Cape Town - Cape Town Stadium continues to be a massive financial drain on the City of Cape Town, and it doesn’t appear things will get better any time soon.
The stadium’s operational budget for the 2015/2016 financial year is a staggering R13 758 7954, while expected revenue is a just a tenth of that – R14 843 871.
A substantial portion of the stadium’s operating budget expenditure for the 2015/2016 financial year – more than R20 million – has already been allocated to salary related costs.
The bill is already nearly R6m higher than the expected revenue which is brought in by the hire or rental of portions of the stadium.
Running at a loss of more than R40m a year, the city is considering various commercial models that would make it financially viable.
However, this plan has not been finalised, and the city can’t afford to let the current management arrangement lapse. The temporary management arrangement, which was extended from June 2014, expires at the end of June.
In the absence of a long-term business plan that deals with staffing issues and commercial rights, the City of Cape Town has no option but to extend its current contracts and management plan for another year.
“The retention of the status quo will reduce any down time through the recruitment of a new team, thus reducing operational, infrastructural, safety and reputational risks,” said Lesley de Reuck, of the city’s tourism, events, and economic development directorate. The current staff was familiar with the stadium and the park, as well as their processes and standards.
“Events already booked for the 2015/2016 financial year require contractual fulfilment. These represent potential repeat clients and are critical revenue generators that must be nurtured. The facility cannot cease to operate on June 30, 2015,” said De Reuck.
In a report considered by the mayoral committee last week, De Reuck said a substantial portion of the stadium’s operating budget expenditure for the 2015/2016 financial year – R20 127 130 – had already been allocated to salary-related costs.
“The retention of the status quo will reduce any down time through the recruitment of a new team, thus reducing operational, infrastructural, safety and reputational risks.”
The current staff were familiar with the stadium and the park, as well as their processes and standards.The stadium has also been booked for events in the next financial year. “Current contractual and partnership agreements with event organisers must be honoured. Failure to do so may result in breach of contract and goodwill,” said De Reuck.
The team of external consultants appointed in 2011 to do a business modelling exercise on the stadium recommended that the land use and environmental conditions for the use of the stadium and its precinct should be changed to allow for commercial activity.
These processes are already under way and De Reuck said the submission of the formal application for amended land use planning conditions was “imminent”. The proposed amendments to the current environmental conditions were released for public comment last month.
He said both processes would be concluded by December, if there were no appeals.
Once these provisions have been granted, steps will be taken to release the Granger Bay Boulevard site into the property development market, he added.
Although the report called for a three-year extension of the management plan, until June 2018, Mayor Patricia de Lille amended the time frame, during Friday’s mayoral committee meeting, by just one year, to next June.
She also called for a progress report on the business plan to be submitted to the council by next March.
Also on the operational budget is a depreciation cost of more than R58m and repairs and maintenance costs of more than R192m. The total operating budget is more than R137m, but the expected revenue for the stadium for the next financial year is more than R148m. Most of this comes from the hire or rental of portions of the stadium.
anel.lewis@inl.co.za
- Cape Argus
No comments:
Post a Comment