State Aid Utd become the first club ever to get their landlords to insure them against failure

By Tony Attwood

My company rents an office block and behind it, a warehouse block.  In each case we pay the landlords a fixed rent, and every three years the landlords have the right to put the rent up.   They do this in accordance with the rents that are being charged elsewhere in the area.  If rents generally go up by 5%, we have to pay 5% more.  We can go to appeal, but the chances of winning are slight.

What our landlords can’t do is get hold of a copy of our accounts and then say, “Ah, I see you have been making a good profit for the last two years, so we want more money for the rent.”  Likewise we can’t say, “because of the action of the criminal banking community who have lost billions of pounds, and now are expecting us to pay for their disasters in higher charges, and with fewer customers left, we are losing money, so we will pay you less.”

And of course that’s not just my company – it is most companies.  Quite possibly all companies in the UK, where the law lays down what landlords can and can’t do, both for businesses and for private individuals at home (although the laws are different for each group).

The club previously known as West Ham however don’t believe in the norm, and they have managed to get themselves a deal in which not only are they paying a fraction of what one might expect in rent, if they fail on the pitch, their rent will go down.  It is quite possibly a unique arrangement in terms of property rental.

Indeed we can now see exactly why the LLDC has fought so hard to keep the contract secret.  The Freedom of Information campaign which was supported by a coalition of 14 Supporters Trusts is the sort of thing that is supposed to make it easier for us ordinary folk to get information.  The LLDC used all its access to public money to fight the case.

And yes, that is right.  Public money – the money that taxpayers like myself give to the government – has been used to fight a request for information from… taxpayers like myself who give money to the government.

If State Aid Utd, playing at the Taxpayers Stadium, end up in the bottom half of the league, their rent goes down.  If they don’t make it into Europe, and/or do poorly in the domestic cups so they play six or fewer European, FA Cup, and League Cup games their rent goes down.

Then, if that were not insulting enough to us tax payers who had to pay for the stadium, if State Aid Utd really screw up and go down to the Championship, their rent is cut in half!  Talk about a reward for failure.

State Aid Utd have played outside of the first division / Premier League in around 48 seasons in which they have been competing – mostly in division 2 but sometimes in the Southern League and sometimes in the London League (excluding war time), the most recent was in 2011/12 when they came third in the Championship.

So major savings are quite possible if the club does exist in the future in keeping with its history.

Of course State Aid and their cronies in the LLDC are reporting this back to front – that the club has to pay more for success, and one can see it this way if one wishes, but the reality of linking a commercial rent to the success or failure of a business is still unprecedented.  If only we could see it as a precedent and get the rental tribunals to apply it to our commercial property – that would really edge us towards an even playing field.

The stadium is costing those of us who live and work in the UK over £700m of which State Aid Utd will be paying around 2.5%.   And if that ain’t insulting enough State Aid will get a fair old chunk of the stadium naming rights.  Although the club is unlikely to get anything like the £30m a year Arsenal get there is still more and more money to be made there.   Plus the sizeable chunk of catering money that they receive.

The argument put in favour of this is that if State Aid had not taken over the stadium then it would have lain empty, and therefore this is a justification for this taking of state aid in running a club.  But had the stadium stayed empty, the taxpayer (me in this case) would have been a lot better off because most of the £700m redevelopment cost would not have been said.  The stadium could have stayed empty as a symbol of the insanity of building mega structures for two weeks of sporting activity.

The Olympics were sold to the gullible British public as a way of ensuring in some magical way that Britain became a healthier society – but there has been absolutely no sign of this.  As it is, figures show that one in four British adults is obese, according to the UN Food and Agriculture Organisation.  Where such issues are discussed the UK is now generally described as the “fat man of Europe”.

The UK has the highest level of obesity in Western Europe, and rather than events like the building of the mega structure now given to the club formally known as West Ham helping reduce obesity, obesity levels in the UK have more than trebled in the last 30 years and, on current estimates, more than half the population could be obese by 2050.  According to the NHS website “Britain has become an “obese society  where being overweight is “normal”. It is a trend three decades in the making which, according to experts, will take several more to reverse.

The full report released today on the donation by state of the stadium to West Ham (now renamed) is over 200 pages long, and there is thought that there is a lot more in the detail that needs to be publicised.  We may not have heard the last of this.

