Law firm blames PwC for West Ham's loss making stadium deal

08 January 2021 Consultancy.uk
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In September 2020, the owners of the loss-making Olympic Park stadium commenced proceedings to sue their former legal advisors, alleging negligence during the deal that saw West Ham take up a highly favourable residence at the stadium. Court filings from Allen & Overy have pointed the finger back at London Legacy Development Corporation and its advisors from PwC, however.

The former Olympic Stadium has enjoyed a turbulent life, following London 2012, with neither fans of resident football club West Ham United nor owner London Legacy Development Corporation (LLDC) seeming satisfied with their current arrangement. While Hammers fans primarily resent the ground’s graveyard-like lack of atmosphere, however, the LLDC has a very different set of problems to reckon with.

While West Ham pay an annual rent of £2.5 million as tenants, previous reports have revealed that the venue is still set to lose £140 million over the next 10 years. At the same time, while the LLDC is keen to offset some of this loss by finding a sponsorship deal for the stadium, the consultants it has handed huge sums of cash to for the brokering such a deal have come up short so far.

Law firm blames PwC for West Ham's loss making stadium deal

As the situation worsens, LLDC and its public sector co-owners E20 launched a £12 million claim against their former law firm Allen & Overy (A&O) in September, alleging it was negligent in the drafting of the 2013 concession agreement that governs West Ham’s 99-year lease of the ground in the Olympic Park in Stratford. However, A&O has sought to shift blame by claiming that the poor deal was the responsibility of the stadium’s owners and advisors from PwC.

While E20 and LLDC argued that A&O’s negligence meant that West Ham was able to push successfully for a greater seating capacity under the concession agreement, without paying more money, meaning E20 would lose £6,926 for every West Ham home game, the law firm said in its defence that commercial decisions did not fall under its remit for legal advice. Instead, A&O suggested that fell under PwC’s sport practice, which was advising the stadium’s owners on commercial and financial issues related to the lease of the ground. PwC has not currently issued a statement on the accusations.

As reported by Financial News, a court filing from A&O claimed that the defendant “did not owe any duty to advise the claimants on the issue of seating capacity, which was a commercial matter for the claimants and the claimants’ other advisers.” The defence claimed that the stadium’s owners would benefit from adding seats in the stadium, as they would enable it to make more money from catering, naming rights, non-football events and a greater footfall in the Olympic Park, but advising as such was not down to A&O.

The filing explained, “Whether these benefits would outweigh the costs to E20 of making more than 53,500 seats available to West Ham was a commercial and public policy matter for the claimants and its other advisers (in particular PwC) and was not a matter in relation to which the defendant had a duty to advise or was ever asked to advise.”