Just want to understand this. West Ham are not tenants. They are concessionaries (sp?) like someone with a T-shirt stall at a concert venue? There is a difference between the two? If the stadium goes bust West Ham are in a different position depending on whether they are tenants or hold a concession? There is no formal deal that says what happens if the stadium company goes bust, either to West Ham, Athletics, American Football or whatever? It is not unreasonable to assume that Athletics, Concerts, American Football, Association Football etc will simply have to find somewhere else to operate by themselves, like West Ham being a tenant at Brisbane Road if Leyton Orient let them? Have I got a lot of this wrong?
I know lots of Wet Spam supporters, having worked in East London, and they seem to be under the impression that they will eventually be handed the stadium and merely take over the running costs. Is this a pipe dream or could it really happen ?
I would have thought that if E20 goes bust then West Ham, not being tenants, cannot just take over but would have to re-bid/re-negotiate along with any other interested party.
Of course, there may be no other bidders which could mean they get the stadium for a nominal sum ... which may have been the intention all along.
However, I would hope that the public outcry would be so big, that they have to pay heavily.
Either way, I think they could still emerge as big winners.
If the financials don't destroy West Ham I would've thought that for West Ham fans if it all might lead to them playing in a different stadium they would be delighted. I can't foresee a West Ham fan campaign for their beloved Olympic Stadium (which isn't theirs anyway).
“There appears to be the assumption by a number of our supporters that the GLA are committed to underwriting all costs associated with the LS.
I do not believe that to be the case, and frankly, regardless of who our contract is with and who we could or could not sue for damages, what really matters is whether there is enough money to pay stewards on 20/10.
There is a 3 week window between the home fixture against Manchester United on 29/09 and the Spurs game on 20/10.
That's plenty of time for E20 to be denied further funding, the administrators moving in and any decision having to be taken by the GLA as to whether or not to fund further against the backdrop of threat of law suits etc.
The Mayor has a window of opportunity to bring things to a head and seek the renegotiation of every deal with the deadline being the spurs game.
We support a club that has been telling the world it has just spent £100m on players, yet can only find £2.5m a year to pay the landlord.
I'm certain all of this is heading for the courts, not just the colour of the carpet or the number of seats that can be sold.
I'd also stress that UK Athletics are far from innocent in all of this - they plead poverty but managed to find $7.5m to pay prize money at one athletics event in 2017.
The public might think that nice Usain Bolt is running for love, but the truth is he runs for cash, and plenty of it.
Meanwhile, waiting in the wings is Danny Levy, primed and ready to file a state aid complaint........”
Also:
“I'm more than a little bit ignorant when it comes to the ins-and-outs of our deal at OS. Is it possible that this is actually what our owners wanted (and anticipated)? They want the stadium (company) to fail, so they get offered the chance to buy it at a discount price? We buy it, make small changes, increase the capacity, put down claret carpet etc to appease some fans and then rent the stadium out to pop concerts in the summer to bring in extra revenue... I thought this was the intention all along?”
I could see that happening but only with a significant additional payment to attempt to recover some of the millions already wasted. Otherwise it would be better for the stadium owners just to demolish the bloody thing and sell the site for low cost housing, as I have favoured from the outset. West Ham can fuck off. And Seb Coe as well. And Boris.
It's no accident that West Ham's rights on insolvency of the owners are not covered in the agreement.
Does anyone think West Ham's lawyers and Lady Brady forgot to protect their interests?
If there was any risk of West Ham losing the right to continue to use the Stadium, or any risk of the rental terms being worsened if the stadium went bust, let alone being required to cough up money, there would have been ten pages of warranties and guarantees underwritten by Newham Council/LLDC.
It was probably tacitly recognised and agreed that the stadium would have no value to any other party and it would just fall into the lap of West Ham in those circumstances, but to write that in black and white would be political dynamite.
There is no other explanation for such a glaring hole in a commercial agreement, where the rights on termination terms are normally the most precisely defined terms given they define the greatest financial exposures for both parties.
The only impact on west Ham is "...the terms of the agreement cease to apply," that means the rent doesn't have to be paid - logical really if there is no one to collect it - and no one can take over the agreement to collect any rent - genius!!
E20 do not own the stadium. Not sure who does. I am rubbing my hands with glee at the prospect of Gold, Sullivan and Brady having their smug smiles wiped off their faces.
