A damning report into the mismanagement of the London Stadium was today (Friday) published by Mayor of London Sadiq Khan, who will now take control of the venue to help it reach a more secure financial footing.
Khan has published a lengthy report detailing what the London Assembly described as a “catalogue of errors” involving the transformation of the venue from an athletics facility into the home of English Premier League football club West Ham United.
In the report, Khan’s predecessor, Boris Johnson, has been heavily criticised for the role he played in the transformation process. The report has found that the taxpayer has been left to foot an annual loss of around £20m due to the mistakes made by the previous regime.
Khan will control the stadium through the London Legacy Development Corporation (LLDC) in the hope of ensuring its long-term future as a world-class multi-purpose venue.
Forensic accountants Moore Stephens were earlier this year commissioned by Khan to produce a report on the decisions made by Johnson.
The review said that the decisions of Johnson – now the UK’s Foreign Secretary – led to the taxpayer taking responsibility for the cost and financial risk of transforming the stadium, rather than West Ham.
The report, which was damning in its criticism of Johnson, said that the decisions to transform the stadium and accept the terms of West Ham’s second bid of anchor tenants were made based on “incorrect financial estimates” and a “failure to fully understand or investigate the commercial risks to the taxpayer.”
A statement from the London Assembly added: “The £323m cost of transforming the stadium was significantly higher than the ‘unrealistic’ estimate of £190m, which the review concludes was never properly scrutinised. This failure was further compounded by the previous Mayor’s decision for the stadium to host Rugby World Cup games in 2015, which added extra delays, disruption and costs to the construction programme and put the July 2016 re-opening ahead of the start of the Premier League season at considerable risk.
“The review says the investment by the public purse will not only never be recovered but has forecast that unless further action is taken, the stadium will continue to lose up to around £20m every year. The former Mayor tied the taxpayer into binding contracts with West Ham United and UK Athletics, severely limiting the present Mayor’s options.”
The stadium hosted the World Athletics Championships and World Para Athletics Championships during the summer, and West Ham began its second Premier League season at the venue a few months ago.
The LLDC, backed by Khan, has been funding the stadium’s losses since July, enabling the aforementioned events to go ahead and for West Ham to play at the venue as planned.
The London Assembly said that without this funding, the E20 partnership, formed of LLDC and the London Borough of Newham, would have entered into administration. Furthermore, Khan would have been liable under Johnson’s agreements to pay significant damages to event organisers.
Newham Council has now taken the decision to withdraw from the E20 partnership, with LLDC and City Hall having agreed that the stadium will continue to provide community benefits to residents in east London.
Khan will take over full control of the stadium through LLDC. He will work with West Ham, UK Athletics and other stadium partners to “address the flaws in existing arrangements” to the benefit of the taxpayer and everyone connected to the stadium.
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.”
Share this