United will receive a £5million up front payment for agreeing to the scheme which will also see a hotel and apartments built on the land above the Metro station, although that money will have to be repaid if planning permission cannot be obtained or the government’s plans to reform the gambling laws are rejected.
A statement to the Stock Exchange read:
Newcastle United and MGM MIRAGE, the most respected US based hotel and gaming company, today announced a joint venture agreement with the aim of building, subject to various conditions being met, a new mixed-use development on land adjacent to St James' Park above St James' Metro Station in the heart of Newcastle's city centre (the "Land").
MGM MIRAGE will acquire 50 per cent. of a new joint venture company into which the Land (which as at 31 July 2003 had a book value of £2.4 million) will be transferred. Newcastle United will receive £5 million as a result of this transaction. Newcastle United and MGM MIRAGE will be equal partners in the joint venture company.
The joint venture is subject to a number of conditions including the de-regulation of the UK's current gaming laws, a reduction in the current levels of its gaming duty and the requisite planning permissions being obtained. If these conditions are not fulfilled within four years MGM MIRAGE has the option to exit the joint venture with the £5 million being repaid to MGM MIRAGE while full ownership of the joint venture company will revert to Newcastle United.
The joint venture company intends to use this site to build an exciting new complex, which could house commercial and retail outlets, residential apartments, a hotel and a Las Vegas style casino of approximately 100,000 square feet. The casino would be owned and operated by MGM MIRAGE in facilities leased from the joint venture. MGM MIRAGE has unrivalled knowledge and experience in leading the development and management of destination gaming and entertainment facilities. If completed, the complex would be expected to become a major new landmark for Newcastle's city centre.
Freddy Shepherd, Chairman of Newcastle United, said: "This is a very exciting opportunity for Newcastle, its people and for Newcastle United Football Club. Situated alongside St James' Park, we hope that the development will become a focal point for the city of Newcastle, and create a vibrant mixed-use development at the heart of the city. We are delighted to be playing a leading role in the transformation of Newcastle into a city that the people of the North East can be even more proud of."
Commenting on the announcement, Terry Lanni, Chairman and CEO of MGM MIRAGE, said: "We have ambitious plans for the UK - deregulation and taxation levels permitting - and we are looking at other opportunities across the country to develop casino facilities of varying sizes, including where market conditions warrant, large scale hotel/casino destination resorts. Our proposed joint venture with Newcastle United, adjacent to its football stadium, has considerable promise and will contribute to the many positive developments already taking place in the City."
Lloyd C Nathan, Managing Director of MGM MIRAGE Development, Europe, added: "Through our research, we have been very impressed by the developments that have taken place in Newcastle over the last decade and we are excited at the prospect of contributing to this further. The joint venture complex promises to create a number of significant new opportunities for Newcastle from jobs to leisure activities, as well as tourist attractions. We look forward to working with the City's people and representatives as the project moves forward and to creating a dynamic entertainment and leisure destination."