London Stadium owners LLDC have admitted that the cost of honouring contracts with West Ham and UK Athletics will cost them a further estimated £200m of losses in their draft annual accounts presented to their audit committee yesterday.
Extracts of the report say: “Forecasts of the partnership’s financial outlook, particularly in relation to the cost of hosting West Ham and the cost of moving the relocatable seats between pitch (football) and athletics modes, has required an assessment of whether any of its contracts are now deemed to be onerous (loss-making). An assessment of its main contracts (in line with IAS 37) has concluded that two of these are deemed to be onerous. Consequently, within its draft 2016/17 accounts, E20 Stadium LLP has recognised a provision for these losses, adversely impacting its reported position for the year.
During 2016/17, the London Stadium’s first full year of operation, it became apparent that a number of income and cost assumptions included in E20 Stadium LLP’s forecasts were unlikely to be realised: These included:
• The financial return from the Stadium operator fell short of expectations.
• The cost of the solution for moving seating in order to comply with the West Ham and UK Athletics contracts was found to be to be significantly higher than originally forecast.
• A naming rights deal, assumed in the LLP’s business plan based on advanced contractual negotiations, fell through and despite further interest and negotiations with a second party, a deal has not been concluded.
The Corporation is therefore exposed to both financial and reputation risk from the operation of the LLP. This has become more critical during 2016/17 when the stadium became fully operational.
We note that the Mayor of London has announced an investigation into the finances of the Stadium, which at the time of this report, is still ongoing.
The stadium is valued based on fair value, which was determined by considering the level of income that the Stadium can generate in excess of operating expenditure. The value of the stadium has been impaired to nil and a £200 million provision has been recognised in relation to the cost of fulfilling the West Ham United Football Club and UK Athletics agreements“
A draft copy of the Annual accounts can be found HERE
Yikes!
Sean can you remind us what we offered to buy the stadium for before Hearns and Levy stuck their oar in?
The Icelandics offered £100m before the stadium was built to buy it afterwards. The amount West Ham bid before the European state aid complaint has never been made public but there is a likelihood it was around the £95m mark made up from £40m from Newham, £15m from West Ham and a further £40m from the original Olympics Budget
However, at that price West Ham and Newham would have assumed more responsibility for the transition and fully covered the running costs.
Has UK Athletics got the same 99/100 year deal as WHUFC?
If not surely it would better it sale the stadium to WHUFC/Newham Council etc so to convert it to football only with concerts sporting events (boxing etc) .
Cheaper option for them . Give us a real home and help locals with useage for other events.
Only loser being UK Athletics who could use designated stadiums for athletics alone i.e old crytal palace stadium and the likes.
We take me unbiased claret/blue specs off now.
Lol
UK Athletics deal is either 25 years or 50 years I can’t remember
It is 50 years. Here is the contract http://www.queenelizabetholympicpark.co.uk/-/media/16036-uka-agreement.ashx
So the owners would need to buy athelitics out of this lease. West Ham would insist on that I’m sure. £50M would do it, add that to the £100M given to West Ham to take over ownership and the tax payer is still in pocket. Madness like I say but what other way is there?
Crystal palace lol.
And presumably that would’ve been in its pre conversion state Sean so West Ham would’ve had a bill for £200M to convert it i.e. roof etc.
It’s madness Hearn and Levy have a lot to answer for as a result of their bitterness.
It now makes perfect sense to anyone with a brain to hand the keys over to West Ham. The question is of course at what value? Starting with “for nothing” and rising to a reverse premium for us to take it. If they gave us the keys and £100M it would still represent a good deal to the tax payer.
I’d love to be a fly in the wall at West Ham board meetings. I wonder if they are just playing a waiting game? Personally I believe West Ham could make it work very well if they had the naming rights and catering and so on but I don’t have the figures to hand however they would be able to utilise it all 12 months for other events i.e. Boxing and concerts etc and they’d scrap athletics so the seat moves would be eliminated.
The other big factor that Sullivan will know is that ownership of the ground will rocket the value of West Ham. It would add £100M to the value of West Ham I betcha.
People are talking about this ending bad for West Ham but how can it? The lease is backed by the tax payer so the owner can’t go bust. The lease is a legal document and can’t be broken or amended.
Sullivan is just sitting tight in a position of absolute power. IMO.
Leyton Orient’s Judicial Review was unsuccessful, Spurs threat of a Judicial Review never materialised and was abandoned. It was all talk.
The real culprit is a guy called Steve Lawrence, an architect who raised an anonymous complaint to the European commission over state aid.
http://www.telegraph.co.uk/sport/football/teams/west-ham/9088214/London-Olympics-2012-man-who-sank-West-Hams-Olympic-Stadium-bid-is-revealed.html
Steve Lawrence or Nigel Kahn. We will never know.
Actually, I am told West Ham would pass on taking over the stadium’s ownership for free as it stands at the moment. They would want to be paid at £2.5m per year subsidy until the stadium could pay for its own operating costs.
You can see from the £200m losses forecast that could still be a good deal for the taxpayer.
I think West Ham would have converted the stadium differently without the massive over spend or waste
The loss making contract is Athletics and concerts. Take away those and just leave as a pitch based stadium for football and rugby and it doesn’t lose money. End of.
All political just to prove it is a multi purpose stadium which is it isn’t from a financial point of view
Personally, I would offer West Ham £100m up front to take over the stadium
Whetstone on a personal crusade to get his posts up?