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Wednesday Oct 24, 2012

Durban grapples with cost of maintaining stadium

Durban's Moses Mabhida Stadium is haemorrhaging money and the eThekwini Municipality is grappling with how to make the facility, built for the World Cup, financially sustainable.

Yesterday audit and risk committee member Peter Christianson set alarm bells ringing about the stadium's financial structure, saying that it was incurring "cash losses".

He suggested it be managed as a separate entity, similar to the way the Durban International Convention Centre (ICC) and uShaka Marine World were being run.

"For the past financial year uShaka and the ICC did not require any cash injection from the municipality," he said.

"The losses [incurred by the two entities] were as a result of depreciation charges on assets. There was no requirement for the city to bail them out. But that is not the case with the Moses Mabhida stadium. There is a flow of funds, but it is difficult to establish what the figure is."

Christianson said that the R3.1 billion stadium's financial structure had to be separated from the "mother body", especially in view of the value of investment.

"We also urge that the council investigates all possible options, including reopening negotiations with the rugby union [for the Sharks to move into the stadium]. It will appear it's the only way to mitigate the cost to the city of operating the stadium."

eThekwini Municipality spokesman Thabo Mofokeng said one of the options the city could consider was changing the stadium to a legal entity. This would mean it would have a board to manage its affairs and the city would play an oversight role.

The stadium has no anchor tenant with pockets deep enough to make it financially sustainable.

Mofokeng said negotiations with the SA Rugby Union were at an "exploratory level".

In June the city revealed that it had spent R50 million since the World Cup to attract events to the stadium. It dismissed claims that it was a white elephant, saying it had generated an income of more than R207m in two years.

Two weeks ago, the city manager, S'bu Sithole, told the municipal public accounts committee that the stadium was a "complex story" and the city was doing its homework.

"The cost structure warrants further understanding," he said.

"The way you manage it is not like any other soccer stadium. There [are] a lot of activities at Moses Mabhida stadium, there's also the retail component. The stadium still needs further research."

Yesterday, Sithole said the council should have made a decision on the stadium's management structure by the end of the year. The stadium is being run by a management company dealing with the dayto-day operations, while an oversight committee oversees the running of the stadium.

DA caucus leader Tex Collins said the city would not recover its capital costs on the stadium, but it should turn an operating profit.

"Unless drastic measures are taken we will continue throwing money at Moses Mabhida stadium. The accounting needs to be in order and we need to find out where money is going and how it is being spent."

Minority Front councillor Patrick Pillay said he supported the call for the stadium to be managed as a separate entity that would reflect its true expenditure.

The Mercury

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