• Telecoms company abandons plans to sponsor the London Stadium • Breakdown of talks over terms of deal, not over HMRC investigation

This article is more than 3 years old

This article is more than 3 years old

Vodafone has abandoned plans to sponsor the London Stadium in a £20m deal, dealing the latest blow to the venue’s troubled conversion to West Ham United’s home.

The company was believed to be on the verge of a six-year deal to take on the naming rights, several years after the London Legacy Development Corporation, the publicly funded joint venture that owns the stadium, began looking for partners.

West Ham’s first season at London Stadium: a ‘terrible’ experience or a step forward? Read more

Talks have broken down and Vodafone will not be proceeding with the deal. Sources said the breakdown was over the terms of the deal and nothing to with an HMRC investigation that included the seizing of material from West Ham.

Under its lease to use the London Stadium, for which it pays a basic rate of £2.5m in rent per year, West Ham is due to receive 40% of E20’s naming rights revenue over £4m a year.

The naming rights deal is seen as crucial to making the complex sums around the taxpayer funded stadium add up. Talks with the Indian conglomerate Mahindra collapsed last year amid differences over the value of the naming rights.

The stadium has had a controversial first season as a Premier League venue. There was crowd trouble during early matches, owing to problems over relocation and segregation, and there have been underwhelming performances on the pitch.

Building the stadium for the London 2012 Olympics and making it suitable for football has cost more than £750m, after the cost of the conversion soared to £323m.

Sadiq Khan, the mayor of London, last year ordered an inquiry when problems with the retractable seats, which added millions to the bill, came to light.