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24 Replies to “State Aid Utd become the first club ever to get their landlords to insure them against failure”

  1. Hi Tony

    I’m completely behind you on the absurdity of this deal but there’s one thing I don’t understand. Can you explain to me that if this clearly is the ‘State Aid’ that it appears to be, why is it not being contested by the appropriate authorities?

  2. Whether a person reads this as you have here Tony or as how WHam/Olympic people probably phrased it, in order for this to not be state aid, the amount of rent that WHam would pay on getting relegated (or whatever the lowest rent specified is), has to be the going rate for that property. If that isn’t true, the state is prying up WHam.

    How then does one determine what the going rate is, for a unique structure?

  3. If West Ham beat Leicester on Sunday, and if that beating culminated to Leicester losing a couple of matches which eventually led to Arsenal winning this season’s title, would Arsenal fc suspend any further complains on West Ham unfair rent deal to rent the London Olympics Stadium from the LLDC and start looking the other way instead?

    I think Tottenham Hotspur also bid seriously to rent the Olympics Stadium, but LLDC they turned down Spurs bidding and instead preferred West Ham to rent the Stadium. So, the argument by LLDC that the Stadium will become a White Elephant project if West Ham didn’t rent it is not tenable.

    West Ham are to pay LLDC £2.5m/year as rent for the Stadium for 99 years according to reports. That’s a total sum of £247.5m payable for nearly a century for a Stadium that initially cost the Taxpayers the sum of over £400m ? and an additional cost of £700m to redeveloped t. Surely, is a century State Aid project by the LLDC for West Ham.

  4. I have downloaded the document, to peruse.

    There are 3 parties to the agreement,

    LLDC, is the landlord.

    The Grantor, is E20 Stadium LLP and the

    Concessionaire is, WH Holdings Limited with

    West Ham United Football Club Limited as the Club.

    Initially, the Concessionaire has only 11 months, as July 2017, is expected to be Athletics month?

    It would seem to me, that July is envisaged as the Athletics Event?

    IF, July is an Athletics month, then West Ham FC may have problems with Europa or Champions League qualifications?

    It is early doors, and as to be expected it is in legal jargon.

    IF, the Olympic Stadium is considered to be the Headquarters of British Athletics, then a tenant makes perfect sense.

  5. To dismiss the hosting of an Olympic Games, Tony, as “the insanity of building mega structures for two weeks of sporting activity” is in my view somewhat unfair.
    Although central, the Olympic Stadium is only one part of the Games and the economic benefit to the country hosting the event is self-evident by the free-for-all in deciding future venues.
    As for the benefit or not, health-wise, to the host nation, I’m afraid that we like most developed countries, are well on the slippery slope of central obesity.
    In my view though, there is still hope that every four years our youth is able to demonstrate the value of sporting exercise at the highest level and who knows….some of our nation may take heed and lose weight!

  6. n my view though, there is still hope that every four years our youth is able to demonstrate the value of sporting exercise at the highest level and who knows….some of our nation may take heed and lose weight!

    Unfortunately nicky it’s more likely that pigs might fly. It is more likely that television rights may be sold and that the general public that are interested will get the fridge full of Pizza and six packs of lager and hit the couch.

  7. However I don’t actually blame West Ham for taking the deal but the man who negotiated it, that’s a different matter.

  8. Tony
    Do WHU have to share the game day revenues and if so what is the split? Beside not going in debt hundreds of millions for a new stadium I’d like to know what else they’re getting for a paltry 2.5 mil/year.

  9. For starters the sale price of Upton Park less the capital gains tax if they don’t find a way round that. I estimate on the back of my euphemistic fag packet that this deal should enable them to get at least two £25 to 30 million players a season.

  10. Porter

    I think it was Karren Brady who negotiated the Stadium deal on West Ham’s behalf, and got a massive bonus for her work. She makes Ivan Gazidis look a bit pathetic.

  11. I do not have an issue with W.Ham using it, just the amount they pay I would have thought at least 15million is more realistic.

  12. Good for Karen Brady but it’s the guy on the other dide of the desk that needs hanging.

  13. The current owners would never have bought the Hammers in the if they hadn’t been reassured on their property developer ambitions. Despite the hilarious late attempt to troll the hammers by Tottenham they were laughing all the way.

    The fist and greatest mistake rests with Brother Boris’ bosom buddy the good and upstanding unimpeachable Lord Coe. What a guy!

