Features

London’s real Olympic legacy: paying to build the stadium twice

22 November 2014

9:00 AM

22 November 2014

9:00 AM

In 2006, on the day that the government’s estimated cost for the 2012 Olympics was jacked up from £2.75 billion to £4.25 billion, I promised to eat my hat on the steps of the Olympic stadium if the bill came to less than £10 billion. Although the official figure now stands at a mere £8.92 billion, it is a feast I am going to postpone, because we haven’t heard the last of Olympic overspending.

Two weeks ago, the London Legacy Development Corporation announced that the value of the contract with Balfour Beatty to convert the stadium for use by West Ham Football Club is to be increased from £154 million to £189.9 million. The new roof, it explained, is proving to be more complex than had at first been realised. At least we will have the consolation of getting into Guinness World Records for the longest single-span cantilevered stadium roof in the world, but Britain won’t be landing a gold medal for financial efficiency. The Olympic Legacy Development Corporation confirmed to me that the £189.9 million doesn’t include the cost of the retractable seating that will let the lower tier be rolled across the athletics track for football matches and retracted for athletics. This work has yet to be awarded. The corporation won’t say what it expects this to cost, claiming commercial sensitivity, but it has been estimated in the construction press at £20 million. Neither does the contract include the cost of fitting the stadium with the bars and restaurants which Premiership football demands.

How can it cost £200 million or more — once those extra bills come in — to convert an 80,000-seat athletics stadium to a 60,000-seat football/multi-use stadium? It cost Arsenal just £390 million to build the Emirates stadium in 2006 — and that included the cost of relocating a waste and recycling site, as well as several light industrial premises that had stood on the land.

When the details of the Olympic bid were announced under the then Labour government, the stadium was supposed to set an example of how to avoid ending up with a white elephant, as so many other Olympic cities have done. What would be an 80,000-seat stadium for the Games would turn afterwards into a more manageable 25,000-seat athletics venue. But the plan was deeply flawed from the beginning. Few athletics events are capable of commanding audiences of even 25,000, while the possibility of using the stadium for other events such as concerts was severely compromised by the fact that the reduced stadium would have no roof. Moreover, the cost of building a supposedly budget stadium soared from an estimated £250 million at the time the bid was launched to an eventual £429 million. To take off the upper tier of seating was going to cost a further £36 million.

When the Boris regime arrived at City Hall in 2008, the plan quickly changed, and the possibility of retaining a larger stadium for football was favoured. The only trouble is that football clubs and their fans, especially Premiership ones, don’t like their pitches encircled by athletics tracks, which put distance between the crowd and the players and make it harder for the fans to abuse the ref and linesmen. Premiership football also demands hospitality boxes, bars and restaurants. Moreover, football being a winter game, fans don’t like getting wet — and the original roof only covered some of the seats.


The result was the extraordinary bill for a new roof. Were it being paid by West Ham United, which won the right to use the stadium after a protracted legal battle with Spurs and Leyton Orient, few would complain. Yet West Ham are putting down remarkably little money up front. The club’s contribution to the conversion will stay at £15 million, in return for which it will receive a 99-year concession giving it the priority use of the ground for 11 months of the year. Other uses will get a look-in, such as the Rugby World Cup and World Athletics Championships, but they will be limited to July and occasional holes in the football season.

West Ham is getting the right to use the stadium for a century for just £3 million more than it paid for a single player, Enner Valencia, in the summer. The £15 million contribution is considerably less than the £71 million at which West Ham’s accounts value its current ground at Upton Park, which it has agreed to sell to housing developer Galliard.

In addition to the £15 million contribution up front, West Ham will pay rent which the legacy corporation say will amount to ‘several million’ a year. That could mean a reasonable return, if the tenant stays. What happens if West Ham decide to leave the Olympic stadium after a few seasons isn’t clear. The legacy corporation declined to reveal whether there are any break clauses in the contract which would let West Ham leave before the 99 years are up — I am told only that it believes the contract is ‘sufficiently robust to account for all scenarios’. West Ham might be in the Premiership now, but whether they would still be prepared or able to spend several million a year renting the stadium if they were relegated to a lower division — as they have been several times in the past — is another matter.

