Stadium Row: Carve-up or cock-up?

Three weeks before the public unveiling of the futuristic design for a new national stadium in July, the Culture Secretary, Chris Smith, sat in a basement conference room of the Department of Culture, Media and Sport and listened intently to Ken Bates, the chairman of Wembley National Stadium (WNS), explain his ambitious plans.

Mr Smith was unimpressed. He looked at the architect's delicate model which had been prepared by a team led by Rod Sheard from Lord Foster's architectural practice, and asked: "Why am I looking at a football stadium? A magnificent football stadium, admittedly. But a football stadium all the same."

Ever since the Foster team received its brief to build a football stadium with an occasional add-on athletics track, the Wembley project was destined to fail. It was a manifesto commitment of New Labour to have a national sports stadium built, suitable for staging international events, and public money by way of a pounds 120m lottery grant was being provided to get that arena built. Yet the lead organisation was the Football Association whose key consideration, inevitably, was a new home for soccer to replace the existing area which had been home to English football ever since Bolton Wanderers played West Ham in 1923. Other sporting lobbies, meanwhile, believed the stadium should be permanently equipped as an all-purpose arena capable of hosting world-class athletic events. Britain is one of the few major sports-playing nations in the world that does not have a national stadium as such, and the born-again Wembley, even bereft of the famous twin towers, was initially heralded as the perfect answer.

Yet last week the whole thing unravelled when a private study concluded that the new pounds 475m stadium was unsuitable for staging Olympic athletics. The Government rejected all the plans, and the architects were ordered to come back with fresh proposals within two weeks; and it became apparent that a solution is unlikely to be found soon enough to allow London to be in a position to stage major international sporting events. All those dreams of hosting the 2005 World Athletic Championships, the 2006 Football World Cup and the Olympic Games in the foreseeable future now seem irreparably damaged.

So what went wrong? Was this fiasco a conspiracy, a carve-up or a cock- up? Many have been involved in the Wembley plot and most have been guilty of either causing or exacerbating the present mess. "Only the new sports minister, Kate Hoey, comes out of it with her hands clean," says Jarvis Astaire, former deputy of Wembley plc (the original company), who was bitterly opposed to the sale of the stadium on its present terms. "She only took office two days before the design plans were announced."

In the football-mad world of New Labour, Chris Smith is an anomaly. He passionately supports Arsenal but is definitely not part of the party's laddish tendency exemplified by Kate Hoey's predecessor, Tony Banks, and Alastair Campbell, the Prime Minister's press secretary, who both have a consuming desire to capture the 2006 Football World Cup. Labour spin doctors are convinced that just as Harold Wilson's 1966 victory came from capturing the euphoric mood of the nation, so the World Cup would provide an unbeatable election launchpad for a much-vaunted third Labour term.

It was three years ago that Wembley beat Manchester in a bid to secure the new national stadium. Since it first won the design competition for Wembley, Foster and Partners says that the brief was to design a football stadium that could also be used for athletics events, but only occasionally. Foster's practice claims that it was told a major athletics tournament would take place there only about three times every 50 years. It therefore took the view that it was not worth compromising the stadium's fitness for football, and proposed an athletics track that could be fixed over lower tiers of seats for those infrequent, albeit important, events. But Lord Foster's idea of a portable athletics track on a concrete platform would cost an incredible pounds 20m each time it was used, and even more bizarrely, would leave Wembley devoid of football for up to two years at a stretch, so long would it take to construct and dismantle.

When Chris Smith saw the plans in July, a senior official said: "It was obvious it was a football stadium which could at a pinch be turned into an athletics stadium at great expense and inconvenience. Public money was being put into a three-sport stadium [including rugby league] - and it could not be provided."

Despite this, on 27 July the Football Association went ahead with its launch and Mr Smith was forced to bite the bullet and commend the "stunning" design. Behind the scenes, tensions were developing between Mr Smith and his football-mad sports minister, Tony Banks.

For Mr Banks, the desire for the new stadium mattered so much that it seemed to go beyond even his political ambitions. A lifelong Chelsea supporter, he is also a close personal friend of Chelsea's chairman, Ken Bates. He in turn is also chairman of WNS. Mr Bates is a man used to getting his own way, and is said to have gone puce when Mr Smith made his comments at the July meeting. Friends were in no doubt that he was singing the FA's tune. One said: "It is no secret that Banks is football-mad and has seen this whole debate from the FA's perspective. It wasn't so much that Banks took his eye off the ball; more a case of him failing to see the hurdles."

Then a few days later Mr Banks surprised many and resigned from the ministerial post he had once described as "his dream job". At first it was presumed Mr Banks would declare his mayoral nomination, and then Downing Street announced he would become Tony Blair's envoy for the 2006 World Cup. No one questioned the move.

Banks was replaced by an equally football-mad minister, Kate Hoey. Ms Hoey, though, shared the Culture Secretary's view that the lottery cash would only be handed over for a multi-sport stadium. With Ken Bates intransigent and the British Olympic Association growing increasingly worried, Ms Hoey ordered a meeting on 19 October for all interested parties. The meeting broke down with increasing bitterness on both sides. Insiders said it was clear the FA resented the amount of influence the athletics lobby was wielding without having any financial input.

A senior Government source said: "It was clear Bates resented being accountable to the Government because of this pounds 120m lottery grant." Rod Sheard told the meeting that "the best football stadium and the best athletics stadium are at either end of a continuum - they are not close together. You have to compromise if you want both."

At the urging of the British Olympic Association and the athletics authorities, a frustrated Ms Hoey ordered an independent report on the plan which resulted in Mr Smith demanding a rethink of the entire Wembley project when it showed that the concrete scheme was economically and technically unviable. "I can't start all over again. But if I could, I would," said Ms Hoey at the time. "What we have here is not a national stadium but a national football stadium."

After another heated meeting with Ken Bates, the Culture Secretary decided to read the riot act in public. Behind the scenes negotiations had failed. On Wednesday he took the unusual step of making a statement in the House of Commons, giving Wembley two weeks to come up with solutions.

But this act of brinkmanship may backfire. Chris Smith wants a major part, if not all, of the lottery money refunded, while sources at Wembley say the company won't hand it back without a protracted legal fight. Bates is adamant that the design fulfils the specification laid down by the last Government when London beat Manchester in 1996 as the site for the national stadium.

The Secretary of State's options are limited. He could take all the money away or spend part of it on a separate athletics stadium for the Olympics, possibly in a brown field site near King's Cross. Or he could order Wembley to build the concrete platform for the 2005 World Athletics Championships. "We call it the embuggerance scenario," an official said.

The options for the FA are not good either. The lottery grant was made on condition that the FA raised the rest of the money - currently pounds 355m and rising - by the end of March 2000. City experts wonder if the new stadium can be paid for, even if it is given the go-ahead. Investec, the merchant bank, has been hired to raise the money. It is favouring a bond issue, secured on the income from the stadium, essentially a mortgage. The interest alone would be pounds 25m a year, but that is twice the entire income of the stadium last year at a time when it was used not only for England games and Cup finals in football and rugby league, but also for rugby union internationals.

According to a leading banker who has been close to the Wembley deal, the only way the stadium can be financed is to increase ticket prices for all events there. "I estimate that the minimum ticket prices will be pounds 100 for England games," he said. Inevitably, not for the first time, the loser in the Wembley fiasco is likely to be the ordinary fan.