Disappointing visitor numbers prompt Brighton i360 to seek better loan terms

Posted On 05 Jun 2018 at 2:53 am

Disappointing visitor numbers and unplanned one-off costs have prompted the Brighton i360 to ask for a review of its taxpayer-funded loans.

The seafront attraction’s owners have approached Brighton and Hove City Council and the Coast to Capital Local Enterprise Partnership (the LEP) to ask for more manageable terms.

Both public sector bodies helped to kickstart the £46 million i360 project with loans totalling £40 million, with the council effectively acting as a broker for the government-funded Public Works Loan Board.

So far all repayments have been made in full and on time despite the shortfall in visitors – in part helped by an injection of cash from the i360’s shareholders, in particular the architect Julia Barfield.

Run for Great Ormond Street Hospital

Her management team has cut staff numbers, saving the equivalent of about £450,000 a year, and has looked at ways to boost bookings and other takings.

But there are concerns that the owners may not be able to make the next repayment in full, with only weeks before it falls due at the end of this month.

Every six months – at the end of June and December- the i360 is expected to pay about £900,000 to the council to repay the Public Works Loan Board loan. The sum includes interest.

In addition it pays a “commercial margin” to the council of about £570,000 every six months (£1.14 million a year) – reportedly equivalent to 3.75 per cent interest.

The council is believed to have made a profit of about £2.5 million so far from handling the £36 million loan from the Public Works Loan Board. The profit includes “arrangement” and “utilisation” fees of almost £1 million.

But the i360 also has to repay a £4 million “junior” loan to Coast to Capital (the LEP) at a higher rate of interest.

The owners want to defer the “margin” payments to the council until they have repaid the more costly LEP loan.

And from the LEP, they want either a cheaper loan or longer payback time, with a decision due at the next Coast to Capital board meeting on Wednesday 4 July.

A significant number of LEP board members have strong Brighton links and are familiar with the economic and regeneration benefits of the i360 even though the attraction and its reliance on taxpayer funding have divided local opinion.

So far though the i360 has helped to fund a revamp of the seafront, where the revitalised arches are bringing in rents and business rates for the council. It also contributed £1.1 million towards restoring the Madeira Terraces.

Annual takings at the Regency Square car park have soared, earning an extra £250,000 alone for the council. And a number of local businesses, notably seafront venues, have reported a boost in takings.

The attraction itself has created 116 direct jobs, generated acres of free publicity for Brighton – some of it resulting from a few early technical glitches shortly after it opened in 2016 – and it has supported a variety of local charities.

One charity event – the iDrop abseil which raised £37,000 for the Rockinghorse sick children’s charity – has inspired the idea for repeat abseiling sessions. The commercially run sessions should provide another welcome revenue stream for the business.

The shortfall in visitors, which is believed to have been blamed on poor weather and the unreliable train service to and from London, has prompted a fresh look at “rainy day” activities.

In the first full year, from August 2016, the i360 had just over 500,000 visitors, significantly fewer than the 800,000 predicted.

The estimate for this year, the second full year, is more likely to be 350,000 to 400,000 – again much lower than the original forecast of about 700,000 – but above the 332,500 needed to remain financially viable.

The first iDrop abseil from the i360

At this stage, it is not clear how long the i360 will want to put off making the “margin” payments to the council – possibly for the best part of 10 years.

But it seems clear enough that even some of the attraction’s original opponents on the council are determined to keep the glass pod going up and down the metal pole.

The alternative would prove significantly more costly and reputationally painful. The council will have to make a decision imminently.

Some hope that a company like Merlin – owner of the Sea Life Centre in Brighton and with a track record of managing attractions as opposed to designing and building them – might step in.

Whatever the outcome, it looks as though yet again the i360 will be at the centre of some lively and sharply divided local debates.

  1. Mrs Kitcats redknkickers Reply

    Told ya so 😂

  2. fishwife, 49 Reply

    Well that wasn’t predicted by … well absolutely everyone, really.

  3. Valerie Reply

    This project was the biggest commercial blunder – and just as Hove Library is being given over to commercial tenants to help defray the £2.5m spent annually on the PFI contract that built the Jubilee Library, so look everyone to see what will now be sacrificed on the altar of the hallowed i360.

    This came awfully fast – and it was predicted it would take less than two years too.

  4. Stephen EDLIN Reply

    The biggest problem is that half the view is SEA.Most Brighton and Hovites knew that it was not viable in the long term.If footfall is dropping already then that is likely to continue.

  5. DaveKemp Reply

    i360 in flop shocker.

  6. PizzaGirl Reply

    A very well researched article that actually shows how positive the i360’s has been to Brighton and Hove. Personally I think the BAi360 offering is excellent, the one red flag in the article is the idea of Merlin being involved.

  7. Dave Crozier Reply

    Oh dear, How sad and nevermind.
    Awful idea from the start to plonk this on our once beautiful seafront.
    Please tear it down and get rid of that dreadful plastic Poundland British airways sign too.
    Thanks in advance.

  8. Smiley miley Reply

    The article points out the tremendous wider benefits to the area in terms of visitors and regeneration.

    As long as the council isnt making a loss and getting in less income than its paying out then it makes business sense to support the proposals

  9. Antony Smith Reply

    Another great bit of business by Brighton council
    Ramada Hotel
    Brighton marina
    I360
    When will they learn, still its us that picks up the bill.
    Almost forgot- THE GREEN PARTY

  10. Buster Friendly and his Friendly Friends Reply

    The legacy of the incapable and incompetence Green Council

    • Andy Reply

      The plans were submitted in 2006 – when we had a minority Labour lead council, and then signed off in 2007, by a minority Conservative led council, building started in 2008 and then in 2011 we got a minority lead Green Party council – this council renegotiated the loan terms, which seems to be making a lot of money for council today? Still, lets not let history get in the way of a good “Green party are awful” rant.
      Incidentally, I am not defending this thing being built, I think it’s ugly and like other have pointed out, the view is mostly ‘sea’ which is a bit rubbish. However, although visitor numbers are not what was expected – it is adding additional value to the seafront as a whole – which is a good thing isn’t?

