West Ham’s Olympic stadium lease sticks London with cost of everything from heating to corner flags

I don’t follow English Premier League finances as closely as those on this side of the pond, so I honestly couldn’t tell you whether the £2.5 million a year in rent that West Ham will pay for use of the 2012 London Olympic stadium as its home pitch is a huge sweetheart deal or not. I’m leaning yes, though, if only from this extraordinary statement put out by the London Legacy Development Corporation, the team’s new landlord:

“We were concerned that the publication of this contract and the precedent it may set for future agreements could make it harder to do this. However, we have decided not to seek leave to appeal, and have today made the contract available on our website.”

That sure sounds like, “No, don’t let it out that we gave West Ham such a great deal, now everyone will want one!”

The big giveaway here, as with many modern stadium leases, is the degree to which taxpayers will be on the hook for stadium operations: The public body will have to pay for all policing, stadium heating, lights, goalposts and even corner flags, which could easily eat up the entire £2.5 million. Nice negotiating, London Legacy Development Corporation!

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13 comments on “West Ham’s Olympic stadium lease sticks London with cost of everything from heating to corner flags

  1. Hi Neil, thanks for the great website your running. With regards to the
    stadium, it a different situation than your usual ones where as the stadium
    wasn’t built for the team but for the Olympics and was in desperate need of a
    tenant for it’s viability. The only other serious bidder, Tottenham Hotspurs
    proposed to scrap the track and make it into a soccer only stadium which was rejected so now there building there own.

  2. Yes, I know all about how the stadium was built, and the West Ham-Tottenham fight over it. The best you can say for the LLDC is that it had a terrible stadium deal dropped in its lap — really the future use of the stadium should have been worked out *before* the damn thing was built — but even so, with two bidders, they could have played them off against each other to get a slightly better deal than this.

  3. I thought the Tottenham solution with them building a separate track and field stadium would have been great for everybody, even the taxpayer. Now, they
    have a multipurpose solution that based on recent trends is probably obsolete

  4. The jarring thing to me is that the lease is running for 99 years. Yup, NINETY-NINE. And on top of that, the £2.5m rent is apparently going to be fixed for the duration of the lease.

    So that figure, on top of getting everything from policing to the corner flags (lol) paid for, gives off the impression that West Ham are making out like bandits here.

    Also, if we’re putting £2.5m in the EPL context: That kind of money might buy you a decent backup midfielder or defender.

  5. Are there many examples of other EPL teams that rent their stadiums, for comparison? I thought virtually all of them owned their own buildings.

  6. There have been “ground-sharing” arrangements in the past (i.e. Fulham playing at QPR’s stadium while their own venue was going thru renos), but they’ve always been temporary measures. Suffice to say, that’s not the case here at all.

    Just looked at West Ham’s player transfers from this season; they got some dude named Nikica Jelavic in the summer for £3m. He’s apparently not on the team anymore.

  7. Playing in a stadium with two running tracks, a circus, and a tractor pull would be a huge upgrade over where West Ham plays now. “Congrats” to them on getting an American-style rip-off of a government entity.

    Doing a cut-price rent deal seems a high price to pay for the occasional track and field event.

    I don’t know if there is a city more overbuilt with soccer stadiums than London, so it seems amazing that more teams don’t share. But given that this is basically the only loan collateral/asset they have, most teams just don’t want to.

  8. Yes. Not only keeping the running track but for some reason the location would be a problem for most teams. The city was begging and only time will tell who the winner is. Watching a soccer game with s running track surrounding the field is a huge negative .

  9. After looking at that contract, I’d say it’s not too bad by American standards, I see worse…

    But most EPL clubs have to go into debt to fund their stadiums, so for West Ham it’s a good deal, they get a new big stadium and don’t drown in debt.

    The rent is low, but the city gets to keep most of food and beverage profit from West Ham games, and most of stadium naming rights revenue.

    Realistically, without a Premier club, naming rights to the stadium would be worth fuck all, now there’s rumored to be a bidder for 6 mil pounds a year. Perusing the formula in the contract, the city would get 4.17 mil out of those 6 mil.

    Food and beverage profit from West Ham games goes to the city until the city gets 0.5 mil, then it’s split with 70% going to the city, 30% to West Ham.

    West Ham only gets 25 nights, and the city can make money from additional concerts, athletic events and what not.

    The city also gets a piece of West Ham sale, if that happens. Lets say, West Ham gets sold for 200 mil, not counting debt (realistic number for today’s EPL, I think), the city would get 7-ish mil.

    West Ham also pays 15 mil up front to help with stadium conversion costs. Obviously that’s still small, compared to 270+ mil that the city spent on conversion.

    If you want to do an event at lets say an NFL stadium you could expect to spend some 100-200k USD for the night. They’ll provide security, catering, etc, and they’ll keep a piece or all of F&B revenue. West Ham is paying over 100k pounds a night, so that will be some 150k USD, plus West Ham is giving up most of F&B revenue, significantly contributing to the naming rights value and giving 15 mil up front. It seems pretty reasonable to me.

