So the day has finally arrived when the LLDC was forced to publish the previously confidential agreement between E20 Stadium LLP and West Ham United. I have read the 207 page document so you don’t have to. But if you want to read it if can be found HERE
It was not a secret that West Ham’s contribution to £272m conversion costs was £15m so that was old news.
It was also little surprise that West Ham will pay a rent of £2.5m per year in the Premier League for the first 25 games and £100,000 per game for any additional games beyond that per year. This information was already widely available in the public domain.The rent includes the exclusive occupation of the club store, ticket office, board room, player’s lounge, office space and storage areas 365 days per year. The rent is index linked with RPI so that will increase with inflation. Assuming an annual inflation of 2% over 99 years that rent could increase to £17.8m per year but TV and ticket revenues would increase likewise. It could mean West Ham pay in excess of £763m in rent in the next 99 years which is more the combined £702m it cost to build the stadium.
I think it proves West Ham are paying their own way and fair share plus it avoids the stadium becoming a white elephant so I don’t know what all the moaning is about.
West Ham have got a discount clause that if they are relegated from the Premier League their stadium rent will halve to £1.25m and remain discounted until they are promoted again to the Premier League.
West Ham is restricted to host two friendly matches per season and two youth matches per annum as part of the agreement.
In the unlikely event that West Ham win the Champions League the club will have to pay up an extra £1m in rent for the Olympic Stadium in any year we win West Ham will have to pay up an extra £250,000 in rent for the stadium any year they qualify for the Champions League group stage. Since winning the champions league earns the club around £100m and the group stages earn a minimum of £30m I don’t think this news should bother us too much,
West Ham will have to pay up an extra £100,000 in rent for the Olympic Stadium any year they win the FA Cup or Europa League. Again winning the FA Cup is worth at least £10m in prize money, TV revenue and ticket sales and winning the Europa League is worth at least £20m in prize money, TV revenue and ticket sales so a drop in the ocean.
West Ham will have to pay up an extra £100,000 in rent for the Olympic Stadium any year they qualify for the Europa league which would be more than covered in the first game in ticket sales.
One of the most interesting revelation’s was the stadium naming rights. The first £4m of any stadium naming rights deal will go to the stadium owners, E20 Stadium LLP, with anything above that shared between the owners and West Ham on a 50/50 basis. However, West Ham’s share of the naming rights in capped to all monies paid to the stadium owners in rent and performance payments. This means in the unlikely case the stadium naming rights were sold for £10m per year we would pay nothing for use of the stadium. Not a bad clause to have really!
West Ham will retain 90% of the pitch side advertising rights on match days and earn 30% of catering revenue at the Olympic stadium on anything over £500,000 each year.
West Ham will pay will pay an uplift in rent depending on their final league position each season. They will pay an extra £25,000 in rent if they finish 10th in the Premier League, £65,000 for 9th, £120,000 for 8th, £190,000 for 7th, £275,000 for 6th and £375,000 for fifth, £475,000 for fourth, £575,000 for third, £675,000 for second and £775,000 for winning the Premier League. Considering each Premier League position is worth £1.2m in the current TV deal and that is set to massively increase next season we shouldn’t lose too much sleep on this clause.
The agreement does confirm West Ham will need to comply with the community clause to offer up to 100,000 general admission tickets free charge of charge to residents of Newham and/or community groups, charities, clubs and similar organisation each football season. How will be fit them in when we have nearly sold out?
The media have headlined this fact today but as it is not our stadium so we don’t pay any of the maintenance or running costs. The stadium owners are responsible for all utilities including heating, power, light and water. The cost and maintenance of the pitch, under soil heating, flood lighting, goal posts, goal nets, corner flags, dug outs and changing rooms. The stadium owners will cover the cost of policing, stewarding, security and cleaning. Quite right too!
So what happens if the owners sell West Ham. I have always been told by the club and the chairmen that would never happen and they plan to leave their shares to their children but there is a clause should circumstances change.
If it did happen E20 Stadium LLP would receive a cut of 7.5% if West Ham is ever sold over £125m but under £150m. That would be a return of between £9.2m and £11.2m to the tax payer. The cut increases to 10% if West Ham is ever sold between £150m and £200m so between £15m and £20m back. The increases to 20% if West Ham is sold between £200m and £300m in the first 5 years meaning between £40m & £60m goes back to the tax payers.
Finally, if West Ham is sold over £300M in the next five years then the tax payer gets 30% so at least £90m back! If West Ham is sold for over £300m between the 6th and 10th year of occupation of the Olympic Stadium then 20% of the selling price is due to the stadium owners.
Put into context, If the club was ever sold for £500m in 9 years time then £100m would be returned to the tax payers in the guise of E20 Stadium LLP owned by the LLDC and Newham council.
My final word on the 207 page document is a clause buried in the small print of the 207 page document it says West Ham are entitled to a 50% discount on their £2.5m annual rent if they ever share the Olympic Stadium with any other football club that use the stadium as their home ground. This clause implies there is no right of veto to sharing with another football club and West Ham’s rent would reduce to £1.25m per annum accordingly.
West Ham would also be entitled to a rebate of £7.5m back from their one off £15m fee if any football team shares with them in the first ten years of their rental at the Olympic Stadium, that reduces to a £3.75m rebate returned to West Ham in the eleventh year to the twentieth year of occupation.
West Ham do have a right to supremacy of fixtures in what they term the ‘Overriding Priority principle’ but that is not the same as a veto in my books. Clause 7.2a says and I quote “Competitive matches will always take precedence over the activities of the other party to any agreement in relation to ground sharing” This clause is designed to comply with the Football league regulations 13.15.1 which says “the playing of any of the Club’s first team matches will always take precedence over the activities of the other party to the agreement”