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World Cup White Elephants

17 April 2014, 05:30

To most it’s no surprise that stadiums built for the 2010 World Cup are white elephants, standing around empty most of the time, eating into budgets meant for service delivery.  We were warned by naysayers and stakeholders who had common sense.  But in the end we dove head first into a multi-billion rand spending spree to throw the most expensive one night stand this country has ever seen, totally oblivious to massive bid-rigging and collusion by construction companies and negligent to the future financial liability of keeping these stadiums.  A few years down the line we are left to deal with this World Cup legacy.

1.       Cape Town Stadium – Recently this stadium has been back in the news as WP Rugby Union (WPRU) apparently re-enter talks with the City of Cape Town about the possible move of WPRU to Cape Town Stadium, away from Newlands.  Costing R4.5 billion to build, this World Cup stadium had raked in R92 million as at last year May while the operating costs were R432 million.  That’s R340 million LOSS.  It was even proposed that the City sell the stadium to WPRU for R1.  That’s ONE rand!  Being a fairly well run business I can see why WPRU would think twice before accepting a loss generating asset aka liability.  Thus there have been several suggestions to knock it down or to turn it into low cost housing but these options have been strongly opposed by those who wish to avoid admitting their horrendous business blunder.  Nevertheless it is standing, hosting the occasional concert and it’s also the home to Ajax Cape Town whose home games average 6,000 people, 10% capacity.  While this continues the City is paying back millions each year in loan repayments for the stadium.

2.       Mbombela Stadium – This was a cash cow from the start as it emerged that there was fraud and corruption involving the tenders to build the stadium.  Not surprisingly it involved the manager of the municipality.  Also not surprisingly, the previous manager was killed while fighting corruption relating to the stadium tenders.  To most, it would appear to be an assassination…  Last year it was reported that the stadium was turning over between R2 – R3 million a year while operating costs came to about R12 million per year.  It had only hosted about 40 events in the three previous years, that’s about one per month, so nothing much happens there.  The municipality continues to struggle paying off its loan for stadium and have attempted to take out a loan to pay off this loan, which the municipality will be struggling to pay off for another decade, further hindering service delivery.


3.       Nelson Mandela Stadium – Another stadium, more excuses on why the stadium ran into a R19.3 million loss for the previous financial year.  The stadium does have its fair share of events, hosting PSL fixtures, Vodacom Cup, cricket, concerts and international sporting tournaments however it has yet to break even.  “If you ask me whether a R2.4-billion stadium should have been built in Port Elizabeth, I would say no" - CEO of the Nelson Mandela Bay Development Agency.

4.       Moses Mabhida Stadium – Fresh off its record loss of last year (R34.6 million), there seems to be little hope in sight for this “most beautiful white elephant”.  With the budget deficit sitting at well over R100 million, the stadium continues to almost beg for events and is literally “giving away tickets” to poorly attended PSL games.

On a positive note, FNB Stadium continues to turn in profits as the lion’s share of big concerts and international sporting events continue to go its way.  But as a profitable unit it continues to be the only one. 

The big question should be around the sustainability of these stadiums.  The longer we keep them around the more losses accumulate, losses which these municipalities can ill afford considering their financial status and the problems with service delivery.  With the exception of FNB Stadium, knocking them down seems to be the only financially viable option to avoid further losses.  Or do we keep them as costly sentimental relics?

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