E20 do not own the stadium. Not sure who does. I am rubbing my hands with glee at the prospect of Gold, Sullivan and Brady having their smug smiles wiped off their faces.
Not sure they will ... as Dippenhall points out, this may well be to their benefit ... which was always the long term plan.
This is breathtaking. Will the fairly recent regime change in Newham - albeit still Labour - have an impact? And how likely is it that further down the line criminal proceedings might arise? After a mere six years this sorry saga seems barely to have begun. As you say, PA, WHU look very vulnerable. Oh for a whistle-blower or two ....
E20 do not own the stadium. Not sure who does. I am rubbing my hands with glee at the prospect of Gold, Sullivan and Brady having their smug smiles wiped off their faces.
E20 Stadium LLP is the owner of the stadium. E20 in turn is owned by LLDC and another company (Stratford East London Holdings Ltd) that bailed out Newham Council. But Stratford East London Holdings is capitalised by LLDC making LLDC the ultimate owner but without any legal obligations beyond running E20. London Stadium 185 Ltd is the Vinci subsidiary that holds a contract with E20 to do the day to day running - LLDC obviously know naff all about running a sports stadium, even if they effectively own one, so it has to be sub-contracted.
As a limited liability partnership, it means that E20 can go bust and LLDC doesn't have to meet any debts or obligations of E20.
Don't hold your breath if you are hoping West Ham will be hit if E20 go bust.
l'm sure the Sun is not part of your usual Sunday morning reading but a so-called exclusive claims E20 could go bust next month if the mayor pulls the plug on the company.
Not sure if this is something you are already well aware of but if not worth a look at the article.
now would that leave the way clear for West Ham to make a full take over? or would it mean the lease is null and avoid and would need to be renegotiated?
This is a very helpful article. We have been trying to dig into this scenario for a while, one of my CAST colleagues knows some insolvency specialists who are interested in this, but have been a bit slow. If they want a gig from the Mayor on this, they better get a move on.
Here is the interesting thing. As a layman I've read through the bloody thing more times than i care to think about, and there is not a word I can find about what happens if E20 goes bust. There is certainly no provision for West Ham to take it over. The most interesting thing is that they are not even tenants. It's only a concession. If for example, the LLDC sold E20 to, I dunno, a property company owned by Daniel Levy, that company would seem to have no obligation to honour the existing Concession Agreement.
I think the article is right to say that its unlikely (to put it mildly) that SK would pull the plug next month. But the case for pulling the plug soon, if West Ham don't re-negotiate, will become overwhelming, and it may well be that the GLA has all the leverage suddenly. And we have clear recommendations about exactly what could be re-negotiated, all in a report which is now in the hands of former Mayoral candidate Caroline Pidgeon.
This basically uncovers why I have been able to sound very confident recently. Part of me remains amazed that Brady never considered the possibility of E20 bankruptcy before signing the Agreement, but there is nothing I can see there, nor can anyone else so far who has looked at it. All of a sudden West Ham look very vulnerable and it is in fact their greed and bullying over the agreement which has led them to this point.
It's official.
PA has a distinct intellectual and perceptive advantage over Lady "open crotch" Silk Knickers.
E20 do not own the stadium. Not sure who does. I am rubbing my hands with glee at the prospect of Gold, Sullivan and Brady having their smug smiles wiped off their faces.
E20 Stadium LLP is the owner of the stadium. E20 in turn is owned by LLDC and another company (Stratford East London Holdings Ltd) that bailed out Newham Council. But Stratford East London Holdings is capitalised by LLDC making LLDC the ultimate owner but without any legal obligations beyond running E20. London Stadium 185 Ltd is the Vinci subsidiary that holds a contract with E20 to do the day to day running - LLDC obviously know naff all about running a sports stadium, even if they effectively own one, so it has to be sub-contracted.
As a limited liability partnership, it means that E20 can go bust and LLDC doesn't have to meet any debts or obligations of E20.
Don't hold your breath if you are hoping West Ham will be hit if E20 go bust.
Well in their latest accounts E20 fixed assets stand at zero. I understand that it is a worthless stadium to anyone other than West Ham but surely IFRS rules require a valuation at something near cost. There also seem to be another bunch of leeches called London Stadium 185 who are paid millions to do little else than arrange large scale room hire.
