The great gift the London Legacy Development Corporation, chaired by Boris Johnson, has given West Ham football club is the sort of gift that makes the money that David Cameron’s mother gave him to help avoid inheritance tax look like chicken feed. It also exposes the fact that when it comes to the national game not only are our political masters grossly unfair, favouring some clubs while penalising the vast majority, but there is also a huge question of whether football has lost its moral compass.
The details of the deal finally revealed, due to the exemplary tenacity of football fans, should come as no surprise. Many of us suspected it, Barry Hearn has for more than two years been shouting from the rooftops that Hammers got amazing sweeteners and, in recent months, there have been media disclosures. Even then the details now confirmed take the breath away.
A rental of £2.5 million a year which works out to £100,000 a game for use of the 60,000-seater stadium. Okay, there will be more charges if they go beyond 25 games and the rent halves if they get relegated, £1.25 million if in the Championship. There are also performance related payments, £100,000 per season if West Ham finishes in the top half of the Premier League, additions if they win domestic cups or qualify for Europe and up to £1 million if they attain nirvana and win the Champions League. Even then this is a steal which, if offered in the rental housing market in London, would lead to a stampede.
The club does not pay for stewarding, goalposts, corner flags, cleaners, turnstile operators, undersoil heating and floodlighting, dugouts for managers, substitutes and the fourth official, changing rooms and toilets, security, cleaning and pest control which, according to experts consulted by the BBC, could amount to between £1.4 million and £2.5 million. The club will also not have to pay for policing on match days and will be the sole beneficiary of ticket sales.
But it is the elephant in the room, the great smoking gun in the deal: what happens should David Sullivan and his partner, David Gold, sell the club that, in many ways, is most fascinating. Should the club be sold in the next ten years for more than £125 million, remember when Sullivan and Gold bought it was valued at £105 million, London Legacy Development Corporation would get £12 million if the sale price was £250 million. In other words Messrs Gold and Sullivan, two private individuals, will sell an asset whose value has been boosted enormously by playing in a tax payer funded venue and pocket £133 million. The payment to LLDC goes up to £87 million if the sale price is £500 million but even then the profit for the two is colossal, £308 million. I do not blame Gold and Sullivan for the deal. I do not know about you but I would have taken this deal without a second thought. Forget the Panama Papers this is the real scandal and it has happened in the People’s Game.
And, of course, it bears out what Barry Hearn told me more nearly eight months ago. Then he revealed his discussion with Boris Johnson. Johnson had said that a percentage of any profits will be paid to the taxpayer but he had not disclosed what the percentage was. Hearn revealed to me that when Hearn, who then owned Leyton Orient, met Johnson, he told the Mayor: “I’ll tell you something, if I am allowed to share and I ever sell Leyton Orient, every penny of profit will go back to the taxpayer.” He then went on to ask: “Have Gold and Sullivan made the same commitment? The Olympic Stadium has added £100 million to the value of West Ham. It could be a most attractive purchase for a foreign buyer: a 54,000-seater stadium in an iconic building on the Olympic Park. The British taxpayer could end up funding a trophy asset for a Qatari.”
And that is exactly what has happened. Indeed I would not be surprised if a few years down the line we do not have in east London what we have had in the east of Manchester where, more than a decade and a half ago, another stadium built for a multi-game festival was also rented out to a club then in a grave situation both on and off the field. The rental had such a dramatic impact that the club is now foreign owned, has gone on to twice win the Premiership and could even win the Champions League. That club is Manchester City and the stadium is the one built for the 2002 Commonwealth Games.
The stadium had been constructed with public money: £78 million from Sport England and £49 million from Manchester Council. But the authorities, anxious not to have a white elephant on their hands after the games, decided the best option was to rent the 48,000 seat stadium to Manchester City. In return for that, Manchester City gave its historic ground, Maine Road, to the council. They also paid £15 million, the same amount West Ham are paying, to rip off the running track and convert the Commonwealth Games arena for football. But the best part was the outrageously favourable deal on the rent: a small yearly rent which only became substantial if more than 36,000 turned up for a match. This meant that the club paid between £1.4 million and £2.5 million a year in rent for seven years between 2003 and 2010, not much different to West Ham’s rental now. I know rental has gone up and City have spent a lot of money round the ground but the fact is City are playing in in this state-of-the-art stadium, which could have cost upwards of £400 million (Arsenal’s Emirates stadium cost £440 million). And playing in that stadium also helped sell the club to its wealthy owner.
As Francis Lee, who was then chairman, put it as City were about to win the 2012 title, the stadium deal revolutionised the club. “The new stadium made it attractive for people to buy into it.” And while Sheikh Mansour has never told the world why he bought City, indeed he has never talked to the media, as I have documented in my book, The Game Changer Thaksin Shinawatra, the disgraced Thai prime minister who sold it to the Sheikh, made it clear that not having to build a stadium helped him do the deal.
I can see the same thing happening to West Ham and good luck to Gold and Sullivan and, of course, Karen Brady who did the deal.
But that British politicians make such deals is the real disgrace. Politicians pontificate on how they are always looking for the common good. But where is the common good in this West Ham deal? Other clubs have to raise millions to build a new stadium, West Ham are virtually gifted one yet no one is consulted on the deal. In America when such deals are done there is a City wide referendum. Should we not have had one before the West Ham deal was done?
Also look at the political humbug. British politicians have gone on about the FIFA scandal. Yes, the scandal is dreadful and we do need a revolution on how FIFA and world football is run. But the FIFA scandal involves less money, around $250 million, compared to what has been spent on renovating the stadium so that West Ham can hire it. Is that not a scandal? And if it is not why? And if it is, as I think it is, what are we going to do about it? Will we hold Boris Johnson accountable? Don’t hold your breath.
What we need now is the 14 supporters trusts, who backed the amazing determination of the Charlton Athletic fan, to force the LLDC to reveal the details to form a sport-wide pressure group to make politicians realise that we need a fair, principled, policy on how the state handles football. We cannot continue on this basis where certain clubs, at certain moments, are gifted public money. And with no restriction to make sure they cannot profit from such aid. When it comes to keeping the steel plant at Port Talbot going with public money there is much debate, as there should be. Why are we not having that same debate when it comes to subsiding football clubs, one that will next year get at least £100 million in television money? More as this aid is given to one club and not to the entire industry. If this is British fairness then politicians have come up with a definition that none of us would accept.
Mihir Bose was the first sports editor of the BBC. He has worked for various media outlets and launched the Inside Sport column for the Daily Telegraph. Now a freelance journalist he has written 29 books. His most recent books are The Spirit of the Game: How Sport Made the Modern World and Game Changer: How the English Premier League Came to Dominate the World. Follow Mihir on Twitter @mihirb