    In the US I see cities often cover the bulk of stadium building costs, then give property and other tax breaks on top of that, and give full control of stadium to the club as well, the club is able to control and keep most revenue streams. The city ends up in debt with practically no revenue going its way from the stadium, left hoping that it will get the money back somehow via tax and business growth.

  10. The situation at the Olympic Stadium is “complicated” – the organisers have been under massive pressure to ensure that hosting the Olympics didn’t end up with a “white elephant” of an Olympic Park that had billions spent on it and was barely used after the 2 weeks (plus subsequent Paralympics), following the messes in Sydney, Athens and Beijing – and with the big part being the main stadium, there was a national obsession with putting a football team in there, so that it would be used regularly with big crowds, and consequently pay its way.

    The precedent that was being followed was Manchester hosting the 2002 Commonwealth Games, and the stadium being converted to a football stadium for (my team) Manchester City. The terms of that deal, which, again, was under pressure to re-use this expensive piece of sporting infrastructure, was that City gave the council their old stadium, Maine Road (which was in the other side of the city, in a pretty poor neighbourhood, but with a decent amount of space along side it) and also paid the council a reasonably complicated deal which was roughly that they gave the council 50% of the gate receipts for everything that they took in over 32,500 (which, at the time, was the capacity of the old stadium). Since this deal, signed in the late 90s, when City were a pretty low end team, if with good attendances, they were bought out by Abu Dhabi’s royal family, and have effectively bought out the council from this deal, and while terms of ownership now are grey, to say the least, I would imagine that Abu Dhabi will have overpaid the council in order to curry favour on other “interests”.

    There was a big difference between the Olympic Stadium deal, and the City of Manchester Stadium (now the Etihad Stadium) – firstly, the CoMS was built very much in preparation to become the football stadium – for the Commonwealth Games, there was a temporary stand at one end, and had a capacity of 35,000 (or so) – but that was because a pre-built tier of seating was underneath, and after the games, the track was removed, and it became a 3 tier, fully enclosed bowl stadium just 12 months later.

    At the Olympic Stadium, there was no deal in place, and it was supposed to become a much smaller 25,000 seater stadium, primarily for athletics. As it turned out, there was so much pressure to use the infrastructure better, the Olympic Legacy Company caved in, and started the process of getting a football team in. They selected West Ham over Spurs (it’s not really Spurs territory, so that was ‘correct’) but given they were mostly giving themselves a single team to deal with, they had very little leverage, and have ended up giving West Ham a very very very cheap deal. I don’t quite know what’s happening to the old stadium, Upton Park – as far as I understand, West Ham are selling that ground, rather than giving it to the Olympic committee as an asset, like how City moved stadium – so I’m pretty sure West Ham are merely paying this cheap monthly rent to play games there.

    In hindsight too, putting a football team into the Olympic Park is probably not going to look like the greatest idea. The park itself is a triumph of regeneration of a “brownfield” site. There are children’s playgrounds everywhere (I take my kids there every weekend), the Aquatics Centre is absolutely rammed all the time, every day of the week, and Velodrome hosts regular sold out championships, and when I applied for a track taster course, I had to wait months before getting a slot. (it was great). During the Summer, the whole place is heaving with families, and over the next few years, a Museum quarter is going to be built. None of this meshes nicely with 50,000 West Ham fans every other Saturday – even if this will mostly be during the Winter months, when the park is quieter.

    In terms of other teams leasing their ground from a local council? No – Manchester City were the only one that jumped out to me – and that doesn’t really happen any more. Selling your ground was generally seen as a no-no, as it was often your biggest financial asset. However, it’s probably less important now that TV money is so eyewatering. A few lower league teams have sold their grounds, but that hasn’t always worked out well – Stockport County being a particularly ugly example.

  11. Most UK grounds are either owned by the team or by another – that is non-public – party. City or province owned stadia are pretty much a continental thing

  12. Very good summary, Phil.

    By PL standards this is a very bad deal for the “host” city. We will see what happens with the Upton Park redevelopment, but as far as I know WHU has not surrendered any part of the profit from that development to “London” or any borough council. That development (as planned, at least) no longer includes any significant amount of social housing as part of it.

    We will see how moving to their new location might affect WHU’s traditional support… Like Arsenal, they are moving but not that far… so I don’t expect it to be a significant issue. As I understand it, WHU is offering two year season seats for less than the cost of a single season’s at Upton Park with the move (for some seats, at least), so it’s not like they are treating this like an immediate cash cow I guess.

    Compare this with Arsenal’s decision to pay for and build their own facility, then try to recoup some through redevelopment of their old ground. That club has been paying down debt for more than a decade in order to “get to” a 60k seater. WHU appears likely to make several million off their housing development and pay very little toward the stadium they are becoming the operator of.

    Wow. By far the most “club favourable” deal in the PL at present I would say. Let’s see if it triggers a new campaign for “equality” among other clubs who’d like to see their revenues remain club property while expenses are off loaded to taxpayers (the North American Model…)

  13. Jelavic was pretty decent at Everton, but he basically lost playing time when the club bought Lukaku. He’s since cashed in by going to China, so no, he’s no longer at WHU.

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