As for the £175 million up-front costs which are not being paid by West Ham, some will come from land sales within the Olympic Park and £36 million will come from the original legacy budget — the money that was to have been spent removing the upper tier of seats. Another £25 million has been granted by the government. Meanwhile, Newham taxpayers are being fingered for £40 million. In return, Newham council will receive a 35 per cent share in the lease, giving it a share in income from the stadium. It will also have the right to hold ten mass community events for Newham residents every year. The council couldn’t tell me exactly what these events,would be, except that it might include a rather grand sports day for Newham schools. The council will also bag 100,000 free tickets a year to West Ham matches. A spokesman denied that they will be going to the likes of Sir Robin Wales, Newham’s £81,000-a-year elected mayor, saying that they will be distributed instead among people who do voluntary work.

The deluge of free tickets hasn’t pleased Barry Hearn, manager of Leyton Orient, a struggling League One side which now finds itself having to compete for fans against a much richer neighbour which is showering locals with free tickets thanks to taxpayers’ largesse. West Ham’s deal is, Hearn says, ‘state sponsorship beyond my wildest dreams’.

Newham also claims another benefit from its £40 million contribution. Most of the jobs at the revamped stadium, says the council, will be filled exclusively through Workplace, the council’s Job Centre-type service, which is reserved for Newham residents. It seems extraordinary, given all the legislation against discrimination in the workplace, that a council should be able to reserve jobs for its residents — and to use taxpayers’ money to do so. It isn’t quite in the spirit of the European single market: while David Cameron is struggling to block the free movement of labour from Poland, Newham is trying to stop people from Tower Hamlets and Redbridge getting a job within its boundaries.

The tragedy is that we have ended up with two national stadiums — Wembley and the Olympic stadium — when one would have done. But that error having been made, did taxpayers need to be stung effectively to build the Olympic stadium twice, so that it could be handed over to a football club?

There is another scandal sitting across the Olympic Park: Stratford International railway station, in which £1 billion was invested in the expectation that Eurostar trains would stop there. Five years after it was finished not a single one does, unless Newham counts as a foreign country now it is operating a closed-borders policy.

The London Legacy Development Corporation has been fortunate in that the post-Olympics period has coincided with another mad London property boom, which has inflated the value of the sites within the park which the corporation has to sell, and let it so far absorb the soaring stadium conversion costs. But once again, in spite of the promises that London would be a model, the Olympics has left an enormous white elephant which is going to require substantial surgery in order to gain it an afterlife. My hat is staying uneaten until at least West Ham have moved into the stadium and the final conversion costs have become clear.

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Show comments
  • Treebrain

    “Newham also claims another benefit from its £40 million contribution. Most of the jobs at the revamped stadium, says the council, will be filled exclusively through Workplace, the council’s Job Centre-type service, which is reserved for Newham residents.”

    Newham is one of the poorest and most socially deprived boroughs in the UK. Giving jobs at the stadium to local residents ensures that they enter the work force and receive opportunities that were previously not available to them, boosts the kcal economy and gets people off benefits and into work.

    Not a bad return for money spent, is it Ross Clark?

    • HJ777

      Might that not depend on how many people are helped to get off benefits and into work for the £40m?

      If it is (say) 400, then that’s £100k per person. There might be more cost-efficient ways to use the money that might help (say) 2000 people at a cost of £20k each.

      • Treebrain

        HJ777,

        The £40m being spent by Newham Council is not being paid just to get people off benefits and into work, that is a bonus.

        The money will secure 35% of the income from the lease, the right to hold en events a year at the venue and receive 100,000 West Ham ticks pa.

  • MichtyMe

    Hampden Stadium was converted into Athletics venue for this years Commonwealth Games and presumably back again for ….£14 million.

