• Price of transforming stadium for football and athletics up to £272m • Revelation likely to reignite row over use of public money

This article is more than 5 years old

This article is more than 5 years old

The overall bill for the Olympic Stadium in Stratford, largely met by taxpayers, has soared to more than £700m before West Ham United move in as tenants next year.

In a move likely to reignite the row over the amount of public money used to make the stadium suitable for both football and athletics, the London Legacy Development Corporation has confirmed the total cost of the transformation at £272m.

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Originally the Olympic Stadium was priced up at £280m in the London 2012 bid book before the price tag rose to £429m. The latest announcement, following the last of the contracts being signed, takes the total cost of the stadium to £701m.

In April the Guardian revealed that the LLDC had opened itself up to a decade of potential challenges over whether the deal broke European Commission state aid rules by not applying for prenotification.

The final confirmed cost of the transformation, towards which West Ham will make a £15m contribution on top of the £2.5m they will pay annually for a 99-year lease, is significantly higher than the £154m originally announced when the deal with West Ham was agreed.

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The LLDC argues that it never announced a final budget for the transformation and that the £154m figure was the cost of its initial contract with the contractor Balfour Beatty.

The final cost takes the 54,000-seat stadium, which will host the Anniversary Games next month and Rugby World Cup matches in September, towards the £780m spent on Wembley.

Without allowing for inflation, the Millennium Stadium in Cardiff cost £121m in 1999 and Arsenal’s similar-sized Emirates Stadium cost £390m in 2006.

However, the LLDC would argue that the Olympic Stadium project was unusually challenging in engineering terms and involved effectively entirely rebuilding the existing structure.

The saga of the stadium’s legacy has been long and tortuous. The initial plan was to remove the upper tiers of the stadium and scale it back to a modest 25,000-seat bowl after the Games.

But the coalition government and Boris Johnson, the mayor of London, urged a rethink in 2010, reasoning that it was folly to in effect knock it down and that only football could provide a sustainable future. Following a bitter battle with Tottenham Hotspur, a deal was eventually agreed with West Ham that later collapsed under legal challenge.

Following another tender process, the club were awarded a 99-year lease to share the stadium with other tenants including UK Athletics. The operator of the Stade de France was recently appointed to handle the running of the stadium and to book concerts and sporting events to supplement income.

Last year the LLDC admitted that the cost had risen to £193.9m as a result of difficulties that Balfour Beatty was experiencing with the world’s largest cantilevered roof.

The LLDC said that the deals it had signed with West Ham, who will in effect be the main tenants during the football season, and British Athletics, which is entitled to use for the whole of July, would ensure that it would not require continuing subsidy from the taxpayer.

“We have invested in transforming a temporary athletics venue into a permanent world-class multiuse arena that has a secure and long-term sustainable future,” said the LLDC’s chief executive, David Goldstone. “This has required a significant amount of work and innovative engineering solutions.

“Alongside the transformation work the deals signed with British Athletics and West Ham United and the appointment of a stadium operator ensures the stadium will pay its way and not require any continuing subsidy from the taxpayer.”

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The largest chunk of funding for the transformation comes from a one-off settlement of £148.8m from the exchequer in 2010. On top of that Newham council has provided £40m, West Ham £15m, almost £40m comes from the original £9.3bn budget for the Olympics, a further £25m from the government. UK Athletics has invested £1m and the London Marathon Charitable Trust has provided £3.5m.

In return for investing £40m for a share in the special purpose vehicle that owns the stadium, Newham council has been guaranteed access to the stadium and up to 100,000 tickets a year to West Ham matches.

West Ham are set to move into the stadium, which will have 21,000 moveable seats designed to make it more suitable for football, at the start of the 2016-17 season.

The club’s vice-chair, Karren Brady, who has sold out of some of the executive box offerings, has promised cut-price season tickets in order to fill the ground and make Premier League football more affordable.

Johnson blamed a lack of planning by his predecessors for the cost of transforming the stadium into a 54,000-seat multipurpose arena.

Concerned about the potential for delays and without a definite commitment from a football club, the Olympic board decided in 2007 to press ahead with plans to build the stadium with a demountable top tier that could be removed afterwards to bring the capacity down to 25,000.

“A very bad call was made when those in charge at the time backed a stadium construction plan that would leave the Olympic Park with a much smaller, mouldering and tumbleweed ridden arena following the Games,” Johnson said. “Following that plan would have literally torn the heart out of the park and put at risk the incredible economic regeneration we are now seeing in east London.

“Our remedy offered long-term sustainable investment in order to protect an iconic stadium that Londoners took to their hearts, and which is now set to be home to almost every conceivable sport, concert or community event for decades to come.

“We’ve created a knockout venue that will drive and sustain thousands of jobs, where we’ve ensured that a hefty share of the profits will be paid back into the taxpayers coffers and which provides a genuine Olympic legacy for our city.”