According David Bernstein at a forum at Portcullis House, Westminster in January 2003, MCFC have an option to purchase under the lease, with the rent we pay set off against the price calculated under the purchase formula (I believe that the amount shown as owing under the notional finance lease in the accounts broadly equates to the current amount it would take to exercise the option). At that time, Bernstein suggested that it would take at least three decades for this to be economically viable. Obviously, the advent of ADUG would make it feasible for us to acquire the freehold now if we wanted. Informed noises suggest that the reason we haven't done so is because, as things stand, the rent is paid to the Council but, if we bought the freehold, the purchase price would largely go to Sport England in repayment for lottery funding; MCFC are reluctant to, in effect, shaft MCC and benefit Sport England instead.
I'm told by a source you'd definitely consider reliable that, when they took us over, ADUG were keen to build a state-of-the-art new stadium. However, Sport England wouldn't countenance CoMS (as it then was) being demolished. I believe that City investigated the possibility of taking out the bottom tier, squeezing in a track again, and cponfiguring the stadium for rugby/athletics/concerts, before concluding that it wasn't a workable solution in terms of cost/benefit.
I think that was a shame, but I can see why they decided that. I'd have loved to see MCFC playing in a fabulous new 75K football stadium on the north car parks while Sale Sharks shared a community stadium next door with MCFC youth, reserves and women's teams, with maybe RL and top athletics events over the summer. Not to be, regrettably.
PS - As for Spurs knocking down the Olympic Stadium, that was never really a runner. Boris Johnson's office encouraged their bid to do that to make sure West Ham weren't the only credible applicant. Spurs realised later that they'd been used and were rather pissed off with it, but were placated by mayoral support for aspects of their current project that had previously proved controversial (e.g funding for transport improvements that the club was previously told it would have to pay for).