E20 do not own the stadium. Not sure who does. I am rubbing my hands with glee at the prospect of Gold, Sullivan and Brady having their smug smiles wiped off their faces.
E20 Stadium LLP is the owner of the stadium. E20 in turn is owned by LLDC and another company (Stratford East London Holdings Ltd) that bailed out Newham Council. But Stratford East London Holdings is capitalised by LLDC making LLDC the ultimate owner but without any legal obligations beyond running E20. London Stadium 185 Ltd is the Vinci subsidiary that holds a contract with E20 to do the day to day running - LLDC obviously know naff all about running a sports stadium, even if they effectively own one, so it has to be sub-contracted.
As a limited liability partnership, it means that E20 can go bust and LLDC doesn't have to meet any debts or obligations of E20.
Don't hold your breath if you are hoping West Ham will be hit if E20 go bust.
Well in their latest accounts E20 fixed assets stand at zero. I understand that it is a worthless stadium to anyone other than West Ham but surely IFRS rules require a valuation at something near cost. There also seem to be another bunch of leeches called London Stadium 185 who are paid millions to do little else than arrange large scale room hire.
Note 4 of the accounts explains that asset value has been reduced to nil. The purchase value of the Stadium is less than the original capital invested and future expected revenue.
Revaluation The fair value of the Stadium was determined by external, independent property valuers (GL Hearn Limited), having appropriate recognised professional qualifications. The independent valuers provide the fair value of the partnership’s property, plant and equipment portfolio annually. The fair value of the Stadium was determined by considering what market value a hypothetical purchaser would be willing to pay. This assessment considered the level of income that the Stadium can generate in excess of operating expenditure, as well as market data of the performance of other European Stadium developments. Accordingly, all of the property, plant and equipment have been categorised as a Level 3 fair value (see Note 9 for definition) based on the inputs to the valuation technique used. Forecasts of the partnership’s financial outlook, particularly in relation to the cost of hosting West Ham and the cost of moving the relocatable seats between pitch (football) and athletics modes, has resulted in the fair value of the Stadium as at 31 March 2018 to be nil (31 March 2017: nil); accordingly, the value of the capital works on the Stadium up to 31 March 2018 are impaired in the partnership’s accounts. As the valuation is based upon the partnership’s business plan forecasts this carries an element of uncertainty and changes to business plan assumptions could result in a material adjustment to the Stadium’s valuation in the coming years. The loss on change of fair value of £3.0 million (2016/17: £61.5 million) represents the write down of the total capital work of the Stadium to date (including an adjustment to recognise the impact of the change in impairment rate on prior year write-downs). The impairment is recognised in the Income Statement.
I could see that happening but only with a significant additional payment to attempt to recover some of the millions already wasted. Otherwise it would be better for the stadium owners just to demolish the bloody thing and sell the site for low cost housing, as I have favoured from the outset. West Ham can fuck off. And Seb Coe as well. And Boris.
It's no accident that West Ham's rights on insolvency of the owners are not covered in the agreement.
Does anyone think West Ham's lawyers and Lady Brady forgot to protect their interests?
If there was any risk of West Ham losing the right to continue to use the Stadium, or any risk of the rental terms being worsened if the stadium went bust, let alone being required to cough up money, there would have been ten pages of warranties and guarantees underwritten by Newham Council/LLDC.
It was probably tacitly recognised and agreed that the stadium would have no value to any other party and it would just fall into the lap of West Ham in those circumstances, but to write that in black and white would be political dynamite.
There is no other explanation for such a glaring hole in a commercial agreement, where the rights on termination terms are normally the most precisely defined terms given they define the greatest financial exposures for both parties.
The only impact on west Ham is "...the terms of the agreement cease to apply," that means the rent doesn't have to be paid - logical really if there is no one to collect it - and no one can take over the agreement to collect any rent - genius!!
That's a fair argument, @Dippenhall, but surely included among the terms of the agreement is West Ham's right to use it.
I can see this being very lucrative for lawyers on both sides.
Stadium aside, who owns the land on which it stands? The stadium might have no economic or accounting value to its owners due to the dreadful contract engineered by boris et al, but surely the costs of demolition are no greater than the development value of the land on which it stands, so the owners could extract value that way, and address some social housing needs too.
l'm sure the Sun is not part of your usual Sunday morning reading but a so-called exclusive claims E20 could go bust next month if the mayor pulls the plug on the company.
