West Ham deal for Olympic Stadium under scrutiny as 2012 legacy hangs in balance

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It's September 21, 2014, and a group of young women have barricaded themselves into a block of empty flats in East London.

Borne out of a sense of frustration and helplessness at a government that has incubated an environment where the five richest families in the UK have accumulated more wealth than the poorest 20% in the country, they sit for two weeks in protest against Newham Council selling off land and 600 hundred housing units to a private developer.

The group, known as Focus E15 after their battle with Newham, who served eviction notices to residents of the Focus E15 hostel for young homeless people in 2013, were taken to court in order to force them out of the buildings. They live in a borough which was flagged up as being home to a community most at risk of long-term unemployment and one which posed the greatest risk of child poverty in the country. Every day is a battle.

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Less than a mile away sits the Olympic stadium, a gleaming taxpayer-funded £720 million ode to ineptitude that awaits its new tenants, West Ham United. They'll move in next year having paid just £15 million towards the £272 million conversion costs required to meet their standards, including Europe's largest cantilevered roof. Newham Council contributed £40 million.

For two years now a group of supporters, banded together across divides from 14 separate clubs, have fought the 99-year tenancy agreement between West Ham and the London Legacy Development Committee (LLDC) after it was announced in March 2013.

The decision to hand West Ham a stadium built at a huge cost to the taxpayer has been an inflammatory issue, and one which stirred the group of supporter trusts into launching a petition to hold a public enquiry. That in turn led to the Information Commissioner ruling last week that details of the agreement must be made public.

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Little is known of the agreement as it stands, and both the LLDC and West Ham would have preferred it stayed that way. Both argued that making public the details would harm their ability to negotiate further contracts but, as it stands before appeal, information regarding the agreement is on its way into the public domain.

"We are disappointed by the Information Commissioner's decision which we believe will damage our ability to secure the best deal for the taxpayer in future,' said an LLDC spokesperson after the decision.

Tidbits have filtered out through the media and they give a good idea of why both are keen on a cloak of secrecy. Deputy chairman of the LLDC, Neale Coleman, admitted in an interview with the Guardian that the stadium had to be built 'twice' to make up for past mistakes and the numbers involved certainly seem to suggest that.

West Ham will reportedly contribute a rent of around £2.5 million every year, but depending on the way which revenues from tickets, naming rights, sponsorship and hospitality are carved up they stand to make millions. So far the LLDC have only revealed that West Ham has retained all the money from ticket sales and that the annual usage fee covers matchday costs.

The stadium, which is being converted into a UEFA Category Four venue so it's capable of hosting events such as the Champions League, will undoubtedly increase West Ham's financial clout and in turn their ability to compete at a higher level, which will in turn generate millions more.

They earned more than £70 million for their 12th-place Premier League finish last year and the incoming TV agreement with Sky means more riches are on offer for higher finishes. The bottom-placed club will take home £90 million next season - more than three times the amount that the Ligue 1 champions will earn.

By comparison, according to an investigation by the Mail on Sunday, the taxpayer stands to earn a paltry £200,000 in 2016/17, including from events such as rugby and athletics during the football off-season. More damaging information about the agreement is expected in the next two weeks after more Freedom of Information requests were made by the fan coalition.

West Ham owners David Gold and David Sullivan, as well as Vice-Chairman Karren Brady, claim that the deal represents good value for the taxpayer, who have paid for the vast majority of construction and conversion costs, and means the stadium will avoid becoming obsolete and run-down, as is the case with other Olympic stadiums.

"Without us the stadium would lose money. The suggestion we are getting the stadium rent free is categorically wrong - we are more than paying our way, said West Ham in a statement. "Our agreement with the LLDC will see West Ham make a substantial capital contribution towards the conversion works of a stadium on top of a multi-million pound annual usage fee, a share of food and catering sales, plus provide extra value to the naming rights agreement.

"Our presence underwrites the multi-use legacy of the stadium and our contribution alone will pay back more than the cost of building and converting the stadium over the course of our tenancy."

In a recent interview with ESPNFC, Gold went as far as to claim that taxpayers should "be grateful" for West Ham's involvement.

However a BBC documentary earlier this year claimed that, after obtaining some redacted details of the club’s rental agreement through a freedom of information request, the taxpayer would meet running and maintenance costs including security, goal posts and corner flags. The figure quoted to cover those costs? Up to £2.5 million - the same amount West Ham will reportedly pay in rent.

‘Confirmation of such a minimal profit forecast for LLDC is seriously worrying and goes to confirm our concerns that this is not the fabulous deal for the taxpayer that we have been led to believe it is,’ fan coalition spokesman Mat Roper said after the findings were revealed. ‘The decisions made by various authorities show that they are playing fast and loose with the public purse.

"With more than £250m of public funds spent on revamping a perfectly good venue, and being told that this was the only feasible deal, the revelations that the public purse will be furnished with just a few hundred thousand pounds in the first and possibly subsequent years, only goes to prove that this is totally unacceptable when public services are under threat of closure."

Problems with not only the Olympic Stadium but the entire Olympic park can be traced back to the bid itself. London edged out favourites Paris back in 2005 largely because of their commitment to a lasting legacy, an issue that had blighted previous Olympic games.

The scale of the operation can not be underestimated; the Olympics had a budget of around £9 billion while for every £1 dedicated towards the regeneration of London's east end, 75p would go towards the Olympic Park.

The original plan was to build a temporary stadium which could be deconstructed and rolled back into a 25,000 venue that would serve as home for athletics in the UK to replace the National Sports Centre in Crystal Palace, ironically after talks with West Ham's former owner Eggert Magnusson had broken down. It was claimed the Icelandic businessman offered £100 million to move into the stadium and reduce the capacity to 60,000. After Boris Johnson became London Mayor in 2008, he resolved to change tack and install a long-term tenant. From there the problems began.

