Scarlets' £2.6m loan extension bid goes to full council

Scarlets are due to discover in September if they have been granted a further 15-year extension by Carmarthenshire County Council (CCC) to repay a £2.6m loan taken out from the local authority in 2007.

The council's cabinet has backed the proposal and if the full council also supports it and Scarlets repay it, the loan will have taken 31 years to repay.

Council cabinet members have sent the proposal for a decision by the full CCC council at their September meeting.

The west Wales rugby region was originally given the loan in 2007 as they prepared to move from Stradey Park to Parc y Scarlets.

The initial £2.4m loan was due for final payment in April 2023.

But amid ongoing financial issues, Scarlets wanted a three-year period in which no repayments would be made, followed by 12 more years in which the loan would be repaid.

CCC's cabinet discussed the proposal, which would mean Scarlets' new repayment plan starting in April 2026 and ending 12 years later, in 2038.

Officials advised councillors that Scarlets "are now midway through a restructuring of cost and have implemented a salary cap to reduce player costs, they are also seeking a two-year capital payment deferment from the Bank and Welsh Government loans".

The officials added: "As part of this recovery plan they have also asked the County Council to restructure the outstanding loan, with a deferment of repayments for three years and they are seeking a re-consideration of the interest rate to a more manageable level."

The land on which Scarlets' stadium sits is owned by the authority, but the venue and surrounding land was leased to the club for 150 years.

Parc y Scarlets opened in November 2008, the stadium and related facilities cost £25.4m to build and £18.3m was provided in differing forms by Carmarthenshire council.

In October 2013, the council agreed to restructure the original £2.4m loan. Earlier in the same year an overspill car park close to the stadium, which was leased to Scarlets, was sold for £850,000. The Scarlets received around £600,000 following the sale, despite the land being owned by the council.

Originally the Scarlets were paying 7% interest on that loan, but a revamped deal saw them paying 4% interest with the potential for it to increase.

Due to be repaid by 2023, the new deal could have meant the council earning around £800,000 less than it would have done, had the original terms of the loan been kept.

Council officials recommended councillors should agree to the terms of the loan again being renegotiated on this basis:

• The term of the loan be extended for 15 years from 1 April 2023, on a repayment basis, with a three-year deferral of payments. The value being £2.616m.

• Repayment of the Loan Principal commences on the 1 April 2026 on a equal instalments basis, with the value being £218,000 per annum.

• Interest continues to be chargeable and is charged at a rate of 2.2% above bank base rate.

The officials added: "The Scarlets are restructuring their cost base with the anticipation of them becoming more sustainable longer term and has structured their proposed repayment plan on the basis of their current financial pressures."

You can watch the council cabinet's discussion of the proposal here., external