Town Hall bails out leisure centre firm again despite ‘significant financial risk’

No date has been set for the reopening of leisure centres. Photograph: Wikicommons

Islington Council has agreed another bailout for leisure centre operator GLL, despite concerns over the “significant financial risk” were the company to fail.

The Town Hall last year deferred GLL’s rent payments for the initial lockdown between March and July to the tune of over £1.2 million, as well as paying an undisclosed amount towards the maintenance of its assets.

Following a second deferral last September, the council decided last week to postpone payments for a third time – in a year that GLL has predicted will be even more challenging.

The council says it is not able to provide the exact figure for the second and third deferrals due to commercial sensitivity.

Health and social care boss Cllr Nurullah Turan said: “Membership levels have fallen significantly and are significantly lower than pre-lockdown levels, so a further period of support is required to allow GLL to be able to open the leisure centres when they are able to.

“Once they are open, GLL will not require further direct financial support fromm the council and will be able to operate as they used to.”

Leisure centres reopened last July, but the second lockdown between November and early December “dented” customer confidence, according to a council report, and eradicated “small signs of growth”.

Centres closed once again with the third January lockdown and remain closed, with no date set for reopening.

Outdoor sports are able to start up again from 29 March, and the Town Hall is to review with GLL the feasibility of reopening sites including Market Road Football Pitches, but indoor sports and group exercise will not return any earlier than 17 May. 

During the third lockdown, GLL’s centres across the borough, including the Archway, Highbury, Sobell Leisure Centres as well as the Cally Pool, the Ironmonger Row Baths and the Islington Tennis Centre, have been in “deep hibernation”, according to the council, with a small skeleton staff carrying out building checks and inspections.

The Town Hall has recovered only a proportion of the lost rental income from GLL through central government support.

The company predicts that if centres reopen for individual gym exercise and swimming in April, it will initially trade at around 30 per cent of pre-Covid levels,  but hopes this will reach 80 per cent by March 2022. 

The challenging times for the company and the questions it raises for local government finance are exacerbated by concerns over the hit to people’s health and wellbeing from the impact of Covid and lockdown.

Councils’ ability to provide community outreach and sports development work through leisure services has never been more important.

The Town Hall’s report on the decision to extend support added: “One of the ongoing concerns is the financial position of GLL as an organisation. If GLL were to fail as an organisation then the leisure provision would have to move in-house initially, which would pose a significant financial risk to the council.”

A Spokesperson for GLL said: “Leisure has been significantly impacted by Covid-19 and operators across the country have agreed support with local authority partners to maintain vital public leisure services.

“With the continued support of Council partners and the wider National Recovery Fund we are able to start reopening our outdoor leisure facilities on Monday 29 March and indoors from 12 April, which is great news for the health of the nation.

“While this report acknowledges it will take time to recover business to pre Covid levels, GLL’s financial position is secure going forward.  

“GLL has a strong partnership with Islington Council and delivers a wide range of health, wellbeing and social benefits to residents and we are looking forward to welcoming people back into our centres very soon.”

EDIT: This article was updated at 12:44 on 24/03/2021 to include a statement from GLL.