Richard Garvie, Community Organiser for the Newbury Labour Party recently submitted a Freedom of Information request to West Berkshire Council, regarding the subsidy for the Newbury cinema.
Richard requested information as follows:
"In the council budget for the past two years, it is suggested that £100,000 is paid in subsidy to the cinema. Can the council inform me as to how much money is actually paid in subsidy, what payment method is used, the frequency of payments and to whom the money is actually paid."
Richard received the following reply from David Lowe, Scrutiny and Partnerships Manager at West Berkshire Council:
"In response I can advise that in 2002, West Berkshire Council sought expressions of interest from individuals and organisations interested in developing a cinema to serve the people of Newbury and surrounding area. Although a number of responses were received, planning constraints, land availability, and financial viability, suggested that a scheme at the junction of Cheap Street and Market Street provided the only realistic prospect of developing a new cinema in the Town Centre.
At that time, the owners of the Kennet Centre entered into discussions with a number of cinema exhibitors to try and attract them to the town. Each exhibitor approached demonstrated the marginal nature of film exhibition. They required a "turn key" building to rent (i.e already fitted out to their specification) and a maximum rental figure that they could pay from the anticipated seat sales. In turn, the owners of the Kennet Centre demonstrated that a deal that satisfied the cinema exhibitors would result in a financial loss to them in developing the project
At a meeting of the Council's Executive on 23rd October 2003 a report was considered on "The findings and recommendations of the sub-group established to consider the request for financial support of the project to develop a new cinema for Newbury". It stated that "market forces alone is unlikely to bring forward a development that includes cinema". The meeting resolved to :- 1. Accept the need for a subsidy for a town centre cinema in Newbury and 2. Ensure that the main terms of the agreement are reported to a future meeting of the Executive for consideration. That further report was considered by the Executive on 10th February, 2004.
In the time between starting the search for a cinema developer and a cinema exhibitor and 2007, the Kennet Centre changed ownership. Following the determination of planning applications further discussions were concluded in 2007 and a Funding Agreement was signed between West Berkshire Council and Newbury Trustee No 1 Limited and Newbury Trustee No 2 Limited as Trustees of the Newbury Unit Trust, the current owners of the Kennet Centre.
There have been no payments made to date. However, the Council has set aside reserves in readiness for the requirement to make payments. The Schedule to the Agreement between the Council and Newbury Unit Trust was made prior to construction of the cinema. The Council have agreed to provide funding not exceeding £100k per annum for 5 years from the date of opening. The payment is only triggered if an actual loss is projected for the new development. (The development includes the ground floor units as well as the cinema itself).
In the last two months, Newbury Unit Trust have provided the accounts for the first full year of operation 1st January 2010 to 31st December 2010. The Council has asked for further information about some expenditure lines in the accounts and clarification about the process for future claims. Provided that satisfactory answers are received it is expected that the first payment will be made in the near future.
Officers have identified two major opportunities for providing the means to make the financial payment;
(1) The cinema will be constructed on the Mall Car Park. The Council’s lease of this car park comes to an end in March 2005. It will then return to the landowner (William Ewart) and become a private car park. The Council will lose the car park income. In constructing the cinema the car parking will be displaced. It has been assumed that 80% will be displaced into the surrounding public car parks. The Mall Car Park currently generates £100,000 of income (gross) per annum. It has therefore been assumed that the Council will accrue an additional £80,000 of car park income annually through the construction of the cinema and the subsequent loss of the private car park. This additional income would not be available to the Council if the cinema was not being built. There is sufficient capacity within the Town Centre car parks to accommodate the displaced vehicles.
(2) By introducing a flat charge for evening parking in the Kennet Centre Car Park it is estimated that a further £30,000 of income will be generated. This is modelled on a car parking fee of £1 per evening although it should be pointed out that the Environment and Public Protection Select Committee will be undertaking a car parking review during 2005 and will consider the issue of charges at that time. This will ultimately be reported to the Executive. That said the Management Agreement with the cinema owner is likely to include a cap on the car park fee of £1 per evening with an annual increase linked to the RPI.
