By Tony Attwood
Any notion that Financial Fair Play rules will help balance out football’s money issues a little, have been blown away by the news that Boris Johnson, the Conservative Mayor of London, has granted West Ham United the tenancy of the Olympic Stadium for a down-payment of £15m and further payments of £2m a year for 99 years.
This makes a total of £213m paid over the course of 99 years. I don’t know if there are any rent reviews built into this, but assuming that there are, and that are set to keep pace with inflation, then that is the total cost to West Ham United.
The only down side is that since the stadium will be very dated within about 60 years (on current trends) then they will end up at the end of the lease with nothing much, and will have to build themselves a new stadium from scratch (if football in general and West Ham in particular are around by 2113.
The price of £213m compares with the cost of the stadium, which in a speech today Richard Caborn, the former sports minister, said was worth £600m. The Emirates cost around £390m to build, of which Arsenal borrowed £260m, which means the actual cost to Arsenal was £546 when interest on the borrowings was factored in. On the basis that the Olympic Stadium was built to a higher standard than the Emirates, and will have to have quite a bit of work done on it to make it a football ground, £600m seems about right.
So what we have here is a £600m stadium going for £213m over 99 years. This means that West Ham don’t have to borrow money as Arsenal did. They own the lease on their own stadium for 99 years, and will be able to sell Upton Park at a fair old profit, and to pay off their existing loans.
The only downside for West Ham is that they won’t have any property that they can use in order to secure other borrowings, since they won’t own the stadium. If the club fell on lean times and slipped down the leagues it would be hard to borrow money to buy players to try to get promotion, as there would be very little security around.
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The referee analysis
- Episode 5: Liverpool
- Case Study 4: Fulham
- Case study 3: Everton
- Case study 2: Chelsea
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- So what’s wrong with the Premier League – the opening part of the story
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- Making the Arsenal – how the modern Arsenal was born in 1910
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- Royal Arsenal: from the Common to the Manor. Coming next.