CT faces huge maintenance bill
2009-10-04 20:08
Johannesburg - The City of Cape Town faces huge maintenance responsibilities for Green Point stadium with no guarantee of a return on the billions invested by national, provincial and local government at taxpayers' expense.
The proposed lease agreement between the city and SAIL Stadefrance places extraordinary and costly obligations on the city as landlord.
It will be required to maintain the state-of-the-art steel, glass and PVC-coated roof, the stadium's glass fibre and steel outer facade as well as high tension cables, catwalks, stormwater drains, gutters and downpipes, all of which must also be kept in a “clean, tidy and sanitary condition”.
SAIL Stadefrance's own contributions to maintenance will initially be capped at R5m. Any costs above that will be borne by the city.
It will have to provide SAIL Stadefrance with gratis liquor and “all other licences” required for operating the stadium.
The operator is also entitled to 2080 temporary parking bays on Green Point Common during events. If any of the bays are unavailable, the city will have to provide parking and a shuttle service at no cost within 4km of the stadium.
Cape Town must use its “best endeavours” to help SAIL Stadefrance source and secure events for the stadium while also channelling current and future events in which it has an interest to the stadium.
The city cannot ”undermine” Green Point by funnelling events to other stadia or subsidising the costs of other stadia that belong to it. Effectively it must help the operators run their business and get it off the ground.
Secure events
In addition, for three years, Cape Town will also have to pay an annual allocation of R3m excluding VAT towards the cost of securing events for the stadium. This is unusual for what would normally be an arms length agreement between two parties with equal bargaining positions.
Shareholders in SAIL Stadefrance stand to gain financially with a provision that allows the operator to enter into “arms-length agreements” with them to provide services and products, although they would have to have the permission of the City. Permission cannot be “unreasonably withheld”.
The lease also omits any share in broadcast rights for future events at the stadium.
In the event that Cape Town fails to host at least five World Cup soccer matches, including a semi-final, it will be obligated to fund SAIL Stadefrance's efforts to “secure and host matches or events at the stadium of a similar stature” as the World Cup games.
It could face a maximum of R30m in penalties to “make up for the lost publicity and exposure of the stadium as an iconic venue”. The loss of match will cost R5m, a semi-final: R10m.
At present, barring any mishaps, the city is scheduled to host eight matches.
David Dyer, Alexander Forbes's business development manager for the Western Cape, told the Cape Argus last week that the company was negotiating extra insurance cover with the city.
Dyer said the cancellation of matches due to the stadium being damaged, security threats or other factors was a costly one. "This could have a severe impact on the event, and it would be important for the city to be covered."