Thursday, 29 November 2012

Newham Residents’ Olympic Legacy: bailing out a Premier League football club owned by multimillionaires.

The Daily Mail and The Guardian have reported that West Ham United is almost certain to be named the preferred tenant for the Olympic Stadium. It seems that, in order to contribute to the estimated £160 million to £200 million needed to convert the stadium for football, WHU has increased its initial up-front offer from £10 million to £15 million (a 50 percent increase) and Newham Council are prepared to increase its borrowing to fund the speculative venture from £40 million to £70 million (a 75 percent increase).

Martin Warne has done an excellent job expressing what will no doubt become widespread incredulity at Newham’s incomprehensible decision in his latest blog-post, hopefully I’ll not be too repetitive here.

Any recent claims Newham Council has put forward to represent itself as an authority that makes prudent financial decisions has taken a bit of battering over the disastrous London Pleasure Gardens loan. It is highly unlikely that any due diligence was undertaken when that decision was made but the same justifications were rolled out that were used to persuade Newham residents that the £40 million “investment” in the stadium is financially viable.

I, like many others, couldn’t see how, in a time of economic uncertainty, gambling so many millions on a percentage cut of the success of a publicly owned sporting and entertainment venue (in a city that isn’t short on similar enterprises), and being able to tentatively promise priority events tickets to locals, is a responsible allocation of Newham residents’ money.

It may be documented somewhere, the percentage stake in the stadium Newham Council has in return for its investment, but I’m unaware of it - as I’m sure most interested people are. That, and the fact that nothing has been made public regarding any projections on possible returns on the investment in future years, makes it impossible for anyone to take a stab at assessing the wisdom of the decision (including Newham residents, who are ultimately responsible for paying back any loan the authority takes out to invest in the stadium).

Now that the council will be increasing its investment by 75 percent, it begs the questions: Will the authority’s share in the stadium increase by the same percentage? And, as a result, can we expect a 75 percent increase in the council’s split of any future profits?

I doubt very much if any of this was a consideration when the decision was made to up the investment by £30 million. It is becoming more apparent that all council policy is nothing more than the manifestations of the whims of the mayor. In this case, my guess is that the mayor wanted to ensure that his good friends at West Ham become the stadium tenants. The club wasn’t prepared to dig too deep into its own pockets (and with the state of its finances, who could blame it) so Newham Council… Newham residents… foot the bill.

Meanwhile, West Ham’s owners (Gold and Sullivan) are sitting on a nice bit of property with the vacant Boleyn ground that, when redeveloped, will go some way to ease their financial woes.

Last year the Council met for 45 minutes to agree £47 million in cuts to services; I wonder how long it took to agree throwing £70 million at the mayor’s latest insanity? Of course, it’s highly unlikely that any meaningful meeting of full Council has discussed the £30 million increase and, even if it had, not one of the borough’s sitting councillors will have had the backbone to tell the mayor he’s acting like a tin-pot dictator. Pathetic lot!

8 comments:

Anonymous said...

This really makes me angry.... where is the extra money coming from?. If it is borrowed, the loan interest still has to be paid.

Anonymous said...

Needs referring to the District Auditor for their view of legality and whether it's ultra vires.

Anonymous said...

What Newham Councillor, and golden boy of the Mayor, had this to say in April 2006:

“New Labour is arrogant. There’s no opposition on the council. It used to be for the working class, but now it is not. It is all about privatisation of schools and the NHS.”

Mike Law said...

Easy: Forhad Hussain, quoted here -

http://www.socialistworker.co.uk/art.php?id=8583

As interesting as that is, I don’t see how that’s relevant to the money wasted on the stadium.

However, I would like to know why Newham’s Monitoring Officer has given him permission to withhold the property he owns/rents in the borough.

Any answers?

Anonymous said...

Why hasn't Newham Council been able to also secure a further loan for £50 million pound while they are at it to save valuable front line services and services that will directly impact on the lives of thousands of residents as well as Newham employees fearful for their futures. Seems easy enough to do for a football club who has made a mint from being located in the heart of Newham. But what is the actual real benefit to the people of Newham where the majority of people are not WHU supporters ?

But in the end who is really interested in the scheming and laundering of public money by a mayor who is a megalomaniac piss head who literally can get away with anything as he clearly is above the law. Certainly not his own gutless party and the Tories must love him.

Let's face it, Newham is lost and no one cares any more.

Anonymous said...

It must be observed that Newham's Monitoring Officer generally does not do an awful lot of monitoring. In Newham, people do what the Mayor wants. The Mayor is not overly keen on monitoring, really; or so it would seem.

Anonymous said...

Perhaps it's something to do with a certain vote yesteday evening.

Anonymous said...

The only benefit I can see is that WHFC move and congestion in the local area is reduced.

Were is the council's case for the benefits to residents?