By Mihir Bose
November 15 – The decision to lease the Olympic stadium to West Ham still generates huge controversy with Barry Hearn owner of Leyton Orient vowing to fight it all the way to Europe. Hearn is awaiting a report on Olympic Legacy by a select committee of the House of Lord’s due on Monday.
However confidential minutes of the Olympic Board, which brought together all the stake holders responsible for London 2012, which have come into my possession show how six years ago the Board rejected Premiership football as the post-Olympic use of the stadium.
Yet in 2013 West Ham appear to have secured the stadium on much the same terms but with the tax payer having to foot a bill 100 percent higher (at £200 million) than what it would have cost had use of Premiership football been incorporated in the original design.
The minutes relate to the 15th Olympic Board Meeting which started at 1-30 pm on 7 February 2007 at the offices of the Department of Culture, Media and Sport in London’s Cockspur Street
The Board had before it what was called “Olympic Stadium Update Report Report Number OB(15)03”.
This had been prepared by the Olympic Delivery Authority and its first recommendations was: “To CONFIRM the Board’s previous decisions not to proceed with a Premiership Football option.”
The executive summary of the report dealt with what the consultants PMP, being used by the Sir Robert McAlpine team, had advised on the stadium and its legacy use.
There had been previous discussions with Premiership clubs including West Ham which had come to nothing. But at the end of 2006 after the Icelandic takeover the club renewed interest in playing at the stadium. This led to discussions and says the report:
“In summary, WHU’s position is as follows.
“• Retrofitting the stadium after the Games is not a cost effective option. The design brief needs to be amended to suit premiership football and core facilities/”enhanced scope” required to accommodate premiership football (e.g. under pitch heating, retractable seating, hospitality areas, redesigned roof etc) would have to form part of the base brief.
“• WHU will not occupy the stadium if a running track is a permanent fixture. Stand seating must cover the athletic track for a majority of the year (about 20k-25k seats) and the roof must be redesigned to the scope of this extended seating i.e. a much more extensive legacy roof structure. The stand capacity is to be 60,000 seats, which includes the seating covering the running tracks. NOTE: This means that the remaining seating left over from the 80,000 Olympic requirement would be somewhere around 40-45,000.
“• The transaction would have to be based on a freehold or very long term lease (in excess of 99 years) sale, with WHU as the sole operator of the stadium. The indicative price for this interest is £100m. NOTE: it is unclear as to when this would be paid and the extent to which this would cover the costs of WHU’s “enhanced” scope.
“• The retractable seating would cover the athletic tracks for the entirety of the football season leaving approx 3-4 months when, subject to not clashing with WHU fixtures, it would be available for athletics for up to 18 events. These events would be subject to WHU’s approval. Other events may be accommodated but these would be at WHU’s discretion and potentially chargeable.
“• A minimum of 500 and a preference for 1,000 car parking spaces, plus coach and broadcast areas.”
The result of all this would mean that “with regular access to the track for athletics training impractical, WHU suggest an alternative solution in their letter which would be to convert the stadium post Games for a football only use, with a separate athletics facility built around the warm up track (in effect Option 2 already considered and rejected by the Olympic Board).”
The executive summary concluded, “In summary, the WHU letter proposes a purchase of the Olympic Stadium by a private company who would then take responsibility for future operating and maintenance costs. WHU would control access to the stadium and would provide very limited access for a few elite athletics events. It rules out the daily use of the stadium for schools, community groups and athletics training. It is currently unclear the extent to which the £100m commercial offer would cover the “enhanced” scope and enhanced risk to the construction programme as they propose this would be delivered as part of the main build programme rather than being retrofitted post Games.”
The executive summary went on to warn that the West Ham proposal raised a number of difficult issues. “WHU’s proposal is an indicative offer. It would take 6-8 weeks to reach detailed Heads of Terms and say another six months to reach a binding legal/commercial position. There are however a number of significant risks to achieving a secure position with WHU and it is unlikely that this position could be reached before contracts have to be let and a start made on site.
“The most significant risks to a clean deal and timescale are:
“IOC – approval to change in Host City Contract.
“State aid and procurement issues – the sale of a public asset to a private company and well below cost price.
“Lottery – approval would be required to sell and asset funded by the lottery to a private company.
“Planning – any deal would have to be subject to planning. The proposals are not in line with the current application and would raise very substantive issues such as traffic and environmental impact. A very careful approach would be required to any new stadium proposal to avoid upsetting the current application which is absolutely on the critical path for delivering the Olympic Park. NOTE: Stratford City have always objected to a premiership football club use and Westfield have formally advised the ODA of their objection to premiership football.
“Scope – agreeing what is base scope Vs “enhanced” scope and who pays for what.”The executive summary said, “The report from consultants PMP shows that elite athletics only usage will require long term subsidy and there is a need to have a mixture of usage for other sports and commercial uses to underpin financial sustainability. There is an urgent need for more work on complementary uses such as education, sporting demands and commercial uses in non-sporting zones B and C.”
There could be no conceivable doubt as to what the Board was told about the discussions with West Ham. “WHU has indicated that will accept a track and field legacy but would not be prepared to occupy the Stadium if the running track is permanent during the football season. This would impact on the size of the roof. It would also effectively rule out daily use of the Stadium for schools and community groups. UK Athletics has stated that the Premiership requirements conflict with its needs and if a 60,000 stadium with a covered track is the preferred option then it would want to re-evaluate Crystal Palace.
