Thursday, July 1, 2010

Episode 16: Finding use for new stadiums will prove an uphill climb

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Finding use for new stadiums will prove an uphill climb
By Ingi Salgado

South Africa has spent nearly 2.75 billion dollars building five soccer stadiums and upgrading another five for the World Cup, but the total bill could escalate if alternative uses for the venues do not bring in enough cash to run operations.

Fears are mounting that local stadiums, especially those in smaller cities, may incur substantial operating losses in the years ahead.

"It's going to be a tremendous challenge when you have as many new stadiums as South Africa has," said Barry Pollen, the director of Stadium Management South Africa, which has been appointed to run the country's calabash-shaped Soccer City stadium in Johannesburg. "If there is no population, then it will be very difficult to attract people."

Stan du Plessis, an economics professor at the University of Stellen-bosch, said it was "implausible" that the smaller new stadiums in Nelspruit, Polokwane and Port Elizabeth would be able to cover their operational costs, let alone provide a decent return on investment to cover construction costs. "They don't have the crowds. The teams may be there, but the question is if they have enough supporters. Premier Soccer League attendance is low outside the very big clubs," he said.

So far, only four local stadiums - none of which were built from scratch - are on track to remain productive assets after the last whistle is blown next week.

Three of them, Ellis Park in Johannesburg, Loftus Versfeld in Pretoria and Free State in Bloem-fontein, have the support of established rugby franchises that boast committed crowds.

The fourth, Soccer City, has opted not to secure a soccer tenant team because it erodes its ability to host finals. But its future is nevertheless more secure than its cousins in outlying areas because of its status.

It will be rebranded as the National Stadium after the World Cup, and will host a variety of sporting events, as well as conferences, weddings, birthday bashes, funerals - "anything we can fit in", says Pollen.

But prospects at the other stadiums are less certain.

In Cape Town and Durban, authorities have thus far been unable to tempt provincial rugby teams to sign on as anchor tenants at the 620 million dollar Green Point Stadium or the 425 million dollar Moses Mabhida Stadium.

In the case of the KwaZulu-Natal Sharks, a 47-year lease at neighbouring Kings Park stands in the way, while Western Province rugby's affiliated clubs have voted to remain at the ground they own in Newlands because it is commercially "more beneficial".

However, in Port Elizabeth, a good relationship with the Eastern Province Rugby Union may not be enough to sufficiently fill the 290 million dollar Nelson Mandela Stadium's 44 000 seats.

The prospects appear bleaker for other stadiums that have no clubs signed on, such as the 165 million dollar Mbombela Stadium in Nelspruit and the 180 million dollar Peter Mokaba Stadium in Polokwane.

Durban city manager Mike Sutcliffe recently indicated that the host cities faced enormous funding issues. "If I'm battling in a big city, I'd hate to know what my colleagues are doing in Polokwane and Mbombela," he told Parliament.

The municipalities that own the stadiums are likely to land up with annual operational expenses amounting to millions of dollars.

The most expensive stadium to run is certain to be the 95 000-capacity Soccer City, whose annual operational and maintenance costs Pollen estimates at 4 million dollars. "Stadiums are very expensive to operate and maintain. They have to generate a lot of revenue," he said.

To help pull in cash, stadium management will more than likely seek to host musical, cultural and religious events, but the relative infrequency of such gatherings rules them out as a substantial source of income. Other possible uses include housing conference centres, shopping centres and restaurants.

Du Plessis said that if there was no realistic prospect of recovering costs in the immediate future, then a "perfectly sensible" solution would be to knock down the stadiums. "You don't have to keep on paying the bill," he said. But this was an unlikely option because of the political embarrassment demolition would cause in a country with pressing development needs, he believed.

Tearing down a stadium may seem extreme, but is not unheard of. South Korea resorted to demolishing its Dong-dae-mun Stadium after the 2002 World Cup co-hosted with Japan.

Concerns about being stranded with white elephants have dogged the hosting of most major global sporting events in recent decades as specially built venues struggle to attract the kind of crowds that would keep them operational. London, host to the 2012 Olympics, is anxiously considering proposals to turn the 1.15 Billion dollar East London Stadium into a music venue, or to secure West Ham United as anchor football tenants after the games.

One thing is certain, without concerted and creative steps to guarantee their future use, most of South Africa's new stadiums will lie idle, further eating into strained municipal finances.