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.
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.
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.