“WHU’s commercial offer is an indicative £100m in return for a very long lease or freehold and sole operating rights. It is not clear the extent to which this would cover the cost of West Ham’s enhanced scope – retractable seating over the track, extended roof over the retractable seats, corporate hospitality, under pitch heating etc.”
The result of this was talks with West Ham had come to an end as the club, ” have made clear that they do not think that their requirements can be met by retrofitting and would only be interested in doing a deal if the pre-Games base build changed. This would mean a fundamental change to the design brief. The Stadium is currently on the critical path. The current programme is already accelerated and there is no time to increase the scope to accommodate a Premiership option if the Stadium is to have any chance of being delivered on schedule or on budget. Continued uncertainty over the base brief for the Stadium is becoming the most significant risk on the project register. If this continues it could undermine the successful delivery of the whole project in time for the Games.”
The Board was told: “A clear decision is now required from the Board as to how it wishes to proceed and its commitment to an athletics legacy – as per the Host City Contract.”
At its previous meetings the Board had considered four legacy options:
20,000 – 25,000 seat athletics facility
60,000 seat football, separate 20,000 seat athletics on the Olympic Park
60,000 seat football stadium, 20,000 seat athletics stadium at Crystal Palace
60,000 football and athletics (combined)
However as the report pointed out: “Option 2 was eliminated on financial/VFM grounds and on risk – complex solution technically to deliver, complexities over specification for football club ‘client’, time required to get commercial agreement with football club, state aid issues, town planning issues, would require additional land take in Olympic Park etc – all of which could jeopardise successful delivery of the project to time and cost. Option 3 was eliminated as it did not meet the aspirations outlined in London’s Candidate File for an athletics legacy and would also attract similar potential difficulties as outlined for Option 2 above. Option 4 was eliminated on financial/VFM grounds and on risk grounds (state aid issues, complexities over specification for football club ‘client’, compromise solution for football, time required to get commercial agreement with football club, does not accord with new masterplan).
A table attached to the report showed that athletics only use would mean a loss of £5.67 million by 2018 and involve huge subsidy from the tax payers.
The Board was also told that Derek Mapp (then Chairman of Sport England) “has raised concerns about the long term sustainability of a 25,000 seat athletics stadium legacy. The ODA also understands that John Scott from UK Sport has expressed strong reservations about the elite events strategy.”
Minutes of the Board meeting state that “The Chair asked that the Board endorse the decision that there be no further contact or negotiations with West Ham Football Club in relation to the Olympic Stadium and this was agreed. The Board also endorsed the concept of the Living Stadium. The Mayor reported that he was due to make an announcement shortly regarding an agreement with WFC and the development of another site adjacent to the Park. “
The only one to voice objections was the then sports minister, Richard Caborn, and the minutes state:
“Richard Caborn reminded the Board that the decision to support athletics in legacy and reject Premiership football at the Stadium meant the loss of a valuable revenue stream. He was concerned that the Mayor agreeing to a further stadium being built by WHC so close to the Olympic Park would create additonal problems in terms of attracting revenue and over capacity. Richard Caborn had previously expressed his concerns regarding the PMP report to the ODA. He was concerned that the legacy costs of maintaining the building would divert resources away from grass roots sports and that these concerns were echoed by UK Sport and Sport England. A number of other athletic sporting venues were cited by Richard Caborn as currently running at a loss, and heavily subsidised by public funds, despite offering world class facilities.”
However, “The Mayor[Ken Livingstone] re-iterated his commitment to the IOC to provide £10m to support the Park in legacy mode, and this commitment was binding on any future Mayor. He was surprised at the cost estimates in the report as being less than he had anticipated. Lord Coe also informed the meeting that £200K would be available from the Marathon Trust. Richard Caborn was assured that there would be no direct cost to Sport England in financially supporting the Stadium in legacy, unless by choice.”
After these discussions it was resolved that: “(i) the Olympic Board unanimously supports the ODA’s brief of an Olympic Stadium of 80,000 seats and 25,000 seats in legacy mode, based on a core athletics use; Olympic Programme Support Unit Confidential – Policy (ii) the Olympic Board rejects any further discussions with any Premiership football club on use of the Stadium in legacy mode, and that Sir Roy McNulty formally advise West Ham Football Club of the Board’s decision; (iii) the ODA develop its legacy work on the use of the Stadium as a matter of urgency, including drawing together all the know funding and income streams.”
But lack of funding streams has meant turning to Premiership football. However the disclosure of these confidential minutes is bound to stir the pot further. It now remains to see what the House of Lord’s report says about all this.
Information from report about post Olympic cost of running Olympic stadium
Table 1 – Financial Summary of PMP work Scenario (£000’s)
Operating Surplus/(cost) Yr 1 Yr 2 Yr 3 Yr 4 Yr 5 Total
(2014) (2015) (2016) (2017) (2018) (Yrs 1-5)
1. Athletics only (1,076) (1,103) (1,125) (1,155) (1,187) (5,646)
2. Athletics plus football (601) (442) (73) 7 81 (1,028)
3. Athletics plus rugby (605) (471) (107) (37) 27 (1,193)
4. Tripartite company (262) (53) 420 511 597 1,213
Base Case (666) (572) (280) (283) (288) (2,089)
Contact the writer of this story at moc.l1734840166labto1734840166ofdlr1734840166owedi1734840166sni@e1734840166sob.r1734840166ihim1734840166