Newham Council has admitted that the £40million loan to help Premier League club West Ham move into the Olympic Stadium may never be repaid.
The east London borough said the loan was 'damaged' and not currently being paid off because the stadium was failing to make a profit.
Newham stressed the loan had not been 'written off' but appear to give up any hope of getting back the cash.
Newham Council have admitted a £40m loan that helped West Ham move into the Olympic Stadium may never be repaid because the venue doesn't turn a profit
West Ham moved into what is now called the London Stadium at the start of last season
The admission has sparked concern from councillors and residents as the borough, one of the most deprived in the country, faces further austerity.
The £40m deal was agreed by the council back in 2012 through its Newham Legacy Investments Ltd (NLI) in conjunction with the London Legacy Development Corporation (LLDC).
The money paid for the conversion of the stadium from the London 2012 athletics venue into a football ground up to Premier League standards. It is now known as the London Stadium.
The LLDC had initially invested £257m towards the refurbishment costs and West Ham contributed £15m as they were granted a 99-year lease on the stadium by then-Mayor of London Boris Johnson.
Bubbles as West Ham walk out for Monday's Premier League match with Huddersfield Town
According to the Newham Recorder, NLI currently owes £44.4m after declaring a loss of £41.6m for 2015-16 and a further deficit of