Not sure if this is something you are already well aware of but if not worth a look at the article.
now would that leave the way clear for West Ham to make a full take over? or would it mean the lease is null and avoid and would need to be renegotiated?
This is a very helpful article. We have been trying to dig into this scenario for a while, one of my CAST colleagues knows some insolvency specialists who are interested in this, but have been a bit slow. If they want a gig from the Mayor on this, they better get a move on.
Here is the interesting thing. As a layman I've read through the bloody thing more times than i care to think about, and there is not a word I can find about what happens if E20 goes bust. There is certainly no provision for West Ham to take it over. The most interesting thing is that they are not even tenants. It's only a concession. If for example, the LLDC sold E20 to, I dunno, a property company owned by Daniel Levy, that company would seem to have no obligation to honour the existing Concession Agreement.
I think the article is right to say that its unlikely (to put it mildly) that SK would pull the plug next month. But the case for pulling the plug soon, if West Ham don't re-negotiate, will become overwhelming, and it may well be that the GLA has all the leverage suddenly. And we have clear recommendations about exactly what could be re-negotiated, all in a report which is now in the hands of former Mayoral candidate Caroline Pidgeon.
This basically uncovers why I have been able to sound very confident recently. Part of me remains amazed that Brady never considered the possibility of E20 bankruptcy before signing the Agreement, but there is nothing I can see there, nor can anyone else so far who has looked at it. All of a sudden West Ham look very vulnerable and it is in fact their greed and bullying over the agreement which has led them to this point.
It's official.
PA has a distinct intellectual and perceptive advantage over Lady "open crotch" Silk Knickers.
Hmm. Possibly not. As I wrote, I found it surprising that Brady would have nothing in the agreement about it, and @Dippenhall has now explained why that might not have happened. I fear Dipps is more likely to be right than the alternative, which is that hubris and loss of concentration affected the Baronness, who likes to brag that she negotiated this herself against the mass ranks of corporate lawyers and consultants across the table
On the other hand I would be a lot more concerned if Boris and his Tory mates were in control at City Hall, but they are not. When I met David Bellamy, Khan's Chief of Staff at City Hall, I told him straight up that it was a concern of the Coalition, that West Ham would eventually get it for a song. He fixed me with a pretty steely gaze as he said "that is not going to happen". Khan has let this article get out, I am sure, and he has a legal background. The politics are on our side.
@seth plum . The difference between a tenancy and a Concession agreement was explained to me like this. If they were tenants they would have rights. They could not be thrown out just because the owner changed and wanted them out, and their rental terms would be protected in law. A Concession is like what you have at a fairground. West Ham may have the biggest concession, the Big Dipper, but that's all it is. No fairground, no Big Dipper.
@IdleHans -" I can see this being very lucrative for lawyers on both sides" - Absolutely.
The land will probably be owned by LLDC or another quango as freeholder with the stadium built and operated under a lease or licence.
The agreement does not give any rights to E20 to terminate the agreement as long as WH honours its obligations. So even if E20 sells the stadium with the benefit of the agreement no one can legally evict WH and demolish the stadium for housing as WH have inalienable rights to occupation and use.
As far as I can get my head around it, if E20 goes bust, no agreement exists, so a new owner would have to negotiate a new agreement. WH just have to play hard ball to ensure its in no one's interest to become landlord, apart from WH. WH will be sitting tenants, not even squatters since they have not entered illegally, without any enforceable rights against them - a lawyer's dream.
@PragueAddick - "A Concession is like what you have at a fairground. West Ham may have the biggest concession, the Big Dipper, but that's all it is. No fairground, no Big Dipper."
Big difference is that the Big Dipper operator wouldn't have an agreement with the fairground that he was guaranteed a site for 99 years and the fairground couldn't terminate the agreement. Nor would the Big Dipper be making more money than the whole fairground and the fairground having no rides apart from the Big Dipper and a couple of children swings. The agreement, by not requiring the Big Dipper to vacate the site, allowed the Big Dipper to take over the fairground for its own benefit if the fairground owner just buggered off because he had no value in the fairground and nothing to sell. You don't need the law to protect you if the terms of the agreement give all the protection you need.
The fair value of the stadium is zero so long as their is requirement for movement of seats between modes every year. We have known this all along.
