Fears that governance arrangements at Royal Albert Hall, which allow trustees to sell tickets on at huge profit, could influence decisions about how the venue is run.
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A historic benefit that enables the majority of Royal Albert Hall (RAH) trustees the opportunity to sell seats for performances at marked-up prices is “a clear conflict of interest”, members of the House of Lords have said.
During a debate on the second hearing of the Royal Albert Hall Bill, former Charity Commission Chair Baroness Stowell reiterated the Commission's long-held objection that more than 75% of the organisation's board of trustees are seat holders who can lawfully profit from ticket resales, should they wish.
When the hall opened in 1871, it was part-funded by people who were allocated seats in return for their initial investment. Today, 319 people own 1,268 of the hall's seats on 999-year leases. Seat holders include charities, companies and individuals, some with family ownership since the 19th century. The new bill would give the hall’s governing body the authority to sell an additional 52 seats to investors.
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Seat holders who do not wish to use their seats for a concert or event can return them to the hall’s box office for the face value of the ticket less 10%. But it’s widely understood that some resell their tickets through third-party websites for profit.
During the debate, Conservative peer Lord Hodgson claimed that “a group of trustees” had been reselling at inflated prices for “a few years”.
Several speakers, including Labour peer Viscount Chandos, noted that members who sell their tickets “are behaving perfectly legally” but agreed that there was a “clear conflict of interest” when it came to trustees doing so.
Conflict of intretest
Seat holders support the hall financially by paying an annual levy called the “seat rate”, which averages £1,900 plus VAT. They must also forgo their tickets for some 100 days each year, known as exclusions, so the hall can sell more commercially to non-seat holders.
The issue raised by several peers is that the 75% of trustees who are also seat holders can influence decisions on matters related to seat holders, including how much they pay annually for seats and which concerts are available to them.
RAH does not declare in its annual report how many seats the trustees or their family members own nor the income they have derived from them.
Chandos said that the board’s “reluctance to address the resulting governance issues [did]not only harm the reputation of the Royal Albert Hall but damage the charitable sector as a whole", providing “an uncomfortable example of private benefit being embedded in the position of seat-holding trustees".
Stowell, who served as the Chair of the Charity Commission from 2018 to February 2021, told peers that the Commission had previously proposed changing the board's composition so that most trustees were not seat holders but the move was rejected. The Attorney General also blocked the regulator’s request to review the hall's management structure in 2019.
According to Stowell, the board has “resisted making any internal changes to guarantee that seat-holding trustees cannot sell seat tickets for anything other than face value or via the hall’s ticket office during their time sitting on the board."
“These are simple, straightforward measures that, I think, most people would expect as reasonable of trustees responsible for a charity,” she added.
“The fundamental problem with the Royal Albert Hall’s governance regime is that contrary to standard charity law, its trustees can benefit privately from the decisions they make about how the hall is run.
"But in today’s modern world—where public trust in institutions is low, and expectations of accountability high; boxes and seats at the Royal Albert Hall are bought and sold for hundreds of thousands, if not millions, of pounds; and trustees of a charity can sell their tickets for concerts at prices at least 10 times their face value—the situation at the Royal Albert Hall seems, to me at least, to be completely unacceptable."
'Highly profitable operation'
Conservative peer Lord Hodgson was also scathing in his criticisms, claiming: “Within the shell of a registered charity, the trustees are running what appears to be a personally highly profitable operation."
He pointed out that tickets for Ed Sheeran’s November show at RAH were listed at up to £6,000 on the resale website Viagogo and that a £100 ticket for the last night of the Proms, which BBC license fee payers fund, fetched £1,218.
Hodgson said that while “the right to enjoy your private property is, of course, an important cornerstone of our civil society”, when RAH became a charity in 1967, it gained “a public benefit objective, tax advantages and the regulation of the Charity Commission."
He said: “[Of the] 25 members of the governing body, 19 (75%) of them have to be elected from other seat holders by the seat holders themselves.
"There must be a concern, or at least the possibility, that the idea of selling Ed Sheeran seats is more important than an equally worthy but less prestigious concert, such as a school choir competition.”
After tickets to his show began appearing on touting websites, Sheeran this week wrote to the hall’s board to say he was “vehemently opposed” to practise.
Proposed bill
Addressing the bill’s submission to open up 26 grand tier boxes to investors, Liberal Democrat Lords Spokesperson Baroness Barker asked if the move would “benefit the charitable purposes of this organisation” or be “merely opening up further business opportunities for the businesses that exist within its shell”?
In a statement, a Charity Commission spokesperson said the regulator does not oppose the changes sought in the bill.
"However, the bill does not deal with the core issues of concern regarding conflicts of interest in the charity’s constitution as it makes no changes to the make-up of the board of trustees and does nothing to reduce the influence of seat-holding trustees," said the spokesperson.
"It is a missed opportunity to address concerns about the charity’s governance. The trustees should ensure that they can meet their responsibilities and, where necessary, make amendments to the charity’s constitution – either via this bill or through the powers the charity already has. This would serve the interests of the hall and wider public trust in charities – and be welcomed by its many stakeholders.”
New capital
A spokesperson for the RAH said: “The Royal Albert Hall bill is intended to benefit the charity administratively, procedurally and financially by allowing the hall to continue to exclude members from some performances and to authorise the sale (at full value) of the right to use two additional seats (with membership) in each of the grand tier boxes where there are currently only 10 seats.
“There is the opportunity to do this in the case of 26 boxes, and this would raise new capital for the charity. The changes introduced in the bill will support the hall’s efforts to rebuild its financial position post-pandemic, to enhance its Grade I listed building, and to continue its engagement work, which reaches over 100,000 people of all ages and backgrounds each year.”
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