Mayor Takes Over London Stadium with West Ham Deal a “Dreadful Mess”

An Independent Review into the decision to transform London’s Olympic Stadium into a permanent football venue was published by Moore Stephens on Friday.

The current Mayor of London, Sadiq Khan, was elected in 2016, over three years after West Ham’s bid for use of the stadium was approved under the watch of his predecessor Boris Johnson. Khan has been voicing grave concerns over the finances behind the deal and Johnson’s handling of it for a while now.

He has branded the finances of the stadium a “dreadful mess”, with its conversion to a football venue having run massively over-budget. Huge losses on the arena are also predicted, with projections at a £20 million loss this year and £140 million over the next ten years. This is public money, let’s remember.

Upon the publishing of the review, Khan has taken matters regarding the stadium into his own hands, announcing his intentions to “renegotiate deals” and bring the London Stadium’s unsustainable finances back under control. Such rhetoric will no doubt be of grave concern to West Ham fans. So here’s what you need to know about the contents of the document, and what it could mean for our club.

The bidding process

Firstly, let’s quickly recap the deal negotiated by our owners and the history behind our move from Upton Park.

The Olympic Delivery Authority and Olympic Park Legacy Authority drew up five main objectives for consideration from bidders for the stadium used for the 2012 Games.

- long-term value for money

- secure suitable legacy partner

- re-open the stadium as soon as possible

- ensure stadium remains distinctive symbol

- allow flexible use.

It was considered that West Ham’s bid fulfilled those objectives to the most acceptable standard. In the original bid agreed in 2011, West Ham was selected over Leyton Orient and Tottenham Hotspur’s bid to rebuild a stadium on the site. Spurs and Orient applied for a judicial review of the decision, which Boris Johnson was all too eager to announce at the time, citing conflicts of interest and funding questions. They won the review, but Spurs abandoned their pursuit of the stadium, seemingly convinced that Johnson wanted West Ham as tenants.

This left West Ham as “the only remaining Premier League football club [oh the irony] and therefore in a dominant negotiating position” according to the review. In the second tenancy process, other bids, from ITS (Formula One), UCFB (College American Football) and Essex County Cricket Club, were rejected in favour of West Ham on the above principles.

Photo by Matthew Lewis/Getty Images

From West Ham’s standpoint, the move was unpopular with most fans. The matter of the bid was taking place within the context of Gold, Sullivan and Brady’s takeover of the club in 2010 and relegation in 2011. Their purchase appeared to be incentivised by the opportunity to move to Stratford, which had been mooted since the glory days of Egert Magnusson.

West Ham prides itself in tradition, and the iconic Boleyn Ground had been our home since 1904, an atmospheric ground which, on a given night and especially under the lights, provided a hostile and intimidating arena for visiting opponents. Apart from its transport links, it was always reported as a popular arena for away fans and lovers of traditional, four-stand grounds. It was also ours. I grew as a fan watching games there with my uncle. He went with his dad. If you’re reading this you may be the same.

Gold, Sullivan and Brady knew this was going to be a hard sell. Therefore they knew they had to both come up with a plan that made financial sense and convince the fans that, amid the exponentially-growing importance of money in football, we would be capable of developing as a football club (the elusive ‘next level’). After all, why not just invest in the expansion of Upton Park?

The deal West Ham managed to negotiate with the OPLA was so attractive it almost seemed farcical, and was branded such by its critics. West Ham were granted a 99-year lease to be the main users of the stadium (with a guarantee of 25 home games for Premier League status and 30 for the Championship). The cost of the rent would be £2.5 million per year, a complete steal if we remember that the taxpayer losses projected on it this year are nearly ten times that!

In addition, West Ham are entitled to all Hospitality revenue as well as a huge chunk of catering at the stadium on match days. The club’s debt would also be offset against the value of any sale, meaning that Gold and Sullivan would still be entitled to a profit on the club before the taxpayer sees any return on the stadium in the event of the sale of the club. The club’s owners have repeatedly reiterated they have no intention of selling though.

However farcical it seems, this was a huge victory for West Ham’s owners and gave them important leverage in selling the move to the fans. It effectively ruled out the renovation of Upton Park as a viable option, given the costs they would have to incur. Bye-bye Boleyn!

Then came the promises. World class players. Next level. Champions League in five years. An arena that would attract the top coaches and players. A new generation of fans. Free Wi-Fi. Full wrap around with pictures of fans. 60,000 seats. Impressive facilities and exclusive bar (which you have to pay through the nose just for membership and you can’t even get in on a match day, let alone having to then pay for drinks). The move of the iconic statue. A new home.

The fact that all of this now seems so far from the truth has turned fans against Gold, Sullivan and Brady. With vociferous ‘Sack the Board’ chants at Watford recently, and the club fighting a relegation battle, this situation already appeared beyond the point of no return. Now factor in that the whole stadium move is now under review, and the board’s popularity is going to nosedive further, if that’s even possible.

So what’s the big problem with the deal, and what does this mean for us?