If any party were willing to pay a £1 for the stadium and undertake this requirement, we should bite their hand off to save the tax payers money.
So even if West Ham were given the stadium they would need to fork out 7-8 million a year and the stadium would still have no sale value. Not really an unfair outcome I think!
Of course, the problem is that the requirement would mysteriously disappear at some point as soon as can be arranged by Britain's wonderfully 'incorruptible' politicians and gullible voters!
@stonemuse I would be really grateful if you'd be able to continue monitoring KUMB and report on interesting (i.e coherent and literate) comments. A shower or bath straight after helps, I find :-) Was the longer post you quoted from some one with the handle "RedKen'sdongle" or something?
@stonemuse I would be really grateful if you'd be able to continue monitoring KUMB and report on interesting (i.e coherent and literate) comments. A shower or bath straight after helps, I find :-) Was the longer post you quoted from some one with the handle "RedKen'sdongle" or something?
It was from ‘the pink palermo’ !
From ‘ironworks dave’:
‘Lots of conjecture about what may or may not happen ....
Bottom line .... contracts are never 'un-breakable' .... there is always provision in law for contracts to be terminated or amended .... the whole point of administration is to allow for this to happen .... just look at the pending House of Fraiser v Landlords court case ....
It's our landlords who would probably benefit from administration not us .... who believes that renting a 700m venue for just 2.5m a year (even if only for 25 days) represents a 'fair' deal .... even the idiot Brady knows it's the 'deal of the century'
The mayor holds all the cards, he controls the owners, the licencing authority, the safety authority, and the policing .... set against that is the fact that were he to 'shut-down' a 125 year old football club he would be vilified (yes even by opposing fans) and become instantly un-electable .... not a good move for a career politician ...
Selling the ground to West Ham? almost certainly political suicide as well .... getting a better deal for the taxpayer ... that's his big win ....
The real problem is however this plays out in the short term without compromise we're either homeless or stuck at a running track ...
Unless or until we agree to pay a higher rent, and pay for all the upgrades that only we want, then feck all changes are going to happen ... see the last two years for confirmation of that fact ....‘
The fair value of the stadium is zero so long as their is requirement for movement of seats between modes every year. We have known this all along.
If any party were willing to pay a £1 for the stadium and undertake this requirement, we should bite their hand off to save the tax payers money.
So even if West Ham were given the stadium they would need to fork out 7-8 million a year and the stadium would still have no sale value. Not really an unfair outcome I think!
Of course, the problem is that the requirement would mysteriously disappear at some point as soon as can be arranged by Britain's wonderfully 'incorruptible' politicians and gullible voters!
Don't forget that West Ham would have to upkeep any ground they own. Paying for the upkeep of an asset worth £100m + they acquire for £1 is a steal. Puts £100m+ of capital on the balance sheet of West Ham overnight.
Using @PragueAddick analogy, the Big Dipper has acquired the fairground site for £1 because it has no value to anyone else. For anyone else it would be paying for the privilege of losing £8m a year and subsidising the costs of running the Big Dipper. As it is, the Big Dipper owners can sell the Big Dipper and the fairground for its huge new marriage value. Bojo told us about the taxpayer getting a share of the sell on proceeds from the stadium if West Ham sold their interest, so no way was the prospect of West Ham acquiring the stadium not on the table, even though it was not envisaged HOW they might acquire ownership in the agreement.
Which is why the absence of any termination clause that restricted West Ham's continued usage, if the stadium went bust and needed to be sold for a different usage to pay back the taxpayer, has a funny smell. The plan all along might have been to leave the door ajar for West Ham to acquire ownership by default, without the authorities being seen as complicit.
Only if WH recognise a moral obligation would it choose to agree to buy the stadium off E20 at the market value to WH of a football stadium in Stratford, rather than the zero value of a fairground without any rides and a Big Dipper that earns £millions and pays none of it to the fairground owner forcing it to operate at a loss.
The fair value of the stadium is zero so long as their is requirement for movement of seats between modes every year. We have known this all along.
If any party were willing to pay a £1 for the stadium and undertake this requirement, we should bite their hand off to save the tax payers money.
So even if West Ham were given the stadium they would need to fork out 7-8 million a year and the stadium would still have no sale value. Not really an unfair outcome I think!
