SBD/December 5, 2012/Facilities

West Ham Gets The Nod To Play At Olympic Stadium As Preferred Partners

West Ham offered $24.2M in cash to pay for the stadium's renovation costs
EPL Club West Ham United has been “named as the top choice to move in to the Olympic Stadium when it reopens,” after a “three-year saga over the fate" of the facility, according to Sale, Edwards & Cass of the London DAILY MAIL. The London Legacy Development Corporation board (LLDC) “unanimously made the decision in favour of the Premier League club ahead of rivals from Intelligent Transport Services in association with Formula One, UCFB College of Football Business and [League One club] Leyton Orient.” LLDC Chair and London Mayor Boris Johnson said, “It will, if it goes through, mean a football legacy for the stadium but there is still a lot of negotiation to go on between the LLDC and West Ham United about the terms of the deal.” The choice of West Ham as tenants “on a 99-year lease came after a bitter drawn-out battle.” West Ham, which offered $24.2M (all figures U.S.) in cash plus a minimum $14.5M-a-year in rent and “share of commercial revenues to help pay for the renovation costs, must also help to fill the funding gap in the building work necessary to transform a track and field venue into a multi-sports arena.” The hole in the projected $241.6M finances “necessary to install a new roof, retractable seating over the running track and corporate boxes is now less” than $32.2M (DAILYMAIL.co.uk, 12/5). The BBC’s David Bond notes the $691M facility is “not expected to fully reopen before August 2015.” The move would see West Ham “relocate two miles from their 35,000-capacity Upton Park to a stadium reduced from 80,000 seats at the Olympics to 60,000.” West Ham would be “the anchor tenants, with other events, such as the 2017 World Athletics Championships, staged at the stadium.” West Ham Vice Chair Karren Brady has told supporters that the club “will not make the move unless the stadium is judged to be acceptable for hosting football” (BBC.co.uk, 12/5).

DEAL DETAILS: Johnson "insisted that 'plan B’ -- reopening the stadium more rapidly and cheaply as a venue for concerts and one off sporting events without the involvement of West Ham -- remained viable.” Johnson said, "We have got plenty of time to get a football solution, if this is what we get, in time for 2016-17. People will understand that my job is to get the best possible deal for the taxpayer. I can see a great future for the stadium with or without association football." The GUARDIAN’s Owen Gibson notes an investment bank is “likely to be engaged to help structure the deal in such a way that the public purse shares in any potential upside for West Ham.” U.K. Athletics will be “guaranteed around 20 dates a year in the new stadium and plan to use it for Diamond League meetings as well as for smaller events and the 2017 World Athletics Championships.” While the Olympic Stadium is “on the list of venues to be used for the 2015 Rugby World Cup, if West Ham do conclude a deal to move in then the timetable will be extremely tight to complete the necessary construction work in time.” If the West Ham deal is “finalised the club will sell Upton Park to developers and use the proceeds to help pay down the debt on their balance sheet” (GUARDIAN.co.uk, 12/5). In London, Paul Kelso notes the decision means West Ham “are now back where they were more than a year ago, when their original selection as preferred bidder collapsed under legal challenge.” City Hall will “seek a clawback of any profits should West Ham be sold on by the current owners.” Johnson said any deal will have to contain “a mechanism to protect the taxpayers’ investment in the stadium were the value of the club to increase significantly through a change in location” (TELEGRAPH.co.uk, 12/5). 

WHAT'S AT STAKE: The London TELEGRAPH’s Kelso in a separate piece notes for rival EPL clubs, West Ham’s move to “what will be the second-largest stadium in the league is bad news.” By securing a 60,000-seat stadium West Ham “will, at a stroke, move to a new competitive level.” The financial benefits of a new ground “in the iconic surrounds of the Olympic Park, close to the corporate fortunes of Canary Wharf with excellent transport links, should be vast.” Kelso writes, “Exploited well, the stadium should guarantee West Ham an annual contest for European football.” The next time “an oligarch or sheikh casts their eye [on] England’s football portfolio in search of a trophy investment West Ham, with a long-lease to a new stadium and a heritage ripe for exploitation, will look very attractive.” This is why the U.K. government is “keen to ensure the public share in any profits from a quick sale” (London TELEGRAPH, 12/5).
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