Scarlets to pay Carmarthenshire Council more in interest on loan
CHANGES have been made to the terms of a multi-million pound loan given to the Scarlets by Carmarthenshire Council.
The Llanelli club had asked the authority to review the arrangements because it said the financial climate had changed since the original deal was struck in 2007.
Back then the council loaned the Scarlets £2.4m at an interest rate of seven per cent.
The club has argued that due to the world-wide financial crisis interest rates have dropped dramatically since then.
At a meeting this week the council’s executive board agreed and now the club will repay the loan at 3.5 per cent above the bank base rate — which would give a current rate of 4 per cent.
The council says because interest rates are at a historically low level it is likely that this will increase in years to come resulting in a better return for the authority.
But in case interest rate rises placed an unaffordable burden on the club the rate has been capped at 10 per cent.
Scarlets Chief Executive Mark Davies believes that the council’s move in dealing with the club’s loan is a “positive, progressive and sound commercial decision”.
The council will receive £104,000 per year in interest from the club.
Mr Davies has acknowledged the club’s financial difficulties, but has demonstrated forecasts for year-on-year improvements.
He also praised the impact the club has on the local economy, as well as the community.
Executive board member for resources Jeff Edmunds said: “This is a sound commercial decision – an interest rate of 3.5 per cent above the base rate makes commercial sense in the long term.”
Income thresholds at which the club is required to pay rent on the Parc Y Scarlets stadium have also been changed.
The threshold at which the club will start paying rent on the rugby related income has been cut from £2.2m to £1.5m.
The council hopes that this will offer the potential for the council to generate rental income for the stadium.
Executive Board Member for Regeneration Meryl Gravell added: “I am so proud that as a council we have been there to support the Scarlets.
“When you hear about the economic impact in the area, the future of the Scarlets is very important for the economy, and the area, let alone all the work they are doing in the community.”