West Ham United, and when temporary becomes permanent

Their contract for The London Stadium was described as "the deal of the century", but supporters don't like it and it's costing London's taxpayers an awful lot of money.

Here’s a question to which it’s unclear that football knows the answer: at what point does ‘temporary’ become ‘permanent’? Consider, if you will, The Brian Moore Stand at Priestfield. This temporary structure has been in place at Gillingham’s home for more than twenty years now, and it seems fair to ask the question of whether it will ever be updated. Other clubs have similar structures, one or two even of (getting on for) similar ages.

But it might surprise readers to find out that there is even one in the Premier League. You see, the London Stadium wasn’t originally intended to end up as a 62,500 capacity football stadium. As part of the legacy aspect of London’s bid for the 2012 Olympic Games, it was originally intended that the now-home of West Ham United would be a 25,000 capacity home for athletics in this country, and the result of this was that all those white metal struts that give the stadium such a distinctive look… weren’t originally supposed to be there in the long-term.

West Ham United ended up as the only viable option for the site after Spurs and Leyton Orient finally dropped their legal challenges in 2014 and with the plan for a permanent home for UK Athletics by this time being half-forgotten. They’d already been given a 99-lease to start from the beginning of the 2016/17 season, with UK Athletics using the stadium every year from the last Friday in June until the end of July. The supporters of other clubs complained at what was widely perceived as being an ‘unfair advantage’ being given to West Ham.

And it could be argued that they had a point. Even though the government refused anay sort on inquiry into the sale, questions over what exactly went on have never really gone away. In 2016 it was revealed that West Ham would pay an index-linked £2.5m per year during a 99-year lease of the stadium but would not have to fund police, stewarding, heating, pitch maintenance, or even corner flags. So in other words, they wouldn’t even have to deal with the normal costs of putting on matches, which is pretty much standard operational expenditure for all clubs.

While West Ham United could be considered to have done very nicely out of it indeed—well, the owners of the club, at least; actual paying West Ham supporters have long been more lukewarm about moving into a stadium which is patently not a football ground—the same can hardly be said for the tax-payers, who may well be wondering why so much public money ended up being spent on developing facilities for a football club playing in the richest league in the world.

The government used £486m to build the stadium and spent the majority of an additional £323m to convert it from a pure athletics stadium for multi-purpose use. West Ham paid just £15m, Newham Council contributing £40m. And as if that wasn’t enough, West Ham's rent at the London Stadium does not even cover cost of staging matches there while keeping all gate receipts from matches. One London Assembly member called West Ham’s tenancy agreement there “the deal of the century”.

More than a decade on from the original deal being struck, the financial losses have continued to mount and the matter end up in court at the end of last year after E20 Stadium LLP, the commercial arm of the London Legacy Development Corporation (LLDC), the successors to the Olympic Park Legacy Company, sued Allen & Overy, the law firm who negotiated the deal with West Ham, over their handling of it all. The matter was settled before it went to court, but it is believed that the settlement amout was upward of £2m.

It is believed that each West Ham home match costs London taxpayers £100,000, and it is now generally understood that stadium will not make an operational profit as things stand. The Chief Executive of the LLDC has already confirmed to the London Assembly that this will be the case, even if they were to agree a lucrative naming rights deal for it.

It has been estimated that even in this eventuality, the stadium would continue to lose around £8m-£10m a year, and the last set of published accounts for the LLDC confirmed that they had made a payment of £26.3m to E20 Stadium LLP for “operational and capital requirements”. These accounts also note that, “In light of the partnership’s current long-term financial forecasts, LLDC currently holds its interest in the partnership at nil value.”

But if that’s the past and present of this largely unloved stadium, what does its future hold? It has been reported that a loss provision has been made of £232m for the new stadium. Furthermore, while 25,000 of the seats are permanent, more than half of the current match day capacity is temporary stands which have now been in place for more than a decade. There’s no immediate safety risk going on here. Safety checks have to be carried out on a routine basis.

But the London Stadium isn’t Priestfield. Tens of thousands of people using the stadium will only increase the wear and tear on it, and… then what? Supporters have complained that the roof leaks and that there’s rust and algae. For all this talk of a 99-year lease, it’s difficult to imagine it lasting anything even half that time without requiring significant redvelopment work, and who would pay for that?

West Ham, by all accounts, have plans for the London Stadium. At present, the stadium has 68,000 seats following an expansion carried out in 2022, but is only licensed to use 62,500 on match days. Their plan, reported at the start of December, is to carry out the relatively minor works required, and then to use all of them, subject to paying an extra—wait for it—£200,000 a year in rent, taking their total with index-linked increases to £3.7m a year.

The upshot of all of this is that “the deal of the century” all starts to look like a better deal for some than for others. It certainly looks like a terrible deal for the LDDC (hence the legal action), and it doesn’t look like a much better one for West Ham supporters, who don’t really it anyway. But it also certainly looks like a good deal for the owners of the club, and that’s probably the most important thing, isn’t it?

Footnote: As an aside, Karren Brady, who negotiated that deal, became a Conservative life peer in August 2014, just a few weeks after the final obstacle to West Ham taking occupancy of the stadium, a legal challenge from Leyton Orient, ended. The chair of the LDDC at that time was, for the record, Boris Johnson. It’s all a coincidence, right? Yeah. Probably all a coincidence.