London Mayor Sadiq Khan is to take over control of the London Stadium, it has been announced.
An independent review was published on Friday morning, which said there had been “a catalogue of errors” which led to massively increased costs over conversion after the London 2012 Olympics.
It was a “bungled decision that has left the taxpayer to foot an annual loss of around £20 million”, the review said.
Mr Khan said: “I ordered the review into the finances of the London Stadium to understand how key decisions were made about its transformation and why costs were allowed to spiral out of control.
“What has been presented is simply staggering. Not for the first time, it reveals a bungled decision-making process that has the previous Mayor’s fingerprints all over it.”
Mr Khan ordered the investigation after it had been revealed that the bill to taxpayers for converting the centrepiece of the London 2012 Olympic and Paralympic Games into a multi-purpose venue had climbed to £323million.
London Legacy Development Corporation (LLDC), the body which operates the stadium for the Greater London Authority, admitted problems with the venue’s retractable seating were the biggest cause of the rise in costs.
Premier League side West Ham, who have a 99-year lease on the 60,000-seat stadium, made a one-off contribution of £15million to the conversion costs and pay £2.5million a year in rent. The total price tag for the stadium, which also has a new roof, is estimated to be £752million.
Mr Khan commissioned a review by forensic accountants Moore Stephens in March 2017, and the 169-page report warned the cost to the public is never going to be recovered, while the stadium would also continue to lose up to around £20m every year.
“Boris Johnson clearly panicked when faced with legal challenges about West Ham and Newham’s joint bid to take ownership of the stadium and then decided to re-run the bid process with the taxpayer taking all the risks and footing almost the whole bill. You simply couldn’t make it up,” Mr Khan said.
“The fact he also failed to properly examine the transformation costs or the entirely inadequate estimates for moving the retractable seats leaves us squarely in the dire financial situation we are in.
“I am determined to put the London Stadium towards a stronger financial footing and secure its long-term future, but I’m under no illusion that this is going to take time and some real commitment from all partners to make this work.”
West Ham issued a statement in response to the report, which said the club had “entered a fair and competitive tender process” as they were selected as anchor tenant.
The Premier League club view the Concession Agreement signed in 2013 as “a watertight, legally-binding contract” and remain “absolutely committed to its terms for the entire 99-year duration”.
West Ham will “continue to devote our absolute commitment to London Stadium” but added “our first priority in this sense is always to act in the best interests of our supporters”.
“We fully concur that West Ham United has played a significant part in the most successful regeneration programme in the history of the modern Olympics, however the stadium itself craves renewed leadership and direction and we welcome the Mayor’s decision to step in and deliver this. West Ham United is firmly behind him,” the statement concluded.
The Moore Stephens report said the decision to transform the stadium and enter into contract with West Ham was “made on incorrect financial estimates and an insufficient appreciation of the critical commercial and financial risks”.
The report added: “It is our opinion that the financial estimates were incorrect not because they were estimates, but because there were errors in their calculation, compilation and presentation.”
Sources close to former London Mayor Boris Johnson, now the Foreign Secretary, rejected the criticisms.
An ally of Mr Johnson said: “No other city has an Olympic legacy like London’s – all seven venues on the park are in private hands, with millions of visitors a year, and a positive economic legacy for east London. The stadium has a secure future with athletics and football.
“The mistakes belonged to Khan’s Labour predecessor Ken Livingstone and the Blair government. Signing off on a stadium fit only for athletics was a massive error. The only option for Boris was conversion to a multi-use venue.
“If Sadiq Khan wants to try and blame someone he should blame his New Labour pals and the old Labour Mayor for their catastrophic planning failures.”