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Payment row threatens to delay opening of new arena

SCOTLAND'S major new music venue under construction on the River Clyde is up to two months behind schedule and faces the prospect of headline concerts by some of the world's top rock and pop acts being cancelled.

JEOPARDY: Concerts by top international music acts such as Fleetwood Mac and Depeche Mode could be under threat if the Hydro is not ready in time. Picture: Colin Mearns
JEOPARDY: Concerts by top international music acts such as Fleetwood Mac and Depeche Mode could be under threat if the Hydro is not ready in time. Picture: Colin Mearns

The Hydro, which sits alongside the Scottish Exhibition and Conference Centre (SECC) in Glasgow, is also running millions of pounds over budget amid legal wranglings between the contractor and the client, the SECC.

Main contractor Lend Lease is holding out for around £98 million while the SECC is sticking to a fee of around £90m in a disagreement over the final bill.

The delay is casting serious doubt as to whether shows by Fleetwood Mac, Depeche Mode, Peter Gabriel, the Proclaimers, Jessie J and Andrea Bocelli are to go ahead.

Productions of Jesus Christ Superstar and Peter Pan, concerts by Bruno Mars, Simple Minds, Nickelback and stand-up comic Micky Flanagan are also in jeopardy.

Crucially, it is also having an impact on an "impending announcement" from an unspecified artist, understood to be Rod Stewart, about appearing at the Hydro in September.

The veteran rocker announced additional UK tour dates yesterday, ending in late September. Glasgow is understood to be the unconfirmed tour finale.

The SECC board is already considering the millions of pounds it could have to pay out in compensation to promoters and members of the public who have bought tickets if, as feared, the Hydro cannot open until late November rather than the end of September.

The delays stem from a dispute between the SECC and main contractor Lend Lease over design specifications, particularly around the roof.

SECC chief executive John Sharkey has been locked in talks for most of this week with Lend Lease attempting to find a breakthrough and has told fellow board members that while there are efforts to pull out all the stops for a September 30 opening the alternative of the end of November is still realistic.

Mr Sharkey now wants to pay Lend Lease an incentive of around £3m to complete the work by September.

It is the latest instalment in a troubled birth for the marquee project, which is designed to free up the SECC for more exhibitions and encourage more major music acts to play Glasgow.

Glasgow City Council has already had to bail out the scheme by more than £40m after a private-sector partner pulled out, sparking an ongoing schism between the SECC and the authority, which owns more than 90% of the business.

It is unlikely that the payment crisis will have any impact on the venue's hosting of several Commonwealth Games events next summer.

In correspondence with other board members, Mr Sharkey has discussed his hopes of a September opening but adds: "It does however require a ramp up in activity in the period to September and that will be the challenge on site especially over the holiday period.

"They are forecasting a labour demand higher than that required to deal with these risks.

"That's the good news. The downside is that we can't get to agreement on a final account settlement. They [Lend Lease] feel that their entitlement is stronger than the entitlement that the client team believe is due to them."

On incentivising a completion with a £3m bonus, Mr Sharkey says: "The benefit is brand protection and avoiding contractual and additional non-contractual payments (should we wish to maintain relationships) to cover cancelled events should the opening be delayed. The amounts will be self-financing given the saving on compensation for cancelled/rescheduled events on a contractual or extra-contractual basis."

An SECC spokeswoman said: "Lend Lease Group, who are responsible for construction of the arena, have indicated that they are currently scheduled to complete the construction of the project, and allow occupancy by SECC, in September.

"Consequently, we are working towards a high-profile opening season for the Hydro."

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