      • Rostrum Reply

        “it is adding additional value to the seafront as a whole – which is a good thing isn’t”

        So would re-building the West Pier and that would have had more relevance and value as an attraction and venue..

        • Steph Reply

          I would argue the West Pier as it is is a better attraction.

      • Valerie Reply

        Corrections:
        1. Planning consent: 2006
        2. Planning consent expiry 2009, thwarted by digging a hole & fishing metal out if the seabed which prompted a BHCC legal opinion that condent was implemented

        Marks Barfield got pole cans made that languished in a Dutch yard for several more years.

        They cd not raise the finance beyond 50% of need & when BHCC agreed to borrow to lend on the top-up, all the pre-existing investors WITHDREW!!!!

        So BHCC then agreed in 2015 to borrow to lend nearly 100% – £36.2m with £4m more from Coast to Capital.

        BHCC HAS TO REPAY THAT 36.2m, PLUS INTEREST. How can it afford any further concessions?

  11. Rostrum Reply

    Give another few seasons and it will go bust leaving the city to pick up the bill.

  12. Gary Reply

    I read this earlier Nottingham Ice Rink/Arena was worth an estimated £60m a year to the local economy of Nottingham. I’m so glad we didn’t invest in such a ridiculous project.

  13. Frances Lindsay-Hills Reply

    Brighton is a fantastic place to live Why?
    We are a welcoming artistic open minded
    Innovative community. If planning permission had been needed for the Royal Pavilion would it have been granted now?

    We are a success because people want to come to come here, we have lost our manufacturing base, we don’t build train carriages, we no longer have large industrial estates. We do have universities, hotels, great restaurants, festivals both music and arts and all of this pays the community charge so residents can enjoy living in one of the most vibrant and creative cities – but the council needs to invest in tourism and yes, this includes the BA i360

  14. Bob Reply

    £40m spent on regeneration yes. On a private owned pole dance no.

  15. Conrad Brunner Reply

    “The attraction itself has created 116 direct jobs”. Really? This sounds like BHCC Green Council era numerical inflation. Let’s be generous: four management, two marketing, four communications & PR, five admin and accounting, 25 ticketing and hosting, eight engineering and maintenance…where are the other 68 coming from?

  16. Hollyanna Reply

    The i360 is supposed to be a major attraction on the south coast. Apparently, the “flight” (how inaccurate and pompous) lasts for twenty five minutes and you’re advised to arrive twenty minutes in advance for security checks. So, a long time if you should need to use the loo. Is there provision for this in the glass doughnut? No.. well, it has a portaloo and tent. And has it broken down many times? Yes. Would you put yourself in that position? No.

  17. I Can’t Be Bothered Reply

    Maybe the train issues wouldn’t have had such an impact on the visitor number if the moronic council hadn’t been so intent on making it impossible to drive to or park in Brighton.

  18. Andy F Reply

    You only go up this thing once. The time you get at the top is very short ,no time to chill out and look at what you’ve paid for. Maybe they need to (off season ) offer Brighton’s residence a longer time up at the top and don’t sting the for the drinks.
    As it stands at present it just rips off tourists once. Hence diminishing numbers. If I want to get a great view I just get on the. Us up to the Beacon at Ditchling. Makes a lot more sense.

  19. Bob Reply

    The gating of Pavilion gardens is also a step to charging for access. Day visitors driven up pole in choice between attractions.

    Greater Brighton which is being pushed through will spread debts across the county. A repeat of Brighton and Hove merger to bail out Brighton before.

    The complications around Brighton and West Pier Trust led to i360 happily building the pole knowing they could sue BHCC for losses and damages. Once this hit c. £10m they asked for the loan … via threat of lawyers.

    • Bob Reply

      Also. If the money(1% of ticket sales) were paid monthly it would provide useful scrutiny of performance. Not difficult to estimate actual paying users of the ride.
      Not had a clear answer if a corporate booking if we have share if those ticket sales

  20. David Reply

    The fools at the B&H Council believed the projected visitor figures. Anybody of estimating experience would have done a proper risk assessment on several projected outcomes before committing such a large some of ratepayers money. Let the company go bust and B&H can then operate the i360 without the other shareholders being involved.

  21. Carol Reply

    They need to revamp ticketing ( family tickets, smaller group tickets, season tickets should all he offered). And they need massively better marketing locally and elsewhere and more events to give people- especiallyjust saying… licals – a reason to make repeated visits ( eg, far more of the recent abseiling event, regular use of it for classy meals, which seem sporadic at the moment, use as a performance venue- it’s a fantastic opportunity for music and theatre- etc etc. Such events as there are need to be better publcised, in the way the festival and theatre events are all over town.

  22. Darren Reply

    I wasn’t exactly overjoyed by the i360 but it’s here and it won’t be going anywhere. What does make me scratch my head is that it’s a “46 Million pound project and £40 Million is loans”… So a company has shareholders who get a HUGE loan to redevelop a bit of prime seafront and they put up 6. Try building a block of flats with that investment or a shopping centre and the banks would say no. The abseiling idea is good or why not put a zip wire off the top ??

  23. Pingback: In photos: Brighton’s West Pier falls into the sea while its i360 tower successor flounders, Nov 2018

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