Professional services firms make thousands from struggling London Stadium

23 July 2018 Authored by Consultancy.uk

The former Olympic Stadium has enjoyed a turbulent life, following London 2012. Now the home of West Ham United Football Club, the ground reported huge losses last year, but despite this, consultants employed by London Stadium owner London Legacy Development Corporation (LLDC) are making hundreds of thousands in fees.

The figure that seems to have most incensed the public regarding the troubled stadium’s performance is that nearly £450,000 of taxpayers’ money has been spent trying to find a sponsor for West Ham's London Stadium home, while a backer is still being sought. While West Ham pay an annual rent of £2.5 million as tenants, the venue is still set to lose £140 million over the next 10 years. Research by global valuation advisor Duff & Phelps suggested that naming rights for the venue could bring in at least £4.8 million annually, and could subsequently offset some of those aforementioned losses.

According to figures reported by the BBC, two companies were paid a total of £447,000 to try to find a naming rights partner, but after two potential deals – one from telecoms giant Vodafone for a £20 million six-year naming rights agreement, and one for Indian conglomerate Mahindra – collapsed, no discussions are currently taking place. Professional services firm IMG was paid £260,000 after being hired by the LLDC in 2013. Then fellow industry expert ESP was given £187,000 when retained by LLDC's subsidiary company E20 for 16 months from March 2015. The hope was that the know-how of the two agencies would pay for itself, as the potential sponsorship revenue would dwarf their costs. This did not materialise, however, leading to fierce criticism of LLDC’s choice to hire them.

Professional services firms make thousands from struggling London Stadium

Gareth Bacon, Chair of the London Assembly's Budget and Performance Committee, told the press he was "mystified" by the failure to secure a suitable sponsor, adding, “It's taxpayers' money that has been wasted. When you pay that kind of money and get absolutely nothing in return, that's not great.”

The stadium has been plagued continuously by controversy surrounding its finances in recent years, particularly after its cost of conversion from an athletics venue into a football ground ballooned to £323 million when the original estimate was £190 million. Further to this, according to a Freedom of Information request by West Ham fan site Claret Hugh, the consulting spending by the ground did not end there. Pragma Consulting has also been employed by the LLDC. The consulting firm was hired on the brief of agreeing “a future vision for the London Stadium and validate that it is achievable,  Achieve consensus across stakeholders for a shared purpose, Define a set of clear and measurable goals to work towards and Outline a framework for making commercial and strategic decisions.” Pragma’s contract also released under a Freedom of Information request shows the firm has been paid £77,750 for its troubles.

On top of this, last year, LLDC appointed a retail restructuring consultant to be the Stadium’s Chief Restructuring Officer. Alan Fort’s contract with the stadium owners together with invoices he has submitted in the last 12 months quotes £4,000 per day for services provided, discounted to £2,500 per day. This essentially means the CRO could charge up to £40,000 per month, having already invoiced several hundred thousand – another bill which the taxpayer would ultimately foot.

Related: Premier League continues stadium expansion to chase Bundesliga attendance levels.

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