The Council will lose the car park income. In constructing the cinema the car parking will be displaced. It has been assumed that 80% will be displaced into the surrounding public car parks. The Mall Car Park currently generates £100,000 of income (gross) per annum. It has therefore been assumed that the Council will accrue an additional £80,000 of car park income annually through the construction of the cinema and the subsequent loss of the private car park. This additional income would not be available to the Council if the cinema was not being built. There is sufficient capacity within the Town Centre car parks to accommodate the displaced vehicles.
Can't follow the logic on this I'm afraid.
However there is now a blanket £1 evening charge on every town centre car park. This must generate more than enough revenue to cover the cinema subsidy.
However there is now a blanket £1 evening charge on every town centre car park. This must generate more than enough revenue to cover the cinema subsidy.
If the cinema had not been built the Mall Car Park would have remained generating £100k for its private owners.
Building the cinema revoved this car park displacing 80% of those that did park there to other council run car parks in close proximity. Thus generating £80k for the council.
If the cinema had not been built the Mall Car Park would have remained generating £100k for its private owners.
Building the cinema revoved this car park displacing 80% of those that did park there to other council run car parks in close proximity. Thus generating £80k for the council.
Seems like a confused logic here. The council loses the lease on a car park. This reduces the income by £100k. The car park is closed so anticipated income from cars that go to other council car parks is £80k. In addition anticipated income from evening parking is anticipated at £30k. So this means that the council expect to £10k more in parking revenue. The council then gives up to 100k a year if the cinema makes a loss. So the council are in reality (provided the expected income figures are correct) spending up to 90k a year in subsidies to the cinema which is what I thought from the start!
Does anyone have any idea of the real increase in income for these car parks now that the old cinema car park is closed?
No. Cinema is making a profit. The subsidy relates to the units, as detailed in the FOI response. So effectively the empty units below the cinema are costing the council the subsidy. That's my point, this is not a subsidy for the cinema, it's a subsidy for the developer. Vue get nothing from the council.
On the 11th August 2005, the leader of the council said this in relation to a subsidy of the cinema:
"In short, the deal signed for the funding for the cinema is a subsidy that will fall upon Council Tax- payers. Unlike the previous administration, we see no point in trying to hide this fact. We may not have agreed with how the subsidy was arrived at, but as we have said before, we will honour the contract that was signed. An appropriate amount will be budgeted for in the Council’s revenue programme, just as happens for subsidies to other organisations such as the Corn Exchange.”
Only that isn't the case, is it? No wonder everyone is confused, the council said it would pay the cinema a subsidy yet it is actually paying the developer. We have a perfectly profitable cinema, yet we still have to pay £100k a year because of the complex agreement between the council and the developer. Why couldn't the council just say "we will pay the developer £500k as a sweetner" instead of pretending that they were subsidising the cinema?
The deal was that in order for Newbury to get a cinema, it needed to be subsidised. That is what is happening. The use of the word 'cinema' does not exclusively have to mean the company actually showing the films.
If a chain restaurant took on one of the empty units below the cinema - would you expect them to be paid a subsidy by the council?
If a chain restaurant took on one of the empty units below the cinema - would you expect them to be paid a subsidy by the council?
Isn't it more that by subsidising the developer any units that are not taken are being paid by the tax payer? I assume that any units taken would reduce the deficit and the subsidy.
Isn't it more that by subsidising the developer any units that are not taken are being paid by the tax payer? I assume that any units taken would reduce the deficit and the subsidy.
Yep - that was the general idea. No-one wanted to bring a cinema to Newbury. So the council subsidised it.
As half of the development is still empty, I'd say both parties were right.
Unless of course you think Newbury should not have a cinema if it needs a subsidy to exist.