    • Dick_Turpin

      Not sure what relevance that has to this piece. If I remember right, Hampden’s conversion was an inherently one-off plan involving ‘stilts’ across the pitch which in turn supported a raised platform on which the track and field surface was installed.

      It seems the point of the ‘retractable’ seating area at the Olympic stadium is to facilitate a similar conversion more or less at the push of a button, and at a cost of little more than the electricity involved.

  • In2minds

    “The full cost of the 2012 Olympic Games is still far from clear” –

    A bit like HS2 then?

  • you_kid

    yes, you are getting there – now a piece on the Olympic Village, please.

    and btw, what was the total build cost of the Allianz Area in Munich, the most expensive city in Germany?

  • rtj1211

    If the stadium can generate the taxpayer £25m a year net, then it will pay for itself over 50 years, which is the minimum life of any properly constructed stadium.

    No doubt Boris et al will be hoping fervently that West Ham Utd manage to qualify at least one year for hte Champions League, as they will get a nice bit of the action if that is the case (well, if they don’, their lawyers need to be shot).

    My take is: £2m a year from the Diamond League athletics; £8m a year from West Ham; £8m a year from concerts; and £7m to find from other things, like T20 cricket, one-offs like the rugby world cup, the World Athletics Championships, an NFL match, a baseball match etc etc.

    • GenJackRipper

      Not a snowballs chance in hell that the NFL is leaving Wembley for this.

  • JonBW

    And the relocation of the Hammers is also to be deplored as another example of football selling out its history and culture.

    Another great old ground with real atmosphere (the Boleyn Ground) disappears; another Club playing its home games in a soulless big shed with the atmosphere of a B&Q store.

    And in five years, it will be half-empty on matchdays.

    • rtj1211

      On the contrary, West Ham have the unique chance to make football affordable to ordinary families and they have made it clear that they intend trying to do precisely that.

  • cambridgeelephant

    If this is true, it’s hardly much of a compliment to the ‘king over the water’ aka Boris is it ? At a minimum he should have insisted West Ham put more of their money into this – as opposed to the tax payer. If Arsenal raised 450 million£ for their stadium – and they did – then West Ham should have been told to cough up a lot more for this.

    • Upyer

      Did you raise the same objections against Man City renting the Commonwealth Games Stadium? didn’t think so.

  • Roy

    This mishmash of extraordinary overspending is nothing to be surprised about. This is what happens when sporting enthusiasts, politicians, and local councils get embroiled in what should be built, the bewildering racket of trying to be the best ever Olympic event, who is getting the kudos, and to a lessor degree what use will it be after the event? The leading decision makers will of course not be paying.

    The answer to all this, is get it right at the beginning: no big spending when the taxpayer (always the end payer) can not afford it. If you build a sports arena and it is required for use after the big event, then the big sporting organisations agree to pay for it on the dotted line. These are the ones who are in the big money. Raking in enormous crowds, week in, and week out, plus all the side income of TV and accessories. There is no reason on earth why the taxpayer should have to pay. The people who play and watch sport are the ones to put their hands in their pockets and fork out, period. User pays surely.

    Who has had to recently pay for the failed banking industry? Since it was not allowed to fail into bankruptcy, it was bailed out by the taxpayer. This is how things go, when not allowed to go bankrupt it is easy to do a bail out. A bail out means the ordinary people pay. They pay in continuously higher taxes, fewer jobs, and more debt for the country, and could mean more printing of money. Meaning higher and higher inflation, with the country less and less being able to compete internationally for the product it makes, or service it provides.

    If you play sport you pay for it. If you go bankrupt you pay for the consequences.

  • Sir Norman De Plume

    And get rid of that hideous ‘sculpture’ while you are at it!

  • disqus_9I6C4azbIA

    As a Scot and non football fan, why do I have to pay for an London football stadium ?

    • Aporia

      Why does the English tax-payer have to subsidise Scotland’s socialist tendencies?

      • disqus_9I6C4azbIA

        Surely this is a question you must, as a English tax payer answer. We wish nothing from you and if you believe we are costing you money,why oppose our desire to regain independence?

