Stadium dollars don’t add up

The NSW Government’s proposal to knock down and rebuild two existing stadiums to the tune of $2 billion lacks reasoning on all levels.

Stadium Allianz

Image: Allianz Stadium

When considered in light of well-publicised lobbying by powerful interests – namely the SCG Trust, home to such notables as radio shock-jock Alan Jones, John Hartigan (ex-CEO of News Ltd.) and former premier Barry O’Farrell – the plans likely represent accession to interest-group pressure, rather than the careful, considered cost-benefit analysis which we might reasonably expect from our elected officials.

With respect to the slated benefits of the proposal – more sporting events and concerts, increased attendances and reduced operating costs – this spending makes very little sense. This is especially true in the Government’s neglect of other, cheaper options; namely the refurbishment and improvement of the venues, as opposed to their complete replacement.

The business case for both emphasises an assumption that the extra events will generate an increase in attendances by up to 15% a year, however Allianz and ANZ stadiums have achieved average crowds of roughly 14,000 and 23,000 respectively, over the last 15 years. ANZ’s average is inclusive of its status as the state’s ‘blockbuster’ venue, with irregular events like Adele’s 2017 concerts, which accounted for two consecutive attendances over 95,000, probably distorting the mean figure.

Even so, the venue very rarely approaches its official 83,500 capacity at all; just 5 from 55 events in 2017 exceeded 80,000 and 2 of 38 in the year preceding. The Government’s projected 15% increase is, then, a profound over-estimation and can do little to assure taxpayers that their money is being wisely spent.

Even leaving aside attendance, the potentially lower operating costs can hardly be considered a substantial community benefit. Lower costs produce greater profit, and with both venues in private hands, notwithstanding the government’s temporary acquisition of ANZ stadium for the purposes of improvement, this decision essentially subsidises the profits of their owners out of the public purse.

Tele photo anz stadium

Image: Daily Telegraph

It would appear that Infrastructure NSW – the body tasked with modelling any substantial government-funded infrastructure proposals – shares these concerns. They conclude the project’s business case with a tone of apprehension, and a caveat, “despite the similarities in their Benefit Cost Ratios, the options vary significantly in terms of their cost and build time…[the Government] should examine in more detail the project’s costs, benefits and timeframes, as a basis for final, detailed investment decisions.”

The opportunity cost of this undertaking cannot be ignored. The $2 billion price tag, we will be kind and preclude inevitable blowouts a lá WestConnex or the Sydney light rail, is capable of funding the Parramatta light rail twice and worth almost one-third of the Sydney and Southwest Metro project.

It also comes at the expense of further investment in grassroots, community sports and recreation, which are arguably more important in determining public interest, participation and patronisation of sporting events than the provision of elite venues. The 2017-18 NSW budget allocates just $200 million of this sort of spending with the Active Kids Rebate, which provides $100 vouchers to families with young children involved in sport, to assist with registration, participation and equipment costs. The obvious disjunct between spending priorities seemingly ignores the potential for grassroots investment to produce substantially greater benefit for a fraction of the cost.

While it is pleasing that the Government have stepped away from the complete demolition of ANZ stadium in favour of refurbishment, saving $500 million, questions and issues remain surrounding private interest lobbying and a potential ‘iron triangle’ of relationships between the NSW Government, professional sports associations and the SCG Trust.

There is a theory of government which suggests that policy development occurs in rarefied prescriptive ‘communities’ made up of technical ‘experts’, the controllers of assets and interested politicians. Where the members produce policy that aligns with their own interests and values at the expense of the public good, such a model subverts democracy itself. If these relationships generate the sort of skewed analysis that characterises the Government’s stadium plans, taxpayers would be right to view this spending and administration with suspicion.

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