The i360 is hoping to defer part of its payments to the council as it has attracted fewer visitors than expected.
Julia Barfield, chair of the Brighton i360 Ltd, said the council will still make a £35m profit on the loan it borrowed to build the attraction, but asked for ‘flexibility on the timings’ of the payments.
The seafront attraction was funded by a £36.3m loan which Brighton and Hove City Council borrowed from the Public Works Loan Board.
The i360 also borrowed £4m from the Coast to Capital LEP - which it will also be attempting to renegotiate.
A further £6m was invested by the Marks Barfield family and other shareholders, who have since also shouldered further costs up to £3.75m.
Every six months, the i360 pays the council £900,000 to repay the loan, as well as just over £1m a year for servicing the loan.
It is the latter payment that the i360 is asking to renegotiate to £25,000 every six months in the short term until visitor numbers improve.
It will, however, continue to make repayments to the council for the loan, which are expected to be paid off in 2041, 25 years after the attraction opened.
Lower then expected visitor numbers are to blame for the move, the i360 said.
When the terms of the loan were agreed in March 2014, the initial forecast for visitors was 800,000 in year one, with 700,000 thereafter.
Although the attraction welcomed more than 500,000 visitors in year one, it wasn’t as many as forecast, and it expects between 350,000 to 400,000 visitors by the end of year two.
A report to Brighton and Hove City Council’s policy and resources committee, which meets to discuss the repayments next Thursday (June 14), said the i360 had so far made all its payments on time, but added that it did require ‘an additional cash injection from the shareholders in order to make the full December 2017 payment’.
It said that because of ‘lower than anticipated visitor numbers’ the i360 will not have sufficient cash to make both the Public Loan Works Board and council payments in full on June 30 2018.
The report said that Steve Bax, the executive director of the i360 has made cost savings, including cuts to back office jobs saving £450,000 a year, and a review of supplier contracts saving a further £40,000.
He has also introduced new initiatives such as ‘sky dining’ and abseiling from the pod, and hopes to bring in ticket partnerships with rail operators and the universities.
Speaking about the move today (June 6) Julia Barfield, who designed the seafront attraction with her late husband David Marks, said: “Thanks in large part to our partnership with Brighton and Hove City Council, the i360 is bringing inspiration and delight to hundreds of thousands of people every year. It is already the most-visited paid-for attraction in Brighton and Hove; it has boosted the local economy and is raising the profile of the city around the world.
“The i360 is making an operating profit, but like many start-ups, we have needed to make some commercial adjustments while we build the business. These have included further capital injections from shareholders plus a request for flexibility on the timings of interest repayments to our lenders.
“Under the terms of our proposal, Brighton and Hove City Council would still receive more than enough money to repay its loan to central government. It would also still enjoy the £35m total profit agreed to over the 25-year loan period – but with greater flexibility on payment dates.
“This flexibility would enable the i360 to continue delivering the benefits already being seen in the city. To date these include supporting more than 100 local jobs all paying the Living Wage, drawing additional visitors to the city which in turn has benefitted the wider tourism economy, paying £2.5m profit payments to the council which has helped transform the seafront, giving free tickets to the city’s state school children and raising many thousands of pounds for key city charities.
“Our partners recognise the important role this family-owned attraction plays in the city economy and we look forward to continuing our conversations with them in the coming weeks.”
Howard Barden, head of Brighton and Hove City Council’s tourism and venues, said: “The i360 is a new business and it isn’t unusual for a business to reschedule loan repayments in the short term to sustain profitability in the long term; it’s a sensible and pragmatic business approach.
“The attraction has already proven itself as a popular visitor draw and has made a significant contribution to the city’s local economy. In less than two years of opening, it has provided over £2.5m to the council, money that we would not otherwise have had.”