Of course, the problem is that the requirement would mysteriously disappear at some point as soon as can be arranged by Britain's wonderfully 'incorruptible' politicians and gullible voters!
For anyone else it would be paying for the privilege of losing £8m a year and subsidising the costs of running the Big Dipper.
New owner should remove all temporary seats thus removing the cost no one can afford or really wants the hassle of. Maybe then the stadium could be run as a viable venue and hold more events annually. Of course this won’t happen the tax payers will have this millstone until West Ham are gifted the temporary structure.
@Dippenhall One of the important points about it being a CA and not a tenancy - I am told - is that the current CA is no longer valid if E20 goes bankrupt. A new one could therefore be negotiated. This new one would probably say things like " Should the User (WHU) require retractable seats, he has to pay for them". "The rent will be £4m p.a.in line with national benchmarks (City)", "the User is responsible for meeting all football matchday overheads". West Ham could not be thrown out, (you believe) but squatting, not paying anything, how long would that be tenable? Assuming that I am right about the CA lapsing, I don't think even Brady would be able to withstand the huge public backlash if she failed to accept that such new terms are reasonable. It looks like even a fair few West Ham fans would agree.
Dippenhall thanks for the clarkification, I didn't read the whole document. Anyone got an idea who might bid against WH for a distressed stadium? Would someone get planning to demolish and use for housing?
Dippenhall thanks for the clarkification, I didn't read the whole document. Anyone got an idea who might bid against WH for a distressed stadium? Would someone get planning to demolish and use for housing?
I should imagine the only viable bidders would be UK Athletics or someone like AEG entertainment who would be able to attract multiple entities to use the stadium throughout the year, MLB games, NFL games, concerts, athletics meets, rugby games, the Race Of Champions etc. etc.
Dippenhall thanks for the clarkification, I didn't read the whole document. Anyone got an idea who might bid against WH for a distressed stadium? Would someone get planning to demolish and use for housing?
Comments
West Ham are not tenants.
They are concessionaries (sp?) like someone with a T-shirt stall at a concert venue?
There is a difference between the two?
If the stadium goes bust West Ham are in a different position depending on whether they are tenants or hold a concession?
There is no formal deal that says what happens if the stadium company goes bust, either to West Ham, Athletics, American Football or whatever?
It is not unreasonable to assume that Athletics, Concerts, American Football, Association Football etc will simply have to find somewhere else to operate by themselves, like West Ham being a tenant at Brisbane Road if Leyton Orient let them?
Have I got a lot of this wrong?
Of course, there may be no other bidders which could mean they get the stadium for a nominal sum ... which may have been the intention all along.
However, I would hope that the public outcry would be so big, that they have to pay heavily.
Either way, I think they could still emerge as big winners.
I can't foresee a West Ham fan campaign for their beloved Olympic Stadium (which isn't theirs anyway).
“There appears to be the assumption by a number of our supporters that the GLA are committed to underwriting all costs associated with the LS.
I do not believe that to be the case, and frankly, regardless of who our contract is with and who we could or could not sue for damages, what really matters is whether there is enough money to pay stewards on 20/10.
There is a 3 week window between the home fixture against Manchester United on 29/09 and the Spurs game on 20/10.
That's plenty of time for E20 to be denied further funding, the administrators moving in and any decision having to be taken by the GLA as to whether or not to fund further against the backdrop of threat of law suits etc.
The Mayor has a window of opportunity to bring things to a head and seek the renegotiation of every deal with the deadline being the spurs game.
We support a club that has been telling the world it has just spent £100m on players, yet can only find £2.5m a year to pay the landlord.
I'm certain all of this is heading for the courts, not just the colour of the carpet or the number of seats that can be sold.
I'd also stress that UK Athletics are far from innocent in all of this - they plead poverty but managed to find $7.5m to pay prize money at one athletics event in 2017.
The public might think that nice Usain Bolt is running for love, but the truth is he runs for cash, and plenty of it.
Meanwhile, waiting in the wings is Danny Levy, primed and ready to file a state aid complaint........”
Also:
“I'm more than a little bit ignorant when it comes to the ins-and-outs of our deal at OS. Is it possible that this is actually what our owners wanted (and anticipated)? They want the stadium (company) to fail, so they get offered the chance to buy it at a discount price? We buy it, make small changes, increase the capacity, put down claret carpet etc to appease some fans and then rent the stadium out to pop concerts in the summer to bring in extra revenue... I thought this was the intention all along?”