I going with Richard Garvie in this. I was lead to believe that the subsidy was based on the profitability of the cinema. I feel conned. What incentive has a landlord got to fill the units. This is a rip-off and is just a part of Newbury Councils' vanity project. This cinema could have been put elsewhere and not needed a subsidy, or bung, or whatever you want to dress it up as.
I going with Richard Garvie in this. I was lead to believe that the subsidy was based on the profitability of the cinema. I feel conned. What incentive has a landlord got to fill the units. This is a rip-off and is just a part of Newbury Councils' vanity project. This cinema could have been put elsewhere and not needed a subsidy, or bung, or whatever you want to dress it up as.
You forget the need to fill the car park to avoid an £80k loss in car park revenue & the fact that without a bung Newbury would still be cinema-less.
Then how can you claim that the subsidy is going in anyway to the Vue; the subsidy would have to contributing to the expected rent for the complex for that to be the case.
Then how can you claim that the subsidy is going in anyway to the Vue; the subsidy would have to contributing to the expected rent for the complex for that to be the case.
I'm not - as far as I'm concerned the bung was to ensure Newbury got a cinema. By which I understand 'cinema' to mean the whole development, warts & all. ( the restaurants / bars / auditoriums / foyer etc etc ). The firm operating the actual showing of the films is one small part.
When I said RG was not correct is saying that the cinema was not being subsidised it is because the project / development of the entire cinema site will be subsidised - even if Vue, or whhoever, are not themselves getting that cash.
Like I said - if one bar had opened in the development, I would not expect them to get any subsidy either.
Didn't the developer announce Vue as the chain to be running the cinema after the green light for the project was given? The developer took the risk, they get the subsidy/bung/cash.
I can't see what the problem is. Newbury folk get their cinema, developer covers his losses, even Vue make some cash too.
I'm not - as far as I'm concerned the bung was to ensure Newbury got a cinema. By which I understand 'cinema' to mean the whole development, warts & all.
Well I didn't. It was announced as a subsidy, not an inducement for a developer to build a cinema (higher than it need be) and chuck some shop units underneath.
Once again, Vue is on a straight lease and recieves no subsidy. FACT.
I think the £500k was a sweetner to the then landowner of the car park. Like always, a bit of foresight could have been used here. Aren't we now looking to develop the bus station? This could have housed the cinema and various other leisure facilities, and I'm sure the bus station was no more valued then as it is now? Council land = no sweetners or land costs!!! Get an investment trust to build it and a little bit of income for the land, job done.
I think the £500k was a sweetner to the then landowner of the car park. Like always, a bit of foresight could have been used here. Aren't we now looking to develop the bus station? This could have housed the cinema and various other leisure facilities, and I'm sure the bus station was no more valued then as it is now? Council land = no sweetners or land costs!!! Get an investment trust to build it and a little bit of income for the land, job done.
I can't see what the problem is. Newbury folk get their cinema, developer covers his losses, even Vue make some cash too.
I think the issue here is that the loss of revenue from the parking that the cinema is now built on has been mixed up with the subsidy for the cinema. Separating those two, the only issue is that whole complex is making a loss, presumably because the restaurant units are empty, and the rate payers are footing the bill and subsidising the developer. Newbury now has a cinema again (although its obvious that a cinema isn't financially viable or else the previous cinema would have kept going) in a complex that was probably too ambitious. If this is what was wanted, its ok. If not, I can see why some questions are being asked.
I think the issue here is that the loss of revenue from the parking that the cinema is now built on has been mixed up with the subsidy for the cinema. Separating those two, the only issue is that whole complex is making a loss, presumably because the restaurant units are empty, and the rate payers are footing the bill and subsidising the developer. Newbury now has a cinema again (although its obvious that a cinema isn't financially viable or else the previous cinema would have kept going) in a complex that was probably too ambitious. If this is what was wanted, its ok. If not, I can see why some questions are being asked.