        • Aporia

          Oops, I’m Scottish.

          To the nationalist, my question can be answered in the way you did. The problem is that only 38% of voting-age Scots actually voted for independence, so this solution is unfeasible.

          To the non-nationalist, my question raises the issue of the responsibility of the Scottish government in light of its current and upcoming powers.

          At the moment, Scottish welfare gets a free ride from the English tax-payer. The only fair solution is for Holyrood to raise its own, further taxes to compensate. Scottish taxes for Scottish people.

          When it does, Scotland will cease to be the leeching, robbing nation that it has become, and I will feel less embarrassed to identify as Scottish (intranational robbery is, at least, less of an affront than international robbery). Most of all, the SNP will finally have to start taking responsibility for their bad policies.

          • disqus_9I6C4azbIA

            I looked up your profile and found there is no reference to nationality or indeed sex. However your claim that the English are giving us buckets of money must surely make you support Scotland regaining independence ? It looks like Scotland will get full taxation powers and will not be involved in the English system. Scottish policies reject your House of Lords, bedroom tax, tuition fees etc. I think these are bad policies. I in no way oppose your belief in these policies and would welcome your leaving the EU.

          • Upyer

            ….and we would welcome you leaving England…all of you

          • disqus_9I6C4azbIA

            Are you saying as A Scot you wish to pay for a football company in England to gain greater profits ? Why on earth would you do this and expect other Scots to do so ?

        • Lala Storm

          Last time Scotland was independent, they went Bankrupt and came to the English to be bailed out. Wind your neck in, you get the best deal in the UK under the BARNET formula. Oh and if England does leave the EU I suspect next time I visit Edinburgh I will see more than the current and pitiful 4% of your population as immigrants.

    • IainRMuir

      A very unwise question for a Scot.

      • disqus_9I6C4azbIA

        I do not understand your response. Why would any person not interested in football be compelled to pay towards the huge wages payed to English players who are well below European standards.

    • Jackthesmilingblack

      Why indeed.

    • Brogan75

      You had your chance.

      • disqus_9I6C4azbIA

        No we did not.Nowhere have we had the freedom to opt out of paying for English football which is second rate on the world stage.

        • Upyer

          …and Scotland are not rated at all

  • jpt4w

    Come on you Irons!

  • IainRMuir

    Anyone with any connection to the construction industry can tell you that, comparing like with like, a conversion is likely to cost more than a new build.

  • William Murphy

    Mr Ross, your hat would be perfectly safe if the true cost of the Olympics to date was officially admitted – never mind the never-ending escalation of the follow-up fiascos. Add in the loss of revenue suffered by numerous small businesses all over London as people heeded Boris’ plea to free up transport and stayed away from the city Add the cost to tourism elsewhere in the country – the Lake District suffered badly as long-distant foreign tourists who would normally combine the Lakes with a London trip avoided outrageous London hotel prices. Add the extra police and military costs – remember they had to be ready to cope with a double whammy of Olympic terrorism and a recurrence of the 2011 riots. Add the costs of crime unsolved or unprevented while hordes of regional police were diverted to London. Add the costs of diverting air traffic. Add the extra costs in hastening the construction of the rail terminal. The real cost is anywhere from £24 to £44 billion.
    And Boris, in ultra-bombastic mode, had the brazen nerve to write immediately after the Games finished that the sceptics had been proved wrong….

  • Samson

    Bargain. Give them another one for a spare.

  • Jackthesmilingblack

    Pull back guys and examine the overwhelming dominance of sport, particularly football in the popular culture of Advanced Capitalist countries, with most of the third world tagging along. So which football teams do Muslims support?

  • Craig Dinning

    But West Ham gave England the 1966 World Cup as well as the best sports anthem ever:-

    “I’m forever blowing bubbles…”

  • Upyer

    The author sounds like a bitter Arsenal or Tottenham liker to me

  • Harry

    No inquiry – spin on that!

    Oh… and thanks for your contributions to our stadium

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