All these bizarre scenarios have been aired this week. None is remotely likely. But as the furore surrounding the rent dispute between the Eye and the South Bank Centre (SBC) grew more bitter by the day, every self-publicist in London felt the urge to chuck in a pennyworth of invective or tosh.
Kate Hoey, the Labour MP for Vauxhall, described the great and the good who sit on the SBC board as “greedy, greedy landlords”. Ken Livingstone, the Mayor of London, called its chairman, the Labour peer Lord Hollick, a “complete prat” and threatened a Soviet-style coup d’état to seize control of his empire.
The Tories said that the crisis was all the Government’s fault. The Government said that negotiating the rent of a fairground ride was not exactly a ministerial matter.
The leader of Westminster City Council offered to find an alternative location for the wheel on his side of the river (in the garden of Buckingham Palace, perhaps). Lord St John of Fawsley demanded that the Eye be pulled down for good because it “ruins the trompe l’oeil of St James’s Park”. And, since no public debate these days is complete without a contribution from a celebrity chef, Marco Pierre White decreed the whole affair to be “lunacy” .
He’s right, of course. Nevertheless, the dispute has cast fascinating light on the tensions among the various authorities responsible for Central London’s most sensitive sites.
The Eye, which soars 443ft (135m) above the Thames, is that quintessential British paradox: a roaring success that somehow manages to lose money hand over fist. Ingeniously designed by the architects David Marks and Julia Barfield, it was erected in 1999, ostensibly as a temporary engineering wonder to mark the millennium. But, like the equally “temporary” Eiffel Tower, it instantly proved to be a huge hit. It has about four million customers each year. Paying £12.50 a ride, they generate an annual revenue of £46 million.
Yet in the last financial year the London Eye Company racked up an £18 million loss. It’s not hard to see how. Five years ago, British Airways advanced £48 million to finance the Eye’s construction. Ever since, it has charged the London Eye Company a whopping 24 per cent annual interest on the loan. As the unpaid interest mounted, the Eye’s debt to BA grew to £150 million, and the repayments increased accordingly — last year to around £30 million.
It is against this desperate financial background that the present dispute should be viewed. One leg of the Eye rests on land belonging to the South Bank Centre — the Arts Council-funded quango that owns and manages the Royal Festival Hall and its satellite halls. Because the SBC was keen to regenerate the South Bank, it supported the building of the Eye in 1999 and leased the land at a peppercorn rent of £65,000 for five years. For some mysterious reason, the London Eye Company let that lease expire last December without clinching an extension or renewal. What has happened since is a matter of heated dispute. Undoubtedly, Lord Hollick’s SBC board has engaged in brinkmanship — which may or may not have included a reported threat to evict the Eye from its present site on July 1 unless a vastly increased annual rent of £2.5 million was agreed (a figure furiously denied by the SBC). But the brinkmanship tactic has misfired dreadfully. Selective titbits of the negotiations were leaked to the London Evening Standard — all tending to portray Lord Hollick’s SBC as a grasping, joyless bunch of bureaucrats set on dismantling London’s biggest tourist attraction. Lord Hollick himself was vilifed as being out of touch, inflexible and one of “Tony’s cronies”. Whether by accident or design, the London Eye Company suddenly had a convenient scapegoat, or a useful smokescreen, for its own financial woes.
Do Lord Hollick and his SBC board deserve this public excoriation? Only, perhaps, for getting their PR tactics so wrong. On any dispassionate examination of the figures, they have a good case for imposing a substantial rent increase. The original £65,000 was ridiculous: less than £200 a day for an attraction that rakes in £200 a minute.
But what of the argument that, as a public quango, the SBC should be more sensitive to public feeling — which is overwhelmingly in favour of the Eye continuing to spin merrily on the South Bank? That’s a powerful point. But the SBC also has urgent financial needs. In particular, it has embarked on a long-delayed £91 million scheme to improve the Festival Hall and to transform the concrete wilderness surrounding it into a congenial public space.
If the SBC did not try to maximise its income from commercial lettings, it would probably be accused of failing in its primary obligation to maintain the Grade I-listed Festival Hall.
Unfortunately, this is an argument that Lord Hollick and his board have conspicuously failed to articulate, perhaps out of a naive belief that commercial negotiations should be kept confidential. Or, more likely, because they failed to spot a PR catastrophe in the making.
What will happen now? It’s inconceivable that the SBC and the Eye won’t agree a reasonable rent, sooner or later. Too much is at stake for both sides. But will Lord Hollick survive at the SBC? And how will the Eye’s consortium survive as its accumulated debt rises towards £200 million? Like the Eye itself, this saga will spin on.
HIGH AND MIGHTY
Its 32 pods can carry up to 15,000 visitors a day
