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SBD Global/December 6, 2012/Facilities

West Ham United Unanimously Chosen As Preferred Bidder For Olympic Stadium

West Ham United is prepared to take over London's Olympic Stadium.
EPL West Ham United will begin talks over the terms of a 99-year lease for London's Olympic Stadium after the club was "unanimously chosen as the preferred partner" for the £430M ($692M) venue, according to O'Connor & Cue of the LONDON TIMES. London Legacy Development Corp. will select West Ham ahead of League One Leyton Orient, UCFB College of Football Business and a consortium hoping to stage F1 races. London Mayor and LLDC Chair Boris Johnson said, "We had four good bids, as everybody knows. The bid that has been ranked top is West Ham United. I am very pleased about that." West Ham’s status as preferred bidder "does not involve the signing of any contracts." However, it "puts the club in pole position to secure the lease" on the 80,000-capacity stadium in Stratford, East London (LONDON TIMES, 12/5). In London, Roger Blitz reported Johnson "laid down four conditions to be met" before West Ham could take up residence and said he was still open to the possibility of a "plan B" that excluded football. The LLDC said among the four conditions is a "mechanism to protect the taxpayers' investment in the stadium, were the value of the club to increase significantly through a change in location." Another condition is "the cost and specification of adapting the stadium for West Ham's needs" (FINANCIAL TIMES, 12/5).

ANCHOR TENANTS: The BBC’s David Bond noted the $691M facility is “not expected to fully reopen before Aug. '15.” The move would see West Ham “relocate two miles" from its 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, 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 London GUARDIAN’s Owen Gibson noted 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, 12/5). In London, Paul Kelso noted the decision means West Ham is "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, 12/5).

WHAT'S AT STAKE: The London TELEGRAPH’s Kelso in a separate piece noted 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 wrote, “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” (TELEGRAPH, 12/5).

MORE TO BE SORTED OUT:
In London, Dyer & Beard noted the deal follows assurances from West Ham Owners David Sullivan and David Gold "in response to an 11th-hour demand" from Johnson that they would "share any profits with taxpayers should they sell the club." However, there are still "terms to be thrashed out," including how the £190M ($305M) upgrade of the stadium to install retractable seats over the running track will be paid for. Gaining planning permission and obtaining appropriate national governing body approvals are "among the other issues which must be sorted before a long-term lease can be signed" (INDEPENDENT, 12/5).

THE LONG HAUL: REUTERS' Keith Weir reported the LLDC said that it was "planning to hire a stadium operator to manage the venue and put on concerts and other sporting events, irrespective of whether West Ham moved in or not." Hoping to "avoid the portrayal of the stadium as a white elephant," the LLDC said it was looking at reopening it for events this summer before conversion work begins. Sullivan and Gold said that a move "would help to establish the club as a force" in the EPL and "played down fears they could try to sell up." In a statement, Gold said, "We are dedicated to West Ham United and the stadium for the long haul" (REUTERS, 12/5).
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