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http://www.theguardian.com/football/2015/apr/20/west-ham-olympic-stadium-state-aid-question
At Westfield shopping centre in Stratford on the fringes of London’s Queen Elizabeth Olympic Park a sleek retail unit nestles alongside upmarket shops. Look a little closer and it becomes clear this is not a mobile phone store or a luxury watch retailer but dedicated to selling season tickets for West Ham’s first season in the Olympic Stadium.
Hi-tech “virtual venue technology” will allow you to see what the view will be like from your new Club London hospitality suite. But be quick because, according to West Ham, spots in the “finest catering and facilities in bespoke lounges inspired by the legendary history of West Ham, London’s East End and the 2012 Olympics” are all but sold out, with only a few hundred left more than year before the club’s first match in its new home in August 2016.
It is, in short, all a long way from Green Street. West Ham’s vice-chair, Karren Brady, rumoured to have received a sizeable bonus for winning her battle to secure the stadium for the club, and co-owners David Gold and David Sullivan hope it will take them to the next level.
The reason they fought so hard to move from Upton Park after 112 years was because they believe it will turbocharge their prospects. That sleek sales office is a manifestation of their hopes for a huge boost in commercial and hospitality income thanks to its proximity to the City and Canary Wharf.
A few hundred yards away, contractors are frantically continuing to install the retractable seats, hospitality facilities and cantilevered roof – the largest of its kind in the world and requiring construction techniques usually employed on North Sea oil rigs – that are required to make the stadium suitable for football as well as athletics.
opening ceremony of the London 2012 Games
West Ham believe the iconic status of the stadium that was created at London 2012 will make the club globally attractive. Photograph: Francois Xavier Marit/AFP/Getty Images
The folly of the process that led here is underlined in FOI documents seen by the Guardian that show that without the substantial conversion work, costing almost £200m, the stadium would not have met local authority safety regulations that require all seats to be covered if it is to host winter sports.
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Stratford is now one of the best connected parts of the capital and the move will make the ground far more accessible to fans to the south and east of the capital. According to Brady’s evangelical case, it will also make West Ham more internationally attractive thanks to its globally iconic stature while also embedding them even more firmly in the local area by allowing them to offer cheaper tickets to locals.
But not everyone is happy. The extended, convoluted saga surrounding the deal with West Ham, who ended up as the only option if London Mayor Boris Johnson and LLDC (London Legacy Development Corporation) wanted to have a major football club in the stadium and retain the athletics track, blunted some of the anger from critics.
Yet as the moving date looms and the first events in the stadium since the conversion get closer – the LLDC remains confident that the London Anniversary Games in July and the Rugby World Cup matches scheduled for September will go ahead as planned – new questions are being raised over the rights and wrongs of the hundreds of millions of pounds of public money that have been poured into West Ham’s new home.
Pull back the lens a little and most histories of the comedy of errors surrounding the stadium alight on a meeting in 2007 when the Olympic board, keen to start building to avoid another Wembley-style fiasco, took the fateful decision to effectively mothball discussions over its future by backing a scheme to strip it back to an uninspiring 25,000-capacity bowl after the Games.
West Ham have been given an advantage not just against Charlton but against clubs across London
Steve Clark, Charlton Athletic Supporters Trust
But according to Steve Lawrence, the architect who was involved in some of the earliest masterplans for the London Games, the story goes back much further, all the way to 2003, when he was involved in the initial blueprints for a potential bid. For Lawrence the deal boils down to a simple question of fairness. He points to the €9m annual rent paid by Ajax to the City of Amsterdam for its 53,000-capacity arena as a useful comparison. If West Ham qualify for Europe, he expects rival clubs overseas to take a keen interest in West Ham’s deal.
“From my point of view, I just want competition between football clubs to be fair,” said Lawrence, who submitted the original complaint that contributed to the original process collapsing. “When Ajax play West Ham in the quarter-finals of the Champions League I want to know that their team hasn’t been bought with British taxpayers’ money.”
When the coalition government and Johnson came into power they resolved to look again at the case for getting a top-flight football club interested, believing it would give the Olympic Park more stardust, footfall, profitability and focus. Johnson persuaded the Spurs chairman, Daniel Levy, to bid, who duly did so on the basis the existing semi-permanent structure should be knocked down and a purpose-built football ground constructed in its place.
But a backlash against the idea of losing the athletics track, led by an emotionally charged Lord Coe, saw West Ham win the day only for the process to be scrapped amid legal paralysis. The LLDC had to rerun the process, this time giving West Ham a licence to use the stadium for a pre-agreed number of days rather than a tenancy.
