Crozier says £757m stadium bill is 'value for money'

How does a single stadium in London end up costing 75 per cent as much as 10 World Cup-class venues in South Korea? That is what the new Wembley (at £757m or $1.2bn) will cost compared to the $1.6bn that Korea spent building eight new arenas and upgrading two others for last summer's Far East showcase.

Part of the answer, it was finally revealed yesterday, is administration: banking charges, designers' fees, lawyers' bills, fittings and the "pre-opening management" of the new Wembley. This will amount to £264m, roughly a third of the final bill. The rest breaks down as land (£120m), construction of the stadium's shell (£352m) and local infrastructure development (£21m).

Of the £264m, some £93m will be spent on demolition, design fees and "fit-out". Thus the cost of actually making the stadium ready for use will be £445m, as opposed to £352m, which many people had assumed.

Another £85m of the £264m will be paid in "finance costs and interest during construction". This will service the Football Association's bank debt before the stadium is even open. Much of this will go to the German finance house, Westdeutsche Landesbank. The FA will pay off most of its debt from stadium revenues after 2006. The FA's chief executive, Adam Crozier, declined yesterday to say how much interest the FA would be paying each year.

The final part of the £264m is £86m for "WNSL management pre-opening and other costs". This will cover the running costs for Wembley National Stadium Ltd's administration during the building process as well as lawyers' fees. It also thought that some consultants' costs and the mothballing of Wembley since the last football match in October 2000 are included in this figure.

Finer details of precisely where the money is going are unavailable, protected by the catch-all excuse of "commercial confidentiality".

As for funding the £757m bill, bank loans will contribute £433m. The FA will contribute £100m in cash plus £48m in "capitalisation of FA staging payments" – in laymen's terms, borrowing from an undisclosed source against future earnings from the stadium. WNSL will contribute £15m.

Sport England has given £120m in Lottery money. Local Government will provide £21m and the Department of Culture Media and Sport will give £20m. Total public funding to the project is thus £161m, which Tessa Jowell, the Culture Secretary, insisted yesterday is "capped and safeguarded" under the terms of the funding agreements.

So does the stadium offer value for money and will it be self-financing? Crozier said "yes" on both counts. According to an independent study by the surveyors Cyril Sweett in April this year, the FA's contract with the Australian construction firm Multiplex offers "value for money both in terms of the market price for the scheme as designed, and in terms of comparison with stadia of similar standing. This does not signify that it is the cheapest price, but that it falls within the broad cost parameters for a project of this type and scale."

In other words, the FA is paying not just for a high-quality stadium – with a higher than normal number of expensive corporate facilities – but for Multiplex's commitment to meet any overrun costs. Corporate income will account for some £50m of the stadium's projected £70m annual income and be vital to repaying loans.

Comparing the cost of the new Wembley to other stadiums certainly makes the FA's project seem hugely expensive. Both Sunderland's Stadium of Light and Southampton's new St Mary's ground cost a mere £30m each. Korea's World Cup venues, albeit small, averaged £100m each. Even the Millennium Stadium was a comparatively paltry £190m.

But the FA prefers to make comparisons with other major world stadiums. Wembley's basic construct- ion cost of £352m equates to £3,918 per seat, which is broadly comparable with the Stade de France (£3,332 per seat) and Stadium Australia (£3,468) and cheaper than Japan's Sapporo Dome (£5,839).

It is the extras that have added to the cost of Wembley, and the FA argues there have been very few precise like-for-like studies ever done to take account of these elsewhere. According to one study that has been done – by Sweett for the FA – the Stade de France did not really cost £266m (which was just the construction fee), but approximately £577m overall by 1998 prices. This would equate to around £800m in 2006, the FA claims.

As for whether the new Wembley will be profitable, Crozier says it should be making between £10m and £20m annual profit within five years of opening. If IMG, the sports marketing firm that will control the sale of all the corporate seats and boxes fulfil their brief, that could well be so. At what price to corporate users is as yet unknown.