(31-01-2022 11:30 )lovebabes56 Wrote: Was he the one who allowed West Ham to move in there?
Press release by London Gov regarding the London Stadium.
The Mayor of London, Sadiq Khan, has published an independent review into the true scale of the mismanagement of the London Stadium by the former Mayor, revealing a catalogue of errors that led to transformation costs soaring and a bungled decision that has left the taxpayer to foot an annual loss of around £20 million.
The review by forensic accountants Moore Stephens reveals how decisions made by Boris Johnson led to the taxpayer shouldering the cost and financial risk – rather than West Ham United – for the transformation of the London Stadium following the 2012 Olympic and Paralympic Games. It shows the decisions to transform the stadium and to accept the terms of West Ham’s second bid as anchor tenants were made based on incorrect financial estimates and a failure to fully understand or investigate the commercial risks to the taxpayer.
The £323m cost of transforming the stadium was significantly higher than the ‘unrealistic’ estimate of £190m, which the review concludes was never properly scrutinised. 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 169- page Moore Stephens report focuses on five key decisions made once London won the bid for the 2012 Olympic Games:
1. The original design of the Olympic Stadium - In 2006, the Government Olympic Board and Olympic Delivery Authority agreed plans for a temporary stadium that would revert to a 25,000-capacity, 90 per cent uncovered, athletics arena post-Games. Cost and timescale pressures were given far more importance in decision-making than Olympic legacy, leading to an unsatisfactory post-Games plan.
2. Planning for post-Olympics use - A wide range of options were considered carefully by the Olympic Park Legacy Company in 2010 (reporting to the former Mayor and Government). The review concludes insufficient attention was paid to possible operating models and the associated legal/State Aid implications.
3. Bid process - The first bid process – won by a joint bid from West Ham and Newham Council to run and own the Stadium - was cancelled by Boris Johnson in October 2011 with subsequent legal action threatening London’s bid for the 2017 World Athletics Championships. A decision was then made to adopt a ‘Public Sector Model’ in which the taxpayer would own, transform and operate the stadium. This, according to Moore Stephens, was when matters “went awry” and reported that the approach was fundamentally flawed from the outset. The previous Mayor immediately publicly stated that he would “effectively rent it [the Stadium] to a football club, almost certainly West Ham.” This fundamental change meant that the public sector, not West Ham, would now be liable for the costs of converting the stadium, and was made without any analysis of the major financial implications of this approach. Further, the Mayor’s statement created a very weak negotiating position and the review concludes that ‘no deal’ should have been an option – something that was never considered. This threat could have been used to negotiate a better deal with West Ham, with commitments from them closer to those made in the first bid process.
4. Transformation of the stadium - Contracts were signed with West Ham United before the costs of conversion were properly understood. The annual cost to retract seats was budgeted at £50k, believed to be far lower than for any comparable system in existence. The £323 million cost of transforming the stadium was £133m higher than forecast when the deal with West Ham was approved in March 2013.
5. Operation of the stadium - The model adopted is dependent on effective retractable seating. However, there was a lack of robust financial appraisal before contracts were signed with West Ham. The separation of shirt and stadium sponsorship required by the deal is one example of how the deals negotiated act as a barrier to maximising income from the stadium.
Moore Stephens conclude that the "onerous" deal with West Ham, made while the former Mayor was Chair of LLDC, was “expensive” and does not represent financial value for money for the taxpayer.
The report says: “In our opinion, the decision to transform the Stadium and to contract with WHU was made on incorrect financial estimates and an insufficient appreciation of the critical commercial and financial risks. It is our opinion that the financial estimates were incorrect not because they were estimates, but because there were errors in their calculation, compilation and presentation.”
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The Dubious World of Boris Johnson