This enables it to argue West Ham effectively only occupy the stadium for 25 days a year and it can be utilised for a range of other uses outside those periods. But for critics this is a specious argument given that it is designed to look and feel like West Ham’s home stadium for the duration of the football season.
And the narrow legal question of whether European state aid rules have been broken refuses to go away, never mind nagging wider concerns about the amount of public money that has effectively subsidised a new stadium for a Premier League football club.
The state aid question is a hugely complex and legally opaque one. But the central charge from critics – that the LLDC erred by not applying for prior approval as most other major publicly funded stadium projects are increasingly advised to do – is hard to reconcile with the organisation’s confidence that it is legally watertight.
One expert in European state aid issues said case law concerning sporting projects had progressed significantly, with the EC taking an increasing interest in the sector after ignoring it for many years. Oskar van Maaren of the Asser Institute at The Hague said it was a “hot topic” for the EC at the moment with formal investigations already launched into football clubs in Spain and Holland.
He said the LLDC would have been well advised to seek prior approval, which would have created “transparency and legal certainty”. He said the EC would have undertaken a “balancing test” and said that if the LLDC had been up-front in applying for approval it would have increased its chances of being given a clean bill of health.
“Notification would prevent complaints being launched in the future. Given that complaints have been launched in the past regarding similar measures that involved the Olympic Stadium chances are that this will happen again,” said Van Maaren.
Having spent so long battling to secure the stadium and cock-a-hoop at the initial response from potential hospitality customers queuing up to watch the Hammers in the new bowl West Ham are resolute in their defence. “West Ham United is confident that its agreement with the LLDC complies with all relevant UK and European legislation and categorically does not constitute state aid,” said a spokesman. “Indeed, 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.”
The LLDC is similarly forthright in defending its decision not to seek prior approval. “Our position has always been absolutely clear the arrangements for the Stadium at Queen Elizabeth Olympic Park do not constitute state aid. The stadium will remain in public ownership after it has been transformed into a multi-use arena and has two concessionaires UK Athletics and West Ham United,” said a spokesman.
Sir Robin Wales, the combative Mayor of Newham, also defends its own position in the process and the £40m loan it has contributed towards the conversion costs in return for which it receives certain benefits. The LLDC and Newham are joint venture partners in E20 Stadium LLP, the special purpose vehicle that owns the stadium.
Like others, he also points to other cases where public funds have helped football clubs - such as the beneficial tax regime that has helped clubs in Spain and the deal that saw Manchester City move into the City of Manchester stadium after the 2002 Commonwealth Games – as evidence that the Olympic Stadium is being unfairly singled out.
But those comparisons ignore the fact that the EC is indeed taking an interest in Spanish clubs and that the Manchester deal – generally considered to have been far better planned in advance – predated the Commission’s current interest in deals involving sports stadiums and is now beyond the 10-year window for complaints.
Challenged on the matter by the Guardian at an event to promote the launch of a new London-wide sports participation push Johnson was typically matter-of-fact.
“They can bog off. It’s totally ridiculous. I can never exclude that some lawyer will come up with some ridiculous interpretation of article 105 of the EU treaty or whatever but I’m as confident as I can be that it isn’t going to be a problem.”
With Johnson returning to Westminster next month and exiting City Hall next year, it will no longer be his problem. But it is one that will not go away for his successor. Not everyone believes that the LLDC would fall foul of the rules – the test would be whether they acted as a commercial operator would have done but there are caveats that could help its case – but all find it hard to explain why it did not go down the “prior approval” route, thus saving itself from a potential decade of drip, drip complaints.
Those that oversaw the decision, and those that profited from it, point to a 2013 complaint from Charlton Athletic Supporters Trust that was eventually taken no further by the Commission.
However, in correspondence the EC has actually said it does “not at this stage envisage to pursue the matter further” - a subtle difference of emphasis - and appears to be continuing to keep the matter under review and accumulating relevant material.
Steve Clarke, of the Charlton Athletic Supporters Trust, said that they did not object to West Ham moving into the stadium but had a problem with the terms, which they argued would give West Ham an unfair advantage. “West Ham have been given an advantage not just against Charlton but against clubs across London and throughout the League. Their buying power in the transfer market will be instantly enhanced,” he said, raising concerns that it would also enable the club to subsidise ticket prices and lure potential Charlton fans from across the river.
“There is no reason at all why so much taxpayers money should be spent creating such a huge advantage.”
In response to an inquiry from the Charlton Trust, London Assembly Member Len Duvall said: “We are in agreement that there are concerns around the transparency of the Olympic Stadium deal and have requested its publication, with little success.”
For its part, West Ham argues that it was selected as “anchor concessionaire” following a “fair, transparent and robust process” and won because it offered a sustainable future for the stadium and “provided the best return to the taxpayer”.