Does anyone think West Ham's lawyers and Lady Brady forgot to protect their interests?
If there was any risk of West Ham losing the right to continue to use the Stadium, or any risk of the rental terms being worsened if the stadium went bust, let alone being required to cough up money, there would have been ten pages of warranties and guarantees underwritten by Newham Council/LLDC.
It was probably tacitly recognised and agreed that the stadium would have no value to any other party and it would just fall into the lap of West Ham in those circumstances, but to write that in black and white would be political dynamite.
There is no other explanation for such a glaring hole in a commercial agreement, where the rights on termination terms are normally the most precisely defined terms given they define the greatest financial exposures for both parties.
The only impact on west Ham is "...the terms of the agreement cease to apply," that means the rent doesn't have to be paid - logical really if there is no one to collect it - and no one can take over the agreement to collect any rent - genius!!
This is breathtaking. Will the fairly recent regime change in Newham - albeit still Labour - have an impact? And how likely is it that further down the line criminal proceedings might arise? After a mere six years this sorry saga seems barely to have begun. As you say, PA, WHU look very vulnerable. Oh for a whistle-blower or two ....
As a limited liability partnership, it means that E20 can go bust and LLDC doesn't have to meet any debts or obligations of E20.
Don't hold your breath if you are hoping West Ham will be hit if E20 go bust.
PA has a distinct intellectual and perceptive advantage over Lady "open crotch" Silk Knickers.
Well in their latest accounts E20 fixed assets stand at zero. I understand that it is a worthless stadium to anyone other than West Ham but surely IFRS rules require a valuation at something near cost. There also seem to be another bunch of leeches called London Stadium 185 who are paid millions to do little else than arrange large scale room hire.
If that was true no football stadium would have any value and could be used to guarantee any mortgage.
There has to be something more to this.
Revaluation
The fair value of the Stadium was determined by external, independent property valuers (GL Hearn Limited), having appropriate recognised professional qualifications. The independent valuers provide the fair value of the partnership’s property, plant and equipment portfolio annually.
The fair value of the Stadium was determined by considering what market value a hypothetical purchaser would be willing to pay. This assessment considered the level of income that the Stadium can generate in excess of operating expenditure, as well as market data of the performance of other European Stadium developments. Accordingly, all of the property, plant and equipment have been categorised as a Level 3 fair value (see Note 9 for definition) based on the inputs to the valuation technique used.
Forecasts of the partnership’s financial outlook, particularly in relation to the cost of hosting West Ham and the cost of moving the relocatable seats between pitch (football) and athletics modes, has resulted in the fair value of the Stadium as at 31 March 2018 to be nil (31 March 2017: nil); accordingly, the value of the capital works on the Stadium up to 31 March 2018 are impaired in the partnership’s accounts. As the valuation is based upon the partnership’s business plan forecasts this carries an element of uncertainty and changes to business plan assumptions could result in a material adjustment to the Stadium’s valuation in the coming years.
The loss on change of fair value of £3.0 million (2016/17: £61.5 million) represents the write down of the total capital work of the Stadium to date (including an adjustment to recognise the impact of the change in impairment rate on prior year write-downs). The impairment is recognised in the Income Statement.
I can see this being very lucrative for lawyers on both sides.
Stadium aside, who owns the land on which it stands? The stadium might have no economic or accounting value to its owners due to the dreadful contract engineered by boris et al, but surely the costs of demolition are no greater than the development value of the land on which it stands, so the owners could extract value that way, and address some social housing needs too.
On the other hand I would be a lot more concerned if Boris and his Tory mates were in control at City Hall, but they are not. When I met David Bellamy, Khan's Chief of Staff at City Hall, I told him straight up that it was a concern of the Coalition, that West Ham would eventually get it for a song. He fixed me with a pretty steely gaze as he said "that is not going to happen". Khan has let this article get out, I am sure, and he has a legal background. The politics are on our side.
@seth plum . The difference between a tenancy and a Concession agreement was explained to me like this. If they were tenants they would have rights. They could not be thrown out just because the owner changed and wanted them out, and their rental terms would be protected in law. A Concession is like what you have at a fairground. West Ham may have the biggest concession, the Big Dipper, but that's all it is. No fairground, no Big Dipper.
