£350m iCITY building will only make £15m over 200 years
PUBLISHED: 08:44 28 November 2013 | UPDATED: 08:44 28 November 2013
The former Olympic press and broadcast centre - built at a cost of £350 million - is only expected to yield a £15million return over the course its 200-year lease with iCity.
The figure, which equates to just £75,000 a year, is highlighted in accounts released by the London Legacy Development Corporation.
They show that although the Olympic Park cost £1.124billion to build, Olympic bosses only expect to claw back £124million from the London 2012 assets.
This is despite the fact that in 2008 the government firmly rejected claims there would be a £1bn “black hole” in its plans to fund the 2012 London Olympics.
At that time Olympics minister Tessa Jowell and London Mayor Ken Livingstone claimed they would be able to recoup £1.8bn following the Games from land sales.
But the assets - which were transferred to the London Legacy Development Corporation (LLDC) earlier this year - have been re-valued down to just £124million based on their “income generating potential”.
In addition the accounts drawn up by Ernst and Young show a string of Olympic facilities will take up to two centuries to realise their “potential net income” – including iCITY, which is located in Hackney.
London Mayor said Olympic sceptics should “raise the white flag” when iCITY signed a deal in May to transform the International Broadcast Centre (IBC) and adjacent five-storey Main Press Centre (MPC) into a digital and creative hub.
Paul Charman from the pressure group Games Monitor, who uncovered the figures, said there would be huge losses to tax payers.
“The previous valuation was the cost of building them, which bears no relation to what they are actually worth because they are actually liabilities,” he said.
“They will cost an enormous amount to run compared to their expected earnings because they are very large venues and require a lot of maintenance.
“What’s there now is worth far less than what was paid for it.
“Either they misrepresented the value of the land or they made some bad mistakes.”
He continued: “It’s like negative equity, it’s true that it’s not an actual loss until they decide to close the books on it and sell it, so until that time they can carry on waiting and say eventually it may be worth more.
“That’s why they are keeping it in public ownership for as long as they can, not because it will be worth any more but because all the public officials will be gone, and the public will forget about this issue.
“They always shift the goalposts and say forget about the money spent, just think of the wider economic benefits and all the jobs, but this was not what was said five years ago, it was all about a cash return.”
A spokesman for the LLDC denied there had been a loss to the taxpayer, adding: “We have used a different accounting method based on net revenue rather than the building costs.
“Those figures do not reflect the massive investment that iCITY will make to create a new digital and creative hub in Hackney.
“The press and broadcast centres will be transformed, creating 4,500 jobs by 2019 with a further 2,000 in the wider community.
“The impact of this vital deal for Hackney and the Park cannot be reflected through spreadsheets in an annual report.”
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