This is the point that the needs communicating to the general public, what happens if. Like Joe says it is a fantastic deal for the city, our income would be guaranteed for at least the first 10 years the stadium is in existence for so let's run some hypotheticals should we default after that point.
For workings assume that LCC are acting as guarantor on £300 million. We pay the council 7 million a year for arranging the low interest rate loan. That spread over 40 years gives a yearly payment of around 15 million.
After 10 years we would have paid 70 million into the LCC coffers for next to nothing. We would have paid back over 70 million in capital leaving a sub 230 million debt. We would have also generated considerable amounts of money for the council/government by building and helping develop the the north dock area 25 years in advance of what it would have done otherwise. Business rates and jobs ahoy all down to us.
So the council at this point has a few options it could start using our slush fund to cover the total costs (15 million a year) and run for a few years or it actually only needs 8 or so million to just pay the loan back, so the slush fund could finance more years while we reduce our playing staff as contracts run down to then be able to restart the repayments to cover the debt and the money we pay to the LCC + what we have missed while we were in a bad situation.
However that assumes we can't afford anything towards the payments it is far more likely that we could pay something just not the full amount, if LCC let us off the amount owed to them while we sort out our financial problems then in reality we could be paying 4 million a year towards the loan, the other 4 million could be made by the slush fund and that could stretch 10 years that way with the council not paying a bean towards it and have already gained 70 million off the back of it. At the end of that 10 year period (not that it would ever stretch 10 years mind you, this is just worst case scenario) the debt would be down to around 150 million. This could be refinanced at a reduced cost over a longer term if everyone so wished at that point. (Again don't think that will ever happen)
Bottom line is I don't think we will ever default on 15 million once it has been hard budgeted for but even if that is the case, I find it almost impossible to see a situation that will actually cause LCC to put their hands in their pockets for us.