"It's been terribly managed," says Olympic specialist journalist Christian Radnedge. "What you have now is this stadium that could come close to costing the taxpayer £1 billion (the initial budget was £280 million). The most ridiculous thing is that it could have been so easy to have made it viable for athletics and other sporting events if it was built into the architectural brief from the beginning.

"They went the way of building this stadium in a bowl format, it's built into the ground, so they couldn't then put the retractable seating in - so they had to spend all this money retrofitting it and now the costs have spiralled out of control because they didn't think it through."

The £160 million Commonwealth Stadium in Manchester, built to host the Commonwealth Games in 2002, is a testament to that; it cost £42 million to convert for football purposes (of which City paid £20 million) because the plans were built into the initial design. City's agreement at least mean the club have to cover all overheads and would pay £4 million in rent on the taxpayer-funded venue too.

What makes matters worse is the complicated nature of converting the stadium because it was built as a temporary venue; the Guardian's Owen Gibson noted of the works: "The only part of the stadium that remains is that which was supposed to be temporary (the upper tier), while the section that was to be permanent has been replaced." Europe's largest, and most expensive, cantilevered roof is being installed to cover seats that weren't meant to be there in the first place.

What makes the whole saga more farcical is that the stadium would not have met local authority safety regulations in its original state that require all seats to be covered if it is to host winter sports.

"I think a large part of it [the West Ham agreement] was that the government were so scared they were going to be lumbered with this white elephant," explains Radnedge. "West Ham knew they were most ideally placed to take it on and the discussions go all the way back to the initial Olympic bid.

"So they've always known they are the preferred company to take on the stadium. They were in a position to dictate the terms of the deal of the deal; the GLA (Greater London Authority) and London as a city were beholden to their demands.

"There's a sense that the mayor's office were scared they would end up with something on their hands that was run down and would end up as a catastrophic drain on finances, as well as a huge embarrassment. This is now such a hugely symbolic part of the Olympic legacy, especially when they made that such a big part of their bid.

"But as it stands, it's the most scandalous gift ever bestowed upon a private company by the government in all of sport."

There are huge issues over other aspects of the Olympic legacy too. The Olympic Village has been sold to the Qatari ruling family's property company in a deal worth £557 million - £275m less than it cost taxpayers to build, while promises over affordable housing in the Olympic Park haven't been met.

1,000 of the 7,000 promised were lost in order to build a new cultural centre on the site, and while 35% of the first development of homes were meant to be affordable, the actual number ended up around 28%, in an area in desperate need of a solution to its social housing crisis. Of 1,500 homes built on the developments known as East Wick and Sweetwater, 40% were meant to be affordable, but that number is set to end up at around 30%.

Former Secretary of State Michael Gove’s decision to end the dedicated funding to the School Sports Partnership Programme means the sporting legacy of London 2012 hangs in the balance as well. According to the Department for Education's PE and Sport Survey in 2012, 90% of young people were taking part in more than two hours of sport a week, up from 25% in 2012 because of the program which pledged around £162 million in funding. Gove replaced that with a £65 million funding initiative that wasn't ring-fenced that has prompted a participation decline.

14 clubs are represented in the coalition of supporter trusts that pushed for the publication of the agreement between the LLDC and West Ham, and have helped move the debate forward. The ruling that details must be revealed opens up the possibility of increased scrutiny which could in turn lead to the agreement being challenged under European state aid laws if it's deemed that West Ham have been handed an unfair advantage over its competitors through government assistance.

Coalition spokesman Mat Porter told GiveMeSport: "The biggest thing, although this is where the campaign might have to take a slight back seat, is if it is deemed a form of state aid and unfair competition against other clubs, it could be deemed state aid. Anyone can make a complaint to the European Union, and we've been told by the EU and the European Commission that any state aid claim holds far more sway if there's a business that is affected.

"So for it to be successful, there would have to be a claim from a team like Leyton Orient or Charlton who have been affected by the move. We've spoken to both clubs and they are aware that there could be a role to play in a state aid claim'#. We'd be able to provide the clubs with the information we've collected, and also generate interest through pressure groups and lobbying MPs to show that this is a bad deal for the taxpayer."

Former Leyton Orient chairman Barry Hearn spent three years fighting West Ham's move to the Olympic Stadium based on fears that a Premier League club moving nearby would impact on the O's. Hearn dropped his legal challenge in 2014 after reaching an undisclosed agreement with the Premier League and sold Orient in June last year.

"We don't blame West Ham, any other club would have done the same," Porter continues. "But there is a feeling that, as a multi-million-pound business, they could have made a fairer deal."

The possible upshot of a successful state aid claim - although that is a way down the line given that an appeal over the Information Commissioner's ruling is expected - is that West Ham and the LLDC are forced to renegotiate the terms of their agreement in favour of the taxpayer.

For their part, the LLDC say that their deal was analysed and approved by the European Commission in 2013. A spokesman said: "The European Commission looked into a complaint in relation to our move to Queen Elizabeth Olympic Park in 2013 but ‘decided not to further pursue’ the matter.”

Back on the Carpenters Estate, the Focus E15 group continue their fight to stop private landlords commandeering properties that could go to those in need. On Saturday, they marched through the streets of Stratford, past the Olympic Park, in the vain hope of putting more pressure on Newham council. A year on and still they protest for one of the most basic human rights.

In the middle of one of the most deprived areas in London and the UK, the stadium sits empty, a monument to a battle between members of the public, and the interests of private profiteers. In all walks of life, from sport to social housing, the battle is long and arduous, but one worth fighting.

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