Common sense. The football club has existed for 124 years. It is a community asset.
There is no social housing to protect. It doesn't exist.
Affordable housing quotas on new developments are effectively one of the few ways we currently manage to get anything approaching new social housing built. They are standard practice and part of planning policy. Any developer is aware that it's a cost they take on when developing a site.
As I understand it the deal here is basically that we give up some public open space for a new football stadium. That's already controversial, because strong arguments can be made for metropolitan open space being a significant community asset. Which by definition has existed for much longer than the football club.
Also as I understand it, the club's ground has a planning condition on it that protects it as for leisure use. So, in planning terms, the "do nothing" option means that the football ground stays, and the open space does not get built on.
To give permission to build housing on the site, then, something has to be given up - either valuable open space or a valued local football club.
Let's set aside any argument about which is more valuable. If the developer is asking "us" for one or other to disappear, then what are they providing in return? If they are providing a generous amount of social or affordable housing then maybe giving up one of those community assets can be justified. Maybe. If they are providing just a standard amount - the same as any developer would have to provide on any site, where no community asset was lost as a result - then that seems a very bad deal. So, they are also throwing in a new football stadium. But they are actually just providing the bricks and mortar of that stadium - they are not providing the actually expensive and valuable part which is the land it sits on. So to me, it doesn't look like an amazing deal, even before they try and propose a significantly reduced affordable housing quota.
So, I think Southwark are right to reject what is in effect a bad deal.
All of the planning context of the site will have been known by the developer when they bought the site. They make a commercial assessment of likelihood of getting planning permission for what they want to build. If they don't get it, and lose money, that's their problem, not the council's. The developer is obviously using the club as a negotiating tool. The council shouldn't give in to that. Of course, if you look at it only in terms of the interest of the football club, then it seems like a solution to let them have what they want, in exchange for the benefits for the club. But that's not the only interest at stake here and it's not the only interest that the council should have an obligation to defend.
If you say you don't care about the affordable housing quota, as long as you get what you want then you are successfully being manipulated by the developers. Of course that's what they want DHFC supporters to say, because DHFC supporters have a strong voice in the media, and it puts pressure on the council and other politicians. Unlike the less easily vocalised and characterised general public and community interest in maintaining open public space, and providing affordable housing.
Additionally, it's pretty much standard practice for developers to pull negotiating strings with claims of schemes not being "viable". If it's not "viable" that's their problem. Southwark are right to call their bluff. The particular financial/ownership situation and difficulties of the club are really a separate issue as far as I can see, possibly ones that have been successfully engineered by the developers, and I don't think it's right for them to start influencing planning decisions.