West Ham’s stadium deal: Brady’s hollow veto threat, naming rights information, local ticketing and more

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After a long campaign, the deal between West Ham and the London Legacy Development Corporation (LLDC) for the Olympic Stadium has finally been published.

The agreement, and the expensive attempt to keep it secret, has sparked considerable debate over how much value for money has been gained for the British taxpayer.

The BBC report covers the agreement, and controversy, in great detail. What I want to do is talk about some of the provisions that specifically relate to Spurs and our own stadium project.

West Ham do not have a veto

In 2014, West Ham vice-chairman Karren Brady poured cold water on the possibility of a ground share with Tottenham while we rebuild White Hart Lane.

“No-one has asked us for our permission (to ground-share) and if they did we would probably say no, depending on who it is – if you get my drift,” she said.

“We are the anchor tenant for the winter matches and nothing else can happen in that time without our permission. Our football matches take priority over everything else.”

When an LLDC official earlier this year said that a ground share could happen, West Ham doubled down on the position:

“As anchor tenant we have primacy of use during the football season and our contract gives us overriding priority to use the stadium, ensuring our fixtures and events are ring-fenced and will always take priority over all other events. It would therefore be impossible to accommodate the fixtures of another Premier League club without West Ham agreeing, a position which was fully supported at today’s hearing.”

The publication of the full agreement shows that Brady and West Ham are, shall we say, mistaken.

At no point in the agreement does it specify that West Ham have a veto over another football club leasing the stadium, and the grounds on which they may object to such an agreement are limited.

The key section is as follows:

(The LLDC) will not grant a concession, lease or licence to any Other Concessionaires to use the Stadium as its home ground for the playing of Football on the Pitch during the Football Season if:

(i) the Grantor, acting reasonably, believes the quality and condition of the Pitch may
be materially impacted; and

(ii) use by the Other Concessionaires would conflict with the Overriding Priority
Principle or any Governing Body Requirement,

The “Overriding Priority Principle” is what it suggests: West Ham get priority in using the stadium (outside of a one-off window for the World Athletics Championships in 2017). However, there is a big difference between priority use, and exclusive use.

The clause concerning the state of the pitch may prevent the LLDC from leasing the stadium to a rugby team, true. But, given how many stadiums around the world are happily shared, not another football team.

If Spurs were to take it, West Ham would have “first dibs” in terms of when matches were played — that is unquestionable. But given that fixtures are decided by the Premier League, the FA and UEFA, it would be up to the governing bodies to decide when the games were played.

West Ham’s concerns about accommodating another set of fixtures are immaterial if the governing bodies are able to agree on a scheduling arrangement. Given that the FA are reportedly happy for Spurs and Chelsea to share Wembley, there appear to be no concerns on that front.

There would be questions over logistics — ticket booths, hospitality and the like. But it is a multi-purpose stadium, and West Ham are just tenants.

In the 203-page document, I can see no further provisions preventing the LLDC from offering the stadium to another team. In fact, the agreement requires West Ham to “take into account the requirements of any other concessionaires to the extent reasonably practicable”.

I would welcome any further insight in case I have missed something. (Which I did — see the update below)

Spurs would now appear to have three clear choices for our temporary home — Wembley, Stadium MK and the Olympic Stadium. None are perfect — we are investing hundreds of millions in somewhere that is.

A poor deal for local residents?

In the S106 agreement with Haringey Council, it was agreed that Spurs would provide 10,000 tickets for residents of Haringey and Enfield (5,000 season tickets and 5,000 matchday tickets) in the new stadium, per league match.

With 19 home matches, that means 190,000 tickets for local residents per year.

In West Ham’s agreement with the LLDC, the club is required to offer up to 100,000 tickets for residents of Newham, and none for other boroughs. There is no specific language on season tickets or pricing limitations.

Residents of East London have been given a poor deal compared to those in North London.

West Ham revenue streams cut

The one area where the LLDC appear to have struck a fairly good deal is over naming rights. Under the deal, West Ham must hand over the first £4 million of a deal, and then split the rest 50-50 each year.

To me, this seems fair. Of course, while taxpayer money built the stadium (twice), a Premier League club will be able to attract far more in sponsorship than an athletics venue ever would.

For West Ham, the amount lost in naming rights income will surely exceed the annual rent of £2.5 million.

For catering, the LLDC keeps 70 percent, as well as the first £500,000. Again, this may mean some lost income for West Ham compared to teams that own their stadiums (who may outsource catering contracts anyway).

Overall, this is still an incredible deal for West Ham. Compared to what Spurs will have to be paying in annual finance costs, they are way ahead. But there are some downsides — beyond the fact that the stadium looks a poor venue for football — to not being the outright owner.

One strange little detail

West Ham agreed to pay £15 million towards the reconstruction costs of the stadium, a sum widely agreed to be derisory.

