In an important new rating decision the UT has concluded in Wigan Football Club Limited v Wayne Cox (VO) [2019] UKUT 0389 (LC) that the successive relegations of a football club from the Premier League (“PL”) to the Championship and then to League 1 did not constitute a material change of circumstances (“MCC”) providing grounds for a reduction in rateable value (in the 2010 compiled list). The UT confirmed the decision of the VTE, but also made reference to the unfairness of the outcome for financially imperilled clubs and the potential need for adjustments in the method of valuation.

At the antecedent valuation date (1 April 2008), Wigan FC had been in the PL and its stadium was valued in the 2010 list at £1.1m. Wigan’s successive relegations from the Premier League in 2012/13 to 2015/16, led to a dramatic loss of income mainly due to the loss of substantial broadcasting revenue. Wigan argued, in summary, that:

• the relegations constituted changes in the ‘mode or category’ of occupation from being a broadcasting studio to being a football stadium; and
• the relegations were ‘matters physically manifest in the locality’ due to the smaller crowds attending games , reduced traffic and spending on match days

were grounds for an MCC proposal and a rates reduction.

The parties agreed there was only one possible hypothetical tenant for the stadium (Wigan rugby club which occupied intermittently paid a fee to use the ground but did not have the financial means to take a tenancy). The main issue for the Tribunal was whether the changes were “material” within the meaning of para 2(7) of Schedule 6 to Local Gov Finance Act 1988. It held that:

(1) playing in a lower league was not a separate ‘mode or category’. Although there are differences between leagues, the differences within leagues can be just as substantial as those between different leagues. Such variances (being unpredictably wide and going against the principle of uniformity) led the UT to confirm the VTE’s statement that “football is football”. The fact that Wigan continued to occupy the hereditament for the playing of football for commercial exploitation, notwithstanding its relegations, dictated the valuation method;

(2) a change in the locality was not physically manifest as a consequence of each relegation. Applying the Merlin/Alton Towers decision, the UT concluded that the manner in which the business was operated – i.e. whether the club happened to be successfully managed or not - could not be used to justify an adjustment in rateable value even where Wigan was the only possible tenant.

The decision is a blow for relegated clubs. Given the number of “yo-yo” clubs who regularly move between leagues and consequently experience big changes in broadcasting revenues which affect their ability to pay business rates, the UT referred to the possible need for a change in the valuation method for stadia. Wigan’s application for permission to appeal has been rejected by the UT. It remains to be seen whether its application is renewed before the Court of Appeal. For now the score remains VO 1 – Wigan 0!

Sarah Sackman represented the successful Valuation Officer, led by Hui-Ling McCarthy KC (11 New Square) instructed by Daniel Bazuaye, HMRC.

The Judgment can be found here.