    You have to ask the question: how could someone could be that stupid and irresponsible with such a large investment – the stadium should’ve and could only have been designed for a football tenant from the beginning, now we are all paying the price for Coe’s delusional vanity, negligence and palpable incompetence. Not least The O’s. They’ve broken every rule in the English football club tradition in this exercise (in the same parish?).

    I blame Venga.

    Oh. And Gazidas too. 🙂

  14. The cherry on top of the £2.5 million annual rent is the cost of maintaining the ground, goal posts, flags and free supply of all utilities (amoumting to £2.5 million per annum). So in reality the stadium is being given free of charge while the club is in the Premier League & gets a £1.25 million annual subsidy if the club is relegated. All goes to show that sale of soft porn can get some hard cash.

  15. @Tony

    I thought West Ham only rented the ground for match days only. That is it is not exclusively theirs for 7 days a week, 52 weeks a year. Is that incorrect?

    As another poster said you can’t really blame West Ham for taking the deal that was negotiated and agreed. It’s been deemed lawful hasn’t it?

  16. Serge
    Can’t resist having a pop at Arsenal can you?
    We don’t know what was discussed and compromised made. If the deal falls through due to State Aid rules, will you come back and apologise?
    I doubt it.

  17. Gooner S
    I think the renting of match days only is a red herring. The amount of money needed for the redevelopment suggest West Ham will have a more profound benefit rather than just as a tenant as future ad hoc tenants will need to work around the redevelopments undertaken for West Ham.

  18. No wonder Arsene Wenger said West Ham had won the lottery!

    As to the Olympics, I enjoyed it too, I was even lucky enough to see some events, living near the ground.

    But it is now clear that the park is increasingly a site for property development of no benefit to the local residents, as even the housing is far too expensive.

    In fact, three council tower blocks on Carpenter’s Estate that could be housing council tenants are standing empty because Newham Council, supported by the LLDC, is intent on knocking them down and replacing them with something that brings in more money.

    Meanwhile, in neighbouring Hackney, one of our few remaining swimming pools is threatened with demolition, to be replaced with a tower block of expensive housing for sale. This won’t improve fitness levels.

  19. Now we know why Spurs were so keen to move out of Tottenham and move to Stratford!

  20. I’d have thought the taxpayers would have made a lot more money by selling the Olympic Stadium for housing developments. Given the cost of land/property in London, it would have been a more viable option, surely?

  21. Does football get more farcical?
    West Ham’s move to the Olympic Stadium is a direct slap in the face for Arsenal, and every other club that have had to finance new stadiums.
    Whether it’s legitimate or not, it stinks.
    We shouldn’t be surprised, it’s not as though we run a clean game in England.
    Every season since the league structure began it’s a nailed on cert that certain clubs have always done ‘favours’ for other clubs, whether it be via team selection, or mentally one side are ‘on the beach’ and just going through the motions of fulfilling the fixture.
    One thing we can be sure of, football at professional level in every country is rife with deception and corruption.
    As the authors on here have proved beyond reasonable doubt, referees are having far too much influence in the outcome of games, which in some instances might win titles, or conversely contribute massively towards a club being relegated, and big people have fortunes invested in betting syndicates, and I’m sure the vast sums they pocket has paid for a few lavish holidays for a lot of football’s top brass. We need only to look at Blatter and Platini.
    Football has become far less exciting because of the constant obsession with money, and we’re being sold a dishonest untrustworthy product. The £billions lost to football when we still have people in the world starving, is staggering. It beggars belief that the masses know Football is governed by cheats who are easily bought, and that it is allowed to continue.
    I’d love to know how many major finals have been determined by dodgy referee’s.
    I hope this ridiculous decision concerning West Ham doesn’t hark back to the 1966 World Cup England ‘stole’ fifty years ago, and some suited dinosaur thinks somehow West Ham are ‘owed’ something for supplying Bobby Moore, Geoff Hurst and Martin Peters.
    They’re owed nothing.
    With the score at 2-2 England were gifted a goal that never looked like it crossed the line (I bet Geoff Hurst knows it too!), which proved pivotal in breaking the German resolve.
    The mere fact that Hurst was knighted and has dined out for something he only achieved thanks to some German-hating Russian match officials, and the other more annoying fact, that when I was younger (and folk still remembered!), every West Ham fan I ever met told me ‘West Ham won England the World Cup…’ which clearly put West Ham into everyone’s conscience, is payment enough.
    You are left hoping that common-sense will eventually prevail and for football’s sake, those running the game will stumble upon some integrity, but I don’t think we should hold our breath.

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