Speaking Stadia - Article 1
by Alan Patching
This is the first of a series of columns for Stadia Magazine. Speaking Stadia has a broad content brief. We will look at issues of importance to, and happenings in, the venues ownership and management business. We will highlight management tips for those involved in the exciting venue ownership and management industry. From time to time we will include snippets of interviews with industry movers and shakers, maybe even with would-be-if-they-could-be-s (we will let you guess where the interviewees should be categorised). Heck, we might even look at some issues from a hypothetical perspective just to justify the Stadia editor's choice of column title (I'm advised it will change from Speaking Stadia to Hypothetically Speaking between my computer and the printed page). The column is written in Sydney Australia, but has a brief unlimited by geographical borders, although it is fair to assume that an author inspection and report on Afghanistani stadia holds no significant priority in the planned travel itinerary for the coming 150 years.
Ours is an industry where it pays to be in touch. One venue's problems just might be the lesson that can help another venue avoid or deal with a significant problem. If this column is to serve a truly useful purpose it is as a conduit for passing on those important lessons, often learned the hard way, so that others may benefit from the experience. If you have a lesson to share, email it to the editor so all may benefit.
The big recent lessons come from Colonial Stadium (Melbourne, Australia) and Stadium Australia (Sydney Olympic Stadium, now Telstra Stadium, Sydney).
National television station Channel 7 has recently completed a rescue deal for Colonial whereby they take over operations and, in return, service debt. Equity investors took the big dive. Colonial is a world class venue, and fans and players will benefit for the long run from the deal. But this venue, like most, would never have happened without equity, so what are the lessons from the Colonial experience for potential equity investors in future stadia. They become clear in a more global observation of the venues market in Melbourne. Colonial's main competition is the Melbourne Cricket Ground. Main venue for the 1956 Olympics and the scene of historic cricketing battles over the decades, the "G" is definitely hallowed turf.
It's a pretty fair bet that it does not have to fill any where near as many seats as Colonial to break even, and this might even be the case when the planned renovations are completed. Needless to say the two venues have different owners.
The main lesson here think long and hard before investing in a major venue where a successful competing venue is already established, especially if it has a substantially lower operating overhead than that projected for the investment you are considering.
Sydney Olympics jewel venue, Stadium Australia, is a case which endorses this lesson. Built in a great location for the Games, and one which will continue to work well for big events, it has a lot of catching up to do on the well established (Government owned via a trust ) Sydney Football Ground/Sydney Football Stadium (SCG/SFS) complex in terms of appeal for events attracting less than capacity crowds. At the time of writing Stadium Australia is well short of achieving its originally intended post-Olympics events schedule. In fact, one hot rumour is that the skin of its teeth was only just left in tact in a recent banks-ownership-hirers arrangement that effectively kept it afloat. The SCG/SFS facilities being relieved of some debt in a membership related deal leading up to the Olympic venue deal, might have had some impact on Stadium Australia's events schedule status, as a result of keener deals that could be made by the older venues in the open market, hypothetically speaking, of course. Whatever the reason for the big venue's troubles, those concerns might not exist if both venues had the same owner. Mind you, that might not be out of the question for the future either. After all, a reduced events schedule might very well have a greater than expected impact on revenue streams, depending on the tolerance of the corporate (suites) market in particular.
Stadium Australia continues to undergo its post Olympics conversion, and many believe a management/ownership restructure is long overdue. Any bank with good profit figures might decide to exploit the shareholder support these engender and get rid of its exposure in similar circumstances. I am surprised the venue has come this far with its original owners. Watch this space.
Both these venues show that common ownership should be a key focus in any investment risk analysis for those considering equity contribution for future major venues. Other factors would be ensuring an appropriate and not over the top level of finishes and inclusions in the venues, the topic for my next column.
Queensland has learned the lesson and will avoid the problems of Colonial and Stadium Australia with the major stadiums of any significance all owned by the Government. Some form of master trust would be the obvious eventual management arrangement for Brisbane's key venues. These include a dedicated oval arena at 'the Gabba' and the new multi code 55,000seat venue at Lang Park currently hitting strides in its construction phase. This arrangement differs from Colonial and Stadium Australia where both oval field and rectangular field sports are planned. Stadium Australia competes with other local venues purpose designed for one arena configuration or the other.
Of course the new Queensland venue has a lot more going for it than the points mentioned above. In a proven location, it will be the most intimate rectangular field venue in Australia, perhaps the best in the world.
Until next month, I wish you a happy festive season, numerous events, and capacity crowds.
This article is copyright. The author consents to this article being reprinted for personal use or publication, on the condition no changes are made to the topic, content and author's name, and the words "Copyright held by Alan Patching and Associates Pty Ltd. Alan Patching is one of Australia's leading business presenters and inspirational speakers." are included at the end of the article.
For more information on this and other leadership, management or project management topics, please visit our e-books page.