“The financial benefit of having West Ham United in the Stadium is that it underwrites the multi-use purpose vision for the venue and secures a year-round calendar of sports and entertainment events. The move will create more than 720 new jobs and bring in more than 1m additional visitors to Queen Elizabeth Olympic Park each year, making it an ongoing viable stadium,” said a spokesman. “Without West Ham United, the stadium would continue to cost the taxpayer millions of pounds a year. With us, the public purse will see a return on the hundreds of millions of pounds that were committed to build the stadium, long before West Ham’s association had begun.”
Yet almost everything surrounding the deal that delivered the stadium to West Ham remains shrouded in secrecy. For a project that has commanded such a flow of public funds, there is a serious lack of transparency.
“The secrecy worries me if those decisions are being made without giving us the ability to hold them to account,” says Conservative London Assembly member Andrew Boff. “But what worries me more is the stupidity of some of the decisions that have been made.”
The secrecy worries me if those decisions are being made without giving us the ability to hold them to account
Andrew Boff, Conservative London Assembly member
Campaigners have spent years engaged in FOI ping pong, succeeding only in obtaining a very heavily redacted version of the contract and limited answers about the process from a twitchy LLDC. Heavily redacted versions of the LLDC’s response to the European Commission and the original contract reveal that it will take a cut of the matchday catering revenues up to a certain amount, beyond which the income is split with West Ham. But all hospitality income will remain with the club.
It also argues that the LLDC will receive a “signifcant uplift” in naming rights income as a result of West Ham’s presence and that there is a “significant community benefits arising from West Ham’s use of the stadium” including 100,000 free tickets per annum to be distributed to locals.
It also highlights the so-called Threshold Amount deal with West Ham ensuring that the LLDC will receive a slice of the proceeds if the club is sold within a certain timeframe (although it will only receive “a share of that increase in value above a certain threshold”).
Yet all the financial information and contractual details in the 25-page letter and the original contract are redacted for reasons of commercial confidentiality, making it impossible to ascertain whether the deal is fair one.
“The LLDC’s refusal to release the commercial details of the contract even under Freedom of Information law adds to the suspicion that those involved do not want the deal to come under public scrutiny until it is impossible to reverse,” said Clarke. “We hope the Information Commissioner will prevail and that taxpayers can take a good long look at what has been agreed in their name.”
In a response to a letter from a group of Leyton Orient fans, Labour London Assembly Member Len Duvall said: “We are in agreement that there are concerns around the transparency of the Olympic Stadium deal and have requested its publication, with little success.”
The ongoing questions surrounding the Olympic Stadium should not obscure the progress that has been made elsewhere on the Park, where children tumble on adventure playgrounds and the first residents are moving into the flats that once housed the world’s best athletes. The velodrome and pool are attracting local residents and elite athletes alike and, while much of the site remains a work in progress, it is possible to start to get a feel for how it will eventually look.
Wider questions about the mix of housing, its density and whether Johnson’s Olympicopolis vision of a hotch potch of cultural, sporting and educational establishments will succeed in the long run will remain. He has lured offshoots of the V&A, Sadler’s Wells dance studio and the Smithsonian Institute to the site to sit alongside his still divisive Orbit sculpture and work is now underway on the iCity “digital quarter” that will sit alongside BT Sport’s studios.
Like it or not the stadium will remain the most high-profile manifestation of the arguments surrounding London’s physical Olympic legacy. If the decision not to seek prior approval of its state aid arrangements comes back to bite the LLDC, it will be one more embarrassment to add to a long list. As West Ham’s owners ponder whether to stick with Sam Allardyce or twist on a new manager ahead of a crucial last season at Upton Park ahead of the move, they will want to be sure that they will not be left liable for a compensation bill that could run into millions.
In the meantime it would not hurt Johnson and the LLDC to consider being a bit more transparent with their critics. It is the opacity and evasiveness of their responses that can’t help but increase fear and loathing among critics of West Ham’s great leap forward.
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Evening Standard
West Ham insist there will be no state aid bill for Olympic Stadium move
Richard Parry
West Ham have reassured fans that the club do not face a compensation bill for their Olympic Stadium move.
A report in the Guardian today claimed the deal to relocate to the iconic venue could contravene European state aid laws and may end up costing the club millions.
But a Hammers spokesman said: "West Ham United is confident that its agreement with the LLDC [London Legacy Development Corpotation] complies with all relevant UK and European legislation and categorically does not constitute state aid.
The agreement will see West Ham make a substantial contribution towards the conversion works of a stadium that it may only rent for up to 25 match days a year, pay a multi-million pound usage fee, as well as a share of food and catering. Without West Ham, it would continue to cost the taxpayer millions."
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