 1988. It was held that:

(1) playing in a lower league was not a separate mode or category. The UT confirmed the VTEs statement that football is football. Wigan played football at the hereditament in all leagues with a view to commercial gain which dictated the valuation method.

(2) there was no change in the locality physically manifest as a consequence of relegation. The Merlin/Alton Towers decision (which was published shortly before the Wigan case went before the UT (LC) led the tribunal to conclude that the manner in which the business was operated (successfully or otherwise) could not justify altering the rateable value even if Wigan was the only possible tenant.

Bearing in mind the various decisions of

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