Sadiq Khan takes over control of the London Stadium as report reveals taxpayer has been saddled with £20m annual bill

Sadiq Khan has taken direct control over the London Stadium after a £20m 'debacle'
Reuters

Sadiq Khan today said a disastrous “catalogue of errors” and “bungled” decision making over the future of the former Olympic stadium has been exposed in a damning report published this morning.

The Mayor claimed a “simply staggering” series of mistakes that had his predecessor Boris Johnson’s “fingerprints all over” them had left the taxpayer saddled with an annual bill of £20 million.

The comprehensive 169 page report into the debacle was ordered by the Mayor in March after the costs of converting the arena where Mo Farah and Jessica Ennis-Hill struck gold in 2012 into a new home for West Ham soared to more than £750 million.

It was revealed last year that West Ham, which is not directly criticised in the report, will pay only £2.5 million rent for its new home under a 99 year teneancy deal agreed in 2013.

Huge misjudgments over costs included estimates of the costs of the retractable seating that allows the 60,000 capacity stadium to be used for Premier League football during the season, but other events such as athletics in the summer.

The report, written by accountants Moore Stephens, says the cost are “in excess of £10m per annum” compared with a budgeted £300,000. It added: ”This cost is not just limited to one year, but is an ongoing issue as the movement of seats is required every year.”

Other setbacks include a failure to secure a deal on stadium naming rights, which had been forecast to bring income of £4 million a year, and a shortfall in “commercial income” from catering and other sales so severe that it does not even cover the payment to the stadium’s operator Vinci.

The Mayor said he was taking direct control of the stadium “in order to renegotiate deals and minimise ongoing losses” and Newham council will withdraw as a result.

E20, the public sector company set up to run the venue is projected to make a loss of £20 million next year and a total of £140 million over its first ten years.

The report found that the £323 million cost of transforming the stadium has balloned from an “unrealistic” initial estimate of £190 million, which was never properly scrutinised.

Mr Johnson’s decision to use the stadium to host Rugby World Cup games in 2015 added extra delays, disruption and costs to the construction programme, according to the report.

Mr Khan, said: “I ordered the review into the finances of the London Stadium to understand how key decisions were made about its transformation and why costs were allowed to spiral out of control. What has been presented is simply staggering. Not for the first time, it reveals a bungled decision-making process that has the previous Mayor’s fingerprints all over it.

“Boris Johnson clearly panicked when faced with legal challenges about West Ham and Newham’s joint bid to take ownership of the Stadium and then decided to re-run the bid process with the taxpayer taking all the risks and footing almost the whole bill. You simply couldn’t make it up. The fact he also failed to properly examine the transformation costs or the entirely inadequate estimates for moving the retractable seats leaves us squarely in the dire financial situation we are in.

“I am determined to put the London Stadium towards a stronger financial footing and secure its long-term future, but I’m under no illusion that this is going to take time and some real commitment from all partners to make this work.”

A source speaking on behalf of Boris Johnson said: “No other city has an Olympic legacy like London’s – all seven venues on the park are in private hands, with millions of visitors a year, and a positive economic legacy for east London. The stadium has a secure future with athletics and football.

“The mistakes belonged to Khan’s Labour predecessor Ken Livingstone and the Blair government. Signing off on a stadium fit only for athletics was a massive error. The only option for Boris was conversion to a multi-use venue.

“If Sadiq Khan wants to try and blame someone he should blame his New Labour pals and the old Labour Mayor for their catastrophic planning failures.”

Merryck Lowe, partner at Moore Stephens who oversaw the report, said it would “assist transparency, enabling everyone taking an interest in the Stadium to understand its history and challenges. I look forward to answering any questions which the London Assembly may raise later this month”.

A West Ham United spokesperson said, “As the report confirms, the Concession Agreement is a watertight, legally binding contract signed in 2013 in good faith by West Ham United, who remain absolutely committed to its terms for the entire 99-year duration.

“We have delivered everything we committed to within the Concession Agreement, and act as the primary delivery vehicle for London Stadium’s legacy delivering its most watched sporting spectacles, revenue driving events and thousands of jobs for local people.

“It is not in West Ham United’s interests for the Stadium to be not performing in line with aspiration and, as we have done ever since moving to Stratford in the summer of 2016, we continue to offer the benefit of our commercial expertise and substantial experience in managing successful stadia.

“West Ham United will continue to devote our absolute commitment to London Stadium, but our first priority in this sense is always to act in the best interests of our supporters.

“We fully concur that West Ham United has played a significant part in the most successful regeneration programme in the history of the modern Olympics, however the stadium itself craves renewed leadership and direction and we welcome the Mayor’s decision to step in and deliver this. West Ham United is firmly behind him.”