The latest annual report of the Royal Albert Hall, which is in dispute with the Charity Commission about reforming its constitution, includes details for the first time of the number of seats in the hall that are owned by members of its governing council or parties related to them.
The charity’s report for 2015, expected to be published today, reveals that 54 seats are owned by the 19 council members, who are elected by other seat-holders and form a majority on the 24-strong council, and another 91 by related parties such as family members or companies in which they have an interest.
The report does not mention that seat-holders – about 350 in total - can benefit from selling their tickets either at face value through the ticket return scheme run by the hall’s box office, or at higher prices on the open market, including the internet. Decisions affecting the potential market value of seat-holders’ tickets are taken by the seat-holder-controlled council.
The situation prompted the commission to tell the hall last year that there was a risk council members "will prefer their own interests to those of the charity" and that the number of seat-holders on the council should be reduced to a minority.
One seat-holder who backs the commission’s view has calculated that selling most of the tickets for one seat at face value through the ticket return scheme brings a net income of about £5,000 a year, which could be significantly increased by internet marketing.
The seats themselves, which include some of the best in the house, can also be traded on the open market at current prices of up to £100,000, meaning that the seats owned by council members and related parties might be worth £14.5m in total.
Asked why seat-holders’ income from ticket sales is not mentioned in the annual report, a spokesman for the hall said: "We are not sure why this in particular should be said. The accounts are clear that members own seats, which by definition means that they can use them as they choose, and there is reference to the ticket return scheme."
The annual report also includes for the first time a new section entitled "background", which explains how the building of the hall in the 1860s was partly financed by the sale to private investors, whose successors now control the hall’s governance, of 1,276 of the hall’s 5,272 seats.
The hall spokesman said the new section was included because "the trustees strongly believe in the value of the charity’s unique operating structure and wish to communicate it more clearly to the public."
The section points out that seat-holders give up their rights every year to tickets for about 150, mostly popular, performances, and pay an annual "seat rate" to the hall, which was £1,455 plus VAT per seat in 2015, with a rebate of £547 plus VAT for giving up tickets in previous years. The seat rate produced £1.8m of the hall’s record income of £31m in 2015.
Other sections of the annual report add that seat-holders (whose formal title is "members of the corporation") made charitable donations of £84,600 to the hall in 2015, return tickets to the hall’s box office for sale "in order to provide greater access by the public to events", and donate their tickets to charitable causes.
In correspondence with the hall released under the Freedom of Information Act last year, the Charity Commission pointed out that "significant profits" could now be made by seat-holders and that there was a "real risk that council members will prefer their own interests to those of the charity."
The hall did not comply with the commission’s deadline for action of last September. The hall defended the existing arrangement at a meeting with the commission, and its chair, William Shawcross, afterwards told the hall’s president, Jon Moynihan, that the commission board had decided to defer the matter "pending clarification of the issues arising from the charity’s own governance review."
Before the recent annual meeting of the hall, Moynihan told seat-holders that the hall’s governance "could probably do with some modernisation" and the proposed review would not report until this time next year.
Members have also been told on behalf of Moynihan that "the principle of seat-holder majority on the council is not the focus of the review, council having already come to a clear position on that last year." It is "far wider than the commission’s one concern", they were told, and is intended to make the constitution fit for purpose.
A spokesman for the commission said: "We understand the historic reasons behind the current governance arrangements of the Royal Albert Hall. However, we believe that the continuance of such arrangements is not in the best interests of the charity.
"We have made clear that issues of conflicts of interest and the independence of the council need to be addressed and are working with the charity to ensure that this is the case."