10/11/2011 03:37 EDT | Updated 12/10/2011 05:12 EST

UK government official says deal for West Ham to move into London's Olympic stadium collapses

LONDON - The future of London's Olympic Stadium will be opened up to a new bidding process after a deal to award the flagship venue to West Ham football club was scrapped Tuesday amid "legal paralysis."

The British government was forced to abandon its long-term solution for the 486 million pound ($760 million) stadium amid fears the venue could remain empty for years after the 2012 Olympics.

West Ham said it will bid again and the new terms will be more financially favourable for the club recently relegated from the Premier League. A 20 million-pound ($31 million) up-front payment will be replaced by smaller annual rent.

London Mayor Boris Johnson said the stadium will "almost certainly" go to West Ham and will definitely retain the running track that losing bidder Tottenham wanted to rip out.

The drawn-out wrangling for control of the stadium has been increasingly acrimonious since West Ham was selected ahead of Tottenham in February as the preferred long-term tenant.

"The process to sell the stadium has become bogged down. We are acting today to end the legal paralysis that has put that legacy at risk," Sports Minister Hugh Robertson said. "Ending the current sale process and looking for a leasehold solution will remove the current uncertainty and allows us to help secure the future use of the stadium with more confidence."

Johnson said the move would put an end to "the great deal of legal to-ing and fro-ing" over the stadium, which West Ham wants to downsize from an 80,000 to a 60,000-seat capacity.

"We will keep it in public hands," he said. "We will effectively rent it to a football club, almost certainly West Ham, and that will cover the costs. I think it will be a very, very good deal for the taxpayer.

"The crucial thing is it will simultaneously deliver a football solution for the stadium and an athletics legacy at the same time."

John Biggs, a city council member representing the area that hosts the stadium, described the collapse of the deal as "a fiasco and a tremendous waste of public money."

"'The stadium has gone from an elegant solution to an expensive white elephant," he said. "We urgently need new thought about the future and no option should be ruled out."

Tottenham mounted a full legal challenge against the decision by West Ham's local authority to provide a 40-million pound ($63 million) loan to fund the second-tier club's move into the stadium. The case was due to be heard in court next week, but appeals could have dragged on for years.

"That could have put at risk the reopening of the stadium in 2014," Robertson said.

Fourth-tier east London club Leyton Orient was also challenging the decision, while an anonymous complaint to the European Commission about the apparent use of Newham Council funds by West Ham fueled concerns that the legal disputes could drag on for years.

Robertson also said the Olympic Park Legacy Company received a letter from Newham on Monday saying that "because of the uncertainty they no longer wanted to proceed."

"That was the straw that broke the camel's back and we thought it better to stop it dead in it tracks now," Robertson said.

Some 35 million pounds ($55 million) has already earmarked under the Olympic budget to downsize the stadium from an 80,000 to a 60,000-seat facility after the games.

One certainty is that the running track will remain in the stadium regardless of the outcome, with London bidding to host the 2017 world athletics championships. Doha, Qatar, is the other candidate.

"It's fantastic for UK Athletics and it is a bold and decisive move by the legacy company," UK Athletics chairman Ed Warner said.

West Ham had planned to retain the running track after leaving Upton Park, but Tottenham proposed knocking down most of the stadium and building a 60,000-seat, football-only venue on the same site without any athletics legacy.

Leyton Orient chairman Barry Hearn confirmed his club would also bid for the stadium, including the possibility of sharing the ground with another club.

"The OPLC have finally listened to someone with common sense and said, 'We messed it up before, let's not mess it up again.' The whole process starts now," Hearn said.

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