The previous cinema failed because it was outdated & the way in which people go to the cinema changed.
Newbury had no cinema beacuse the risk to a developer of bringing one back to the town was too high, given that modern cinemas have to be more than just screens showing movies these days.
Councils are supposed to subsidise things aren't they?
btw - is the Cinema any good? - I have never seen a movie there.
Under the original subsidy agreement, the £100,000 per annum was to go to the cinema operator.
The whole deal was renegotiated by the Conservative administration when they took over in 2007. They obviously did a deal with the landlord.
The Conservatives were very scathing about the original deal. When they renegotiated they said their backs were against the wall and the original financial amount had to stand otherwise Newbury would not get a cinema.
I have to admit that until the FOI report, I had always assumed that the subsidy was being paid to the cinema operator.
I am led to believe that in the first year, there were nearly 400,000 customers for the cinema. if only 25% them paid the £1 evening parking charge, then we have recouped the subsidy in full. If more than 25% paid the evening charge then we have a chance of recouping the cost of the Green Meanies who have to staff the KC multi-storey after 6.00pm.
The previous cinema failed because it was outdated & the way in which people go to the cinema changed.
Newbury had no cinema beacuse the risk to a developer of bringing one back to the town was too high, given that modern cinemas have to be more than just screens showing movies these days.
How do people go to the cinema? What's different from before?
What does Newbury's cinema have apart from screens showing movies?
The sensible solution (in hindsight) was to build the cinema on stilts, retaining a car park underneath. This was Newbury's second most popular car park and its demise has caused major trading problems for all retailers and businesses in this area of the town. I anticipate the usual blustering from User23 on this topic but I can assure you that it is true.
How do people go to the cinema? What's different from before?
What does Newbury's cinema have apart from screens showing movies?
What is different? - Better seating, layout of the seating, better projection & sound technology etc etc. When the old cinema in park way was still open the out of town multiplex was taking over & sealed its fate.
Because of the expense, most people now go to the cinema as a night out & combine it with a meal. Hence the units under the cinema. For what ever reason - Newbury's cinema is missing out on this part of the action, which must benefit other establishments in town.
Amazingstoke's cinema at Festival Place has already seen one change in who runs it. Originally when built it was Star.
Let's not condemn User, I'm convinced he is just trying to be helpful by putting the council's point of view. We just need to be patient with him. I'm sure that he is already thinking hard about the disadvantages of his tendency to use straw man arguments and ad hominem attacks, he just needs a little more coaching. For anyone who'd like to help, here's a handy list of fallacies: http://en.wikipedia.org/wiki/Fallacy Let's see how he gets on!
It's what I do as part of my job. How do you think I found out that Vue were not recieving anything from the council? That's why I put the FOI request in.
Because of the expense, most people now go to the cinema as a night out & combine it with a meal. Hence the units under the cinema. For what ever reason - Newbury's cinema is missing out on this part of the action, which must benefit other establishments in town.
The reason the units remain empty is that opertors are hedging their bets on where to open, there is much concern that those units are too far removed from the main town centre area when Parkway opens.
The reason the units remain empty is that opertors are hedging their bets on where to open, there is much concern that those units are too far removed from the main town centre area when Parkway opens.
It's what I do as part of my job. How do you think I found out that Vue were not recieving anything from the council? That's why I put the FOI request in.
In that case you are more than likely aware that getting leisure facilities built often requires more profitable schemes to be given the green light to help fund them.
In that case you are more than likely aware that getting leisure facilities built often requires more profitable schemes to be given the green light to help fund them.
Absolutely. A larger facility on the site of the bus station with additional leisure facilities would have been a better option.
Absolutely. A larger facility on the site of the bus station with additional leisure facilities would have been a better option.
Which we still would not have. Who is to say that the bus station won't be developed with additional facilities? If you wait for the perfect solution, you might end up never getting anything.
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