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IOLProperty - South African Property For Sale
Friday Nov 30, 2012

Cape Town in new bid to save stadium

Seven options to save the Cape Town Stadium have been proposed - and the public will be asked to comment on the business models for the commercialisation of the struggling R4.5 billion venue.

The roof of Cape Town's stadium.

The stadium has run at a loss since the 2010 Soccer World Cup, costing the city R44.6 million a year to run.

The city has been unable to secure an anchor tenant, but it is still in talks with the Western Province Rugby Union to come on board.

Cape Town mayor Patricia de Lille is expected to release more details of the business plan and public participation process next week.

The seven proposed business models are:

  • The city as an operator with an anchor tenant.

  • An independent operator with an anchor tenant.

  • The anchor tenant as the operator.

  • The city as an operator with no anchor tenant.

  • An independent operator with no anchor tenant.

  • A public/private partnership.

  • Operating the stadium as a municipal entity.

    The analysis of the business models, by International Risk Mitigation Consultants, shows that 2016 would be the first year that three of the seven models could generate a surplus of around R6m, doubling by the following year to between R13m and R14.5m.

    These are the three business models that will turn a profit by 2016: the city as the operator with an anchor tenant, a public/private partnership, and running the stadium as a municipal entity (the latter is similar to how the Cape Town International Convention Centre is run).

    The other models would generate a surplus much later.

    Anton Groenewald, executive director of the city's tourism, events and marketing department said if the city continued with its current method as the operator with no anchor tenant, the stadium would never generate a surplus.

    Analysts cited successful stadium governance, management and commercialisation experiences from the Wembley Stadium in London, the Barcelona Olympic Stadium in Spain and the Allianz Arena in Munich.

    Groenewald said international case studies gave the city a better understanding of the costs and benefits attached to each option.

    The Barcelona Olympic Stadium has a major retail component and hotel attached to it, and Groenewald said another successful practice was selling the naming rights, as in the case of the Allianz Arena, where financial services company Allianz bought the naming rights. A local example is the Sahara Park Newlands cricket stadium.

    Business analysts say the highest-risk business models are the ones where the city is not part operations.

    International and local examples had also shown that when private entities had full control of stadiums, they neglected spending or underspent on maintenance.

    "We have spent 12 months on the report refining it to our best effort and we will now ask residents whether they agree or disagree or whether there are any other alternatives.

    Their comments could drive the outcome of this process," Groenewald said.

    The 48-page analysis will give the public the associated risks of each business model.

    "This is so that the public can understand what the city is trying to do to cover costs. Their comment has an influence and we need to establish whether residents will support changing the ROD," Groenewald said. (The ROD, or record of decision, was the original agreement that the stadium was built under, which banned certain commercial activities.)

    Commercial aspects the city could incorporate at the stadium include a nightclub, hotel, paid parking facilities, restaurants and sports bars, a gym, banqueting and conferencing facilities, retail space and a sports centre.

    Cape Times

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