West Ham lose the Olympic stadium

The deal to award West Ham the Olympic Stadium after the London 2012 Games has collapsed, the BBC has learned. The board of the Olympic Park Legacy Company (OPLC) has ended negotiations amid concerns over delays caused by the ongoing legal dispute with Tottenham. The OPLC, government and Mayor of London have instead agreed the stadium will remain in public ownership.

A new tender process will be opened for an anchor tenant who will now lease the stadium for an an annual rent. The winning bidder would rent the stadium rather than purchase it outright and bear the majority of any redevelopment costs. The new tender process will be launched this week and any interested bidders will have to submit proposals by January.

Strained finances

A fund of £50m has been set aside from public money to convert the 80,000-capacity stadium at Games time to a 60,000-seater venue afterwards. The post-Games stadium will be capable of hosting major athletics events and Premier League football.

That opens the possibility for Championship football club West Ham and their bid partner Newham Council to submit a new, lower risk proposal which could still see them move in after London 2012. With West Ham's finances under strain following their relegation from the Premier League last season, the new arrangement could be much more attractive as it would only cost around £2m a year to lease the stadium. That money will help offset estimated running costs of more than £5m a year.

The OPLC has decided to take drastic action because of the uncertainty being caused by the legal challenges from Tottenham but also Leyton Orient. Both clubs are contesting the original decision to award the stadium to West Ham because of their reliance on a £40m loan from Newham Council, which they say is effectively state aid. Spurs are seeking a judicial review of the decision and the next hearing at the High Court was due to be held next Tuesday.

But to complicate matters further, an anonymous complaint was made to the European Commission last week which could have meant even further delays. And despite London Mayor Boris Johnson's ultimatum to Spurs last week to settle the dispute before next Tuesday and accept a funding package to help redevelop their White Hart Lane ground, the OPLC had lost confidence in a quick resolution.

Public money

The clock is ticking for the OPLC because it has set a deadline of 2014 for the new tenants of the stadium to move in. For that to happen, planning permission must be submitted by March 2012 to ensure work starts immediately after the Games. The prospect of a never-ending battle in the courts raised fears that the stadium could lie idle for years after the Olympics had finished. The other catalyst for the U-turn is London's bid for the 2017 World Athletics Championships.

Last week's visit of the inspection team from the International Association of Athletics Federations (IAAF) was dominated by the continuing uncertainty over the stadium's future and, in particular, the running track. With London facing a real contest against Doha in November's vote, the government and mayor wanted to send a strong message to the IAAF that they are committed to staging the event in the Olympic Stadium. But the latest twist to the controversial saga will raise serious questions about how such an important decision could be thrown back into confusion with just 10 months to go to the Games. There will also be concerns over why another £50m of public money is going to be poured into a stadium which has already cost over £500m.