Oxford City Council received just £1.1m for land it sold to former Oxford United owner Firoz Kassam - even though it was valued at £3.8m, a senior council officer has admitted.

The Oxford Times obtained facts on the sale of land at Minchery Farm, where the Kassam Stadium, Holiday Inn Express Hotel, and the Ozone Leisure Zone now stand - all properties owned by Mr Kassam's companies. The prices were revealed by the council following a prolonged wrangle, after The Oxford Times used the Freedom of Information Act.

Local Authorities are required to receive "best value" for any public assets they sell under the terms of section 123 of the Local Government Act 1972.

The Information Commissioner originally found in favour of The Oxford Times in February this year, ordering the council to disclose the information requested.

But the council decided at the last minute to appeal against the ruling. A tribunal hearing of the case in London was scheduled for a date earlier this month, but three days before the hearing the council suddenly withdrew its appeal.

The cost to the public of throwing-in-the towel - in officers' time, legal costs, etc. - is still being assessed.

However, the city council's strategic director of financial and corporate services, Mark Luntley, still stoutly maintains that the council receved "best value" for the land sold in February 2000, despite the evidence of an exhaustive report commissioned from financial advisers Grant Thornton - now revealed under the FOI - which put the £3.8m tag on the public asset.

He explained that the council "has nothing to hide" and had been forced to appeal because the sale agreement with Mr Kassam's company, Firoka, had been the subject of a confidentiality clause. This clause had meant that the council could be sued if it disclosed the information requested.

Only after the council had issued a summons for the Firoka finance director to appear before the tribunal did Firoka agree to allow the council to tell all.

Mr Luntley said: "Mr Kassam was the only buyer in town and it's arguable that we were lucky to get any money at all for a half-built stadium. Land with half a stadium on it could be worth considerably less than land with nothing on it.

"In addition, we now have a stadium for at least 25 years, jobs have been created and business rates of £720,000 a year have been generated."

But this, of course, is the crux of the matter. As a reader of this paper, John Batey, pointed out in a letter to the editor (August 31), we (the council tax payers of Oxford) still do not have a stadium; a company belonging to Mr Kassam has that asset, and rents it to Oxford United each week.

The central question remains: did the council dangle the carrot of prime development land adjoining the stadium in front of "the only buyer in town," and at a knock-down price too, in order to persuade him to finish the stadium and so keep the football club alive? Building work started on the stadium in 1996. It ground to a halt the following year, and remained half-built for 18 months, when it became clear that Oxford United could not afford to pay contractors Taylor Woodrow.

To add to the confusion, the former owner of the site, Thames Water, then sued the council and won its case. It had a covenant over the site restricting its use to leisure - which it argued successfully did not include such businesses as football, cinema, bowling alley, and restaurants of the type operating there now.

The costs of the High Court case plus the price of settling with Thames were then paid by Firoka and the council jointly. Mr Kassam paid Thames about £500,000 to lift the covenant.

In addition, Mr Kassam paid £1m to Leslie Wells, an Oxfordshire spokesman for the gypsy community, who ran a grab truck business behind the stadium. The council is now looking into the question of why Mr Wells's two-thirds of an acre was worth £1m and the council's land of more than ten acres just £1.1m. Mr Luntley said: "The problem was that Mr Wells appeared to own a right of way across part of the stadium."

A number of questions about the sale still need answering, not least the extent to which Firoka's obligations under the planning agreement have been met.

It is also arguable that Firoka now has an asset still more valuable than that valued by Grant Thornton, since the lifting of a restriction on the hours that films could be screened on match days at the multiplex cinema now at the Ozone.

Mr Luntley explained that originally the council planned to take a 20 per cent shareholding in the stadium company, which in turn would own the stadium, the hotel, and the leisure land. Grant Thornton reckoned such a holding would be worth £760,000.

In the event, Firoka paid the council the £760,000 instead of handing over shares. But as the council had to pay part of that money to Thames Water, its net receipt was £494,000.

In addition, according to the sale agreement now released under the FOI, he paid: £300,000 for the leisure land (compared with a valuation commissioned by the council from surveyors Rapleys of £2.5m); £100,000 for the hotel site (valuation £400,000-£600,000); and £500,000 for the stadium.

The reason the four figures do not add up to the £1.1m mentioned at the top of this page seems to lie in exactly what was paid and by whom to Thames Water. Watch this space. After seven years digging, all will soon be revealed.

Mr Kassam is currently abroad and was unavailable for comment as The Oxford Times went to press.