A multi-million pound re-development of one of the world's most iconic rugby grounds, the BT Sport Cardiff Arms Park, has moved a step closer.
The change could see a new stadium surrounded by offices and luxury apartments.
It follows an agreement in principle between the landlord of the ground, Cardiff Athletic Club (CAC), and its tenant, Cardiff Blues, which would give the professional rugby region a new long-term 150-year lease on the ground, but with approval to take forward commercial developments.
Last night members of CAC, which is made up of the sport sections of rugby, cricket, tennis, bowls and hockey, gave the go-ahead for both parties to now enter into detailed negotiations with a view to securing final approval early in the New Year.
Cardiff Blues has made no secret of its desire to redevelopment the ground, based on securing a long-term lease beyond its current arrangement which expires in 2022.
It is understood that as part of the new lease proposal CAC would receive an upfront payment from the Blues in the region of £8m.
If agreed the new lease would kick in with immediate effect.
However, a condition from the Blues, and expected by CAC, as that there is no personal gain.
So this should see investment by the sections and in particular a new bowling facility for the bowls section, as it would have to vacate its current home at the Arms Park.
As present the Blues pay a rent of around £115,000 a year to CAC, but under the proposed new deal it is also understood that this would double to around £200,000, although it would still receive the car parking income from the ground.
Discussions between the two parties on a new lease have been taking place for a number of years, but have now moved significantly forward.
If approved Cardiff Blues, potentially by forming a new property development firm, could build a new stadium at 90 degrees to the existing and ageing 12,500 capacity stadium.
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This would free up development opportunities either side for a mixed use development scheme, including apartments overlooking the River Taff and new office space right in the centre of the city.
A new stadium, potentially with a capacity of around 15,000, could cost between £20m to £30m.
it is also understood that the Blues in a separate deal to a new lease with CAC, would look to include into any future regeneration scheme the current site occupied by hotel operator Holiday Inn, which is next to the stadium.
The hotel currently leases its car park from the CAC. The car park and the hotel site would significantly increase the development footprint.
There is plenty of property development expertise on the board of the Blues in its chairman Peter Thomas and Paul Bailey, to set up a subsidiary property development firm.
Other options could be for the club to develop the site in a joint venture, or sell the scheme with planning consent to a developer [s].
But whatever the model it would provide a huge fillip to the balance sheet and valuation of the Blues as a business.
The joint position
In a joint statement Cardiff Blues and CAC said: "The CAC Management Committee will now progress negotiations towards final approval of its trustees and its members with an Extraordinary General Meeting proposed to take place in early 2016.
"By securing a new long-term ground lease on BT Sport Cardiff Arms Park, Cardiff Blues Ltd is seeking to develop a stadium fit for purpose for both Cardiff Blues and Cardiff RFC in the heart of Cardiff.
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"Detailed discussions will continue to agree the full terms of the new ground lease.
"Cardiff Blues and the rugby section of CAC will set out in due course their preferred route with respect to responsibilities for the Premiership team, terms for cooperation on the use of the ground and other operational matters."
