London Mayor Sadiq Khan is to take over control of the Olympic stadium after an independent review uncovered a “catalog of errors” that led to massively increased costs over conversion after the 2012 Games.
The report said the decision to transform the stadium and enter into a contract with Premier League side West Ham was “made on incorrect financial estimates and an insufficient appreciation of the critical commercial and financial risks”.
The review by accountants Moore Stephens, published on Friday, said taxpayers had been left to foot an annual loss of around £20 million ($27 million) as a result of the “bungled decision”.
Khan ordered the investigation after it had been revealed that the bill to taxpayers for converting the centrepiece of the London 2012 Olympic and Paralympic Games into a multi-purpose venue had climbed to £323 million.
“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,” said Khan.
London Legacy Development Corporation (LLDC), the body that operates the stadium for the Greater London Authority, admitted problems with retractable seating were the biggest cause of the rise in costs.
West Ham, who have a 99-year lease on the 60,000-seat stadium, made a one-off contribution of £15 million to the conversion costs and pay £2.5 million a year in rent. The total price tag for the stadium, which also has a new roof, is estimated to be £752 million.
Khan commissioned the review in March and the 169-page report warned the cost to the public was never going to be recovered.
“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,” he said.
West Ham issued a statement saying they remained committed to the terms of their agreement for its 99-year duration.
“We have delivered everything we committed to within the concession agreement, and act as the primary vehicle for London Stadium’s legacy, delivering its most-watched sporting spectacles, revenue-driving events and thousands of jobs for local people,” the statement said.
“The stadium itself craves renewed leadership and direction and we welcome the mayor’s decision to step in and deliver this. West Ham United is firmly behind him,” it added.