The Review’s Criticisms of the Deal

Khan’s review has effectively found that the stadium costs the taxpayer an unacceptable amount of money. He is especially critical of his predecessor Boris Johnson’s handling of the deal. In hindsight, it appears that Johnson was desperate for a quick fix. The report suggests he didn’t want an unused Olympic Stadium to happen on his watch, and resorted to practically giving it away, as long as he could leave someone else to clean up the mess once he left office. He looked at West Ham’s fanbase and status and decided that was good enough to secure the legacy, whatever the cost.

Up for particular criticism is that the selection process of West Ham over Orient and Spurs had been concluded prematurely. It meant that the second process lacked competition – West Ham were always going to win over Essex CCC and College Football.

Then the spiralling and unmonitored costs of the conversion were attacked. The conversion, including a new purpose-built roof, came in £133 million over-budget at £323 million.

Photo by Mike Hewitt/Getty Images

Speaking objectively and not as a fan, the fact that the stadium is running projected taxpayer losses at around ten times the number of what Gold and Sullivan are even paying in rent seems frankly ludicrous. We should not be surprised that Khan wants a renegotiation at all.

Also of particular interest in the 169-page document, was the suggestion that had the deal been handled properly, with “the true and likely consequences of the proposed deal… it may not have been signed, particularly in light of the fact the WHU usage fee is not sufficient to cover the costs”. It seems now that Khan is going to try and re-do the deal in the interests of the taxpayer.

What this all means for West Ham

Firstly, it seems likely that West Ham will have to pay more for use of the stadium. The report continuously references as its main gripe the new tenants’ lack of commitment to funds. Remember: “the WHU usage fee is not sufficient to cover the costs.” “Significant changes will be needed if its financial sustainability is to be improved”. Of these changes, the review has six main recommendations:

- not transitioning the East Stand between football and athletics events (fans even further from the pitch and probable reduced capacity)

- not holding annual athletics events (reducing the cost of conversion but likely increasing West Ham’s responsibility in funding)

- increasing secondary revenue streams through means such as MLB and cricket (remember playing our first three games of the season away from home? Expect more of that)

- selling the stadium (!)

- shutting the stadium (!)

The question of stadium naming rights was rejected.

Needless to say, these options, especially the last two, will strike great fear into West Ham fans’ hearts. I would argue that none of the options are acceptable from a fan standpoint.

West Ham were sold the sale of the Boleyn Ground on the pretence that the Olympic Stadium was a financial no-brainer. If this is renegotiated, it would represent a disaster for Gold and Sullivan politically and financially.

Reviewing their justification for demolishing Upton Park and pocketing tens of millions from its sale, as well as cashing on memorabilia from the ground, there seems to be a trail of falsehoods and broken promises. The club has not reached the ‘next level’. Fans complain about the stadium’s lack of atmosphere and the distance of seats from the pitch. And Sullivan’s mismanagement as Director of Football, year upon year of missed opportunities and hesitant decision making, has contributed to the club’s current dire predicament.

Away from that, Gold, Sullivan and Brady will now have to quickly face up to their decisions. The summer of the move represented a golden opportunity to spend a bit of money to try and break the barrier of the Top 7/8 in the league. We’d just had a great season, qualified for European football in a huge new ground and had one of Europe’s in-form players in Dimitri Payet.

Payet became quickly disillusioned when he was promised ‘next level’ and then given Calleri, Nordtveit, Fletcher, Feghouli and Zaza on loan. Sullivan bid for every striker he’d ever heard of. We spent half the season playing Antonio up front.

The whole reason we agreed to the move was because of the financial steal it was sold as. If this ends up as a falsehood too, fans will have every right to feel cheated about their move away from their home of a hundred years.

Moving forward

At this stage, West Ham paying more for the stadium rent seems a possibility. As mentioned above, this could be a political disaster for the owners.

But more important are the potential knock-on effects. Let’s remember that Gold and Sullivan are already known for their frugality and lack of opportunism. How will our transfer budget be affected by this increased financial burden? Will they need to take potential compensation into consideration if a manager is not doing well – and will it hurt our team if they are too worried about finances to act correctly? What will the knock-on effect be for stadium-related costs such as stewarding? What will happen if we get relegated?

Depending on the levels of renegotiation, it may be even be decided that a tenancy agreement in its current form makes no sense for either party. That could open up the possibility of a sale (and ground rebuild for us – how apt), ground share or stake in a truly multi-purpose venue. But of course this is all still speculation. Is outright ownership an option given West Ham already have a deal?

Naturally it’s worth mentionin that this could all be a storm in a teacup. We have to be careful with the rhetoric of politicians. Yes, the millions of taxpayer money should be a big issue. But also at the moment this is a big political opportunity for Khan to engage in some Tory-bashing and promote his own career as fledgling Mayor. One suspects that, with Conservative unpopularity growing amid the shambles of the Brexit negotiations, there are plenty of legs left in this issue for Khan. But what if Johnson is sacked as foreign sec? What if Khan faces other major mayoral challenges over the coming months and years? Will this continue to be a big issue for him? Equally, is Khan able to deliver on his word? Is a renegotiation even going to happen?

We will have to wait and see what happens next. One thing is for certain though: the ‘next level’ promise sold to fans, which was looking far from a reality even before Wednesday night’s humiliating 4-0 defeat to Everton, is looking even more unlikely amid what has quickly become a mess of a stadium move.