The land will probably be owned by LLDC or another quango as freeholder with the stadium built and operated under a lease or licence.
The agreement does not give any rights to E20 to terminate the agreement as long as WH honours its obligations. So even if E20 sells the stadium with the benefit of the agreement no one can legally evict WH and demolish the stadium for housing as WH have inalienable rights to occupation and use.
As far as I can get my head around it, if E20 goes bust, no agreement exists, so a new owner would have to negotiate a new agreement. WH just have to play hard ball to ensure its in no one's interest to become landlord, apart from WH. WH will be sitting tenants, not even squatters since they have not entered illegally, without any enforceable rights against them - a lawyer's dream.
@PragueAddick - "A Concession is like what you have at a fairground. West Ham may have the biggest concession, the Big Dipper, but that's all it is. No fairground, no Big Dipper."
Big difference is that the Big Dipper operator wouldn't have an agreement with the fairground that he was guaranteed a site for 99 years and the fairground couldn't terminate the agreement. Nor would the Big Dipper be making more money than the whole fairground and the fairground having no rides apart from the Big Dipper and a couple of children swings. The agreement, by not requiring the Big Dipper to vacate the site, allowed the Big Dipper to take over the fairground for its own benefit if the fairground owner just buggered off because he had no value in the fairground and nothing to sell. You don't need the law to protect you if the terms of the agreement give all the protection you need.
A not for (football) purpose stadium which costs a fortune to maintain and run...
If any party were willing to pay a £1 for the stadium and undertake this requirement, we should bite their hand off to save the tax payers money.
So even if West Ham were given the stadium they would need to fork out 7-8 million a year and the stadium would still have no sale value. Not really an unfair outcome I think!
Of course, the problem is that the requirement would mysteriously disappear at some point as soon as can be arranged by Britain's wonderfully 'incorruptible' politicians and gullible voters!
@stonemuse I would be really grateful if you'd be able to continue monitoring KUMB and report on interesting (i.e coherent and literate) comments. A shower or bath straight after helps, I find :-) Was the longer post you quoted from some one with the handle "RedKen'sdongle" or something?
From ‘ironworks dave’:
‘Lots of conjecture about what may or may not happen ....
Bottom line .... contracts are never 'un-breakable' .... there is always provision in law for contracts to be terminated or amended .... the whole point of administration is to allow for this to happen .... just look at the pending House of Fraiser v Landlords court case ....
It's our landlords who would probably benefit from administration not us .... who believes that renting a 700m venue for just 2.5m a year (even if only for 25 days) represents a 'fair' deal .... even the idiot Brady knows it's the 'deal of the century'
The mayor holds all the cards, he controls the owners, the licencing authority, the safety authority, and the policing .... set against that is the fact that were he to 'shut-down' a 125 year old football club he would be vilified (yes even by opposing fans) and become instantly un-electable .... not a good move for a career politician ...
Selling the ground to West Ham? almost certainly political suicide as well .... getting a better deal for the taxpayer ... that's his big win ....
The real problem is however this plays out in the short term without compromise we're either homeless or stuck at a running track ...
Unless or until we agree to pay a higher rent, and pay for all the upgrades that only we want, then feck all changes are going to happen ... see the last two years for confirmation of that fact ....‘
Using @PragueAddick analogy, the Big Dipper has acquired the fairground site for £1 because it has no value to anyone else. For anyone else it would be paying for the privilege of losing £8m a year and subsidising the costs of running the Big Dipper. As it is, the Big Dipper owners can sell the Big Dipper and the fairground for its huge new marriage value. Bojo told us about the taxpayer getting a share of the sell on proceeds from the stadium if West Ham sold their interest, so no way was the prospect of West Ham acquiring the stadium not on the table, even though it was not envisaged HOW they might acquire ownership in the agreement.
Which is why the absence of any termination clause that restricted West Ham's continued usage, if the stadium went bust and needed to be sold for a different usage to pay back the taxpayer, has a funny smell. The plan all along might have been to leave the door ajar for West Ham to acquire ownership by default, without the authorities being seen as complicit.
Only if WH recognise a moral obligation would it choose to agree to buy the stadium off E20 at the market value to WH of a football stadium in Stratford, rather than the zero value of a fairground without any rides and a Big Dipper that earns £millions and pays none of it to the fairground owner forcing it to operate at a loss.