However, there is a curious reference to this payment in the agreement. Instead of the club (either the umbrella company WH Holdings or West Ham United Limited), David Gold and David Sullivan agreed to provide personal guarantees for this money.

Mr David Gold and Mr David Sullivan providing personal guarantees for the
Concessionaire’s obligation to pay the One-Off Usage Fee or the obligation to pay the One Off Usage Fee in accordance with Clause 20.4 (Usage Fee for Use of the Stadium and Other Payments) has been irrevocably discharged;

I’d welcome any explanation for this — it certainly seems quite unusual, no?

A final thought

Having read this document in full, as well as much of the reaction to it, I think it is important to make one thing clear: West Ham haven’t done anything wrong.

If the deal represents poor value for the taxpayer, that is the fault of the LLDC. Karren Brady’s job was to negotiate the best possible deal for the company she runs. It is fair to say, she has done that. I can hardly blame her for trying to throw Spurs off the scent in terms of ground sharing, given the history between the clubs.

Could the LLDC have struck a better deal? Possibly. That £15 million contribution from West Ham towards refit costs, in particular, seems deeply unambitious in light of what Arsenal, Spurs and Chelsea have spent, or are planning to spend, on their stadium projects.

But this stadium was a white elephant waiting to happen — a vast arena, built for a sport most people only care about for a week every four years, in a city already full of them. The 2012 Olympics was great fun, but also a mind-blowing waste of money. Gradually, cities such as Boston are wising up to the IOC scam and telling them to get stuffed. Sadly, the egos of our politicians were sufficiently stroked, and we will be paying the bill for a long time to come.

We shouldn’t forget Spurs also wanted the stadium — or rather, we wanted the site. We would have knocked down the existing stadium to build a dedicated football facility (in conjunction with our new NFL friends, no doubt). I’m sure Daniel Levy would have been just as aggressive in his negotiations with the LLDC as Brady was. Under the Spurs plan, the taxpayer would surely be no better off.

A few Spurs fans, myself included, had fun tweeting to the European Commission about potential illegal state aid. This is certainly something that warrants further investigation — undeniably, West Ham have received a huge leg up from the public purse here. This is a list of competition cases in the sports sector — there are a fair few.

I’d be surprised if the challenge came from rival clubs though. I daresay the likes of Spurs and Chelsea, who are yet to finalise funding for their own stadium projects, are cautious about this in case they need to seek any form of public funding if money runs short. Much better just to build a better stadium, and beat West Ham on the pitch.

If I was a West Ham fan, I would be excited about the future of my club and no doubt pleased with the work done by Brady. I’m sure, I’d also be enjoying the angst it is sparking among rival fans.

But I’d also be apprehensive about the quality of the stadium and the matchday experience. Upton Park may be small, but it is a fine and atmospheric football ground, and bigger isn’t always better.

Thanks for reading. Please follow me on Twitter for more Spurs chat. If you’ve spotted anything of interest, or think I have misinterpreted something, please do get in touch.

 

Update (16/04/2016): As was pointed out on Reddit, there is one other clause of importance that I missed first time around.

Clause 20.5 states that, if another “concessionaire” uses the stadium for football, West Ham get 50 percent of their £2.5mln annual rent back, plus 50 percent of the £15mln one-off fee if it is within the first 10 years of the agreement (it drops to 25 percent in the following ten years).

So, if Spurs were to want the Olympic Stadium in 2017/18, it isn’t as simple as just matching West Ham’s rent. To make LLDC “whole”, Spurs would have to cover the £7.5 mln lost in one-off payment, and £1.25mln lost in rent. So, in total, £8.75 mln. After that, it becomes about paying enough that it makes it worth LLDC’s while. Note, it would hard for LLDC to turn down anything that offers the taxpayer more money back after such a huge cost.

For Wembley, the rent is likely to be in the region of £20mln per year, and Spurs would have to have it at a limited capacity, for most matches, of 50,000. Let’s say Spurs offered the same as West Ham in basic payment for the Olympic Stadium — £100,000 per day for 25 event days, and covered the LLDC’s lost one-off fee in full: that would be £10 million for a year. With a capacity of 60,000, and half the rent, this may be a better deal financially for Spurs.

Of course, it may be that there are more premium seats, corporate facilities and other revenue-generating goodies at Wembley than the Olympic Stadium. That, coupled with the ball-ache of having to work with West Ham and deal with all the logistical hurdles Brady has thrown up in the agreement, no doubt means Wembley remains the preferred and more likely option. But my broader point stands: West Ham don’t have a legal veto, and Spurs do have another option — at least something the club can use in its negotiations.

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2 thoughts on “West Ham’s stadium deal: Brady’s hollow veto threat, naming rights information, local ticketing and more

  1. Pingback: Deep Dive: Chelsea’s Stamford Bridge redevelopment — Trying to keep the train on the tracks | The Spurs Report

  2. Pingback: Examining the rising costs of Tottenham’s £800m stadium | The Spurs Report

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