As Buckingham teeters, rivals wonder what has gone wrong

Firms have been sounded out about buying parts of stricken contractor Buckingham, Building can reveal, but several would-be saviours have privately said they are not interested in mopping up bits of the business.

The builder, known for its work on major stadium jobs, filed a notice of intention to appoint administrators two weeks ago, giving it 10 days of protection from creditors while it explores a sale.

The company, which was set up in the 1980s, blamed “deep losses and interim cash deficits incurred on the three major stadium and arena contracts, and a substantial earthworks contract in Coventry” for its problems.

Though not named, the stadiums jobs are believed to be new stands at Fulham and Liverpool while the firm is still carrying out work on a multi-storey car park opposite Swansea Arena. The arena was completed by Buckingham for the city council last year but the car park is running months behind schedule after the paint, which coats the steel on the structure of the car park, needed to be removed and reapplied.

As well as sports and leisure clients, the firm also works for Network Rail and set up an HS2 operating division at the beginning of 2020 to target work on the railway. It posted income of £47m in its inaugural year and revenue the following year was 25% above target at £56m.

Building understands several firms have been contacted by would-be administrators since the news of Buckingham’s plight became public earlier this month. One chief executive said: “We were phoned and we said we’re not interested. It was an outright no. We’ll stick to our guns. The HS2 stuff is mainly as a supply chain to the big JVs which we’re not interested in.”

Building has spoken to a handful of firms likely to have been sounded out about parts of the business and it is likely several other parties have been contacted too.

When contacted by Building, Buckingham said it was not able to provide further updates. 

Its problems, nonetheless, have shocked many. Buckingham has built up a reputation as a go-to sports and leisure builder with previous jobs including the Spurs stadium, where it worked on the roof, and it completed Brighton’s ground 12 years ago.

Its CV also includes the slide at the ArcelorMittal Orbit ahead of the London 2012 Olympics and the Gloucester Gateway services on the M5, consistently rated as one of the best service stations on the motorway network.

In short, it had built up a track record and the chief executive Building spoke to said the news about Buckingham’s struggles caught him off-guard: “I didn’t hear anything on the grapevine so it was all a bit out of the blue.”

>> Also read: Buckingham ceases trading and seeks sale blaming ‘escalating losses’ on stadium jobs

>> JV to pay troubled Buckingham’s subcontractors on £120m HS2 contract

Buckingham has said it is looking to “explore a sale of all or part of the business in a very short period” – which it said on 17 August would be within days or weeks – “to preserve as much of the business as possible”.

But the chief executive warned that clients would have to agree to new owners taking over their contracts beforehand. “That’s not guaranteed,” he added. “People are looking for people and firms will be all over them. [Buckingham’s] staff will be picked off.”

Buckingham’s turnover fell from £507m to £486m in 2019 with pre-tax profit staying flat at £10.2m before jumping the following year to £584m and a 20% rise on its 2019 number. But pre-tax profit slipped from £10.2m to £8.6m in 2020.

In its last set of accounts, for the year to December 2021, turnover went up 14% to £665m meaning that revenue across those three years was up 37%.

This has worried another major contractor, who also said it would not be interested in picking up bits of the business. Its chief executive said: “It’s very hard to grow a construction business quickly. You have to take on new clients, a new supply chain, management teams. You will take on more risk. Running a construction business is an assault course. You have to navigate the potholes and that takes time.”

The 2021 accounts, the firm’s most recently published, show that Buckingham sank to a £10.7m pre-tax loss with the firm blaming a bust subcontractor and a client that kept changing its mind on a stadium contract, widely believed to be the Fulham scheme, sending it to only its second annual pre-tax loss since being set up in 1987.

Buckingham admitted it paid out a profit-related bonus in November 2021 because at the time it was still forecasting to be in the black for the year. “This is the first year when the final results have reversed so sharply from this stage,” it said.

But one chief executive was aghast. “If you don’t know in November what profit you’re going to be doing that year, you’re in real trouble.”

He, too, said his business had been asked to take a look at Buckingham but quickly ruled out making a bid for parts of the business. “They don’t do anything that we can’t do. It’s an odd mix there. They do stadiums, which we’re not interested in, and then they do rail work. There’s no point us buying something that would only add an extra £20m or £30m [to our revenue].”

In the 2021 accounts, Buckingham had flagged that margins at its logistics business, which includes building warehouses and distribution hubs for clients including Prologis and Panattoni, would be hit by reduced margins because deals had been agreed before the war in Ukraine started last February.

It did not say whether it would return to profit but said turnover was expected to rise to £700m for 2023, adding that its order book was around £1.1bn while cash in the bank stood at £77m at the end of 2021.

That £77m seems to have begun to run out because in its statement 13 days ago, Buckingham said rapidly “escalating contract losses and a sharp reduction in liquidity” meant it was “unable to continue trading at this current time”.

There has been no update since and a decision is expected this week on the company’s fate.

Clients such as Liverpool FC, which had been hoping for the rebuilt Anfield Road stand to be open in time for this month’s start of the new football season, only for the full opening to be pushed back to October, are, like Buckingham’s 600 staff, in limbo.

“Timing, obviously, is incredibly fluid right now, there’s a lot of uncertainty around where we are and obviously in time that will become more clear,” chief executive Billy Hogan told the club’s website last week, confirming work on the job had now stopped.

One firm with experience of building stadiums admitted: “If large major projects don’t go well, they can be very painful.” The Fulham scheme, which had expected to be finished in time for the start of the 2021/22 season, is now set to be fully completed next year.

In an update to fans on 15 August, two days before Buckingham’s statement, the Cottagers hinted at friction between the club and its builders: “As you will be aware, we have experienced delays in the project from the outset.

“Many of the principal delay factors include addressing difficult site conditions during the demolition of the old stand, as well as remedying issues arising out of the construction of the new stand.

“While it has taken time to address these factors, good progress is now being made on the fit-out phase and we will start to open first class spaces in the new stand during 2024.”

Asked by Building whether it was interested in either of the football club jobs, the contractor with experience of stadiums replied: “No – nor is it in our plan.”

Buckingham, which made clear in its 17 August statement that it is “currently not in administration”, was contacted for comment but said it was unable to add any further updates.