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07 September 2017 Posted by 


Are we over-investing in stadiums?
THE hugely successful American investor Peter Lynch, when asked about making sound investments; stated:
"One should know what you own and why you own it".
There is wisdom in his words, sentiments that should probably be applied when assessing government investment in public facilities such as stadiums. 
It is well recognised that sport stadia are important in the lives of local populations, particularly in sport loving countries such as Australia; but are these investments necessary and do they improve the lives of most?
Like me, I am sure many have watched with interest the conversation and the resultant decisions regarding government investment in, western Sydney, sport stadia. 
For many, the issue is of little concern but I suspect, when governments start throwing budget numbers more than $1B, the veracity of the analysis and argument comes into serious question.
The world is littered with decaying sport infrastructure; even in our own backyard, ANZ stadium has not delivered its promise; by any standards it has been grossly under utilised, costing taxpayers millions of dollars over its 17-year life.
Salford University last year published its findings on global stadium investment and returns; a sobering study showing that for any stadium to be self-sustaining (irrespective of its size) it needs to be filled +- 3 times a week. (i.e. +- 150 times a year).
Applying the model, ANZ stadium, should have attracted some 42 million spectators over its life to date. The stadium’s own web site glowingly states it attracted 24 million people. 
In the absence of a comparative statistic, the gross number appears laudable, however, the empirical investment model shows that with such audiences, the facility has probably been a budgetary nightmare. 
Now I am sure that 24 million spectators didn’t appear miraculously, and several people obviously worked extremely hard but against that I suspect that the costs of manufactured events (Arsenal did not arrive without someone paying a lot of money) are not commensurately factored into account.
It appears that the new Parramatta stadium, with good marketing and a strong multi-use portfolio, stands a chance of being self-sustaining. 
Its position abutting the CBD (as is the Millennium stadium in Cardiff) providing good social value and sustainable returns. The Eels leagues club facility and its planned expansion only adds to and will contribute toward the stadium’s future performance. 
Being sporadically used, filled only on a handful of occasions and cocooned within an unappealing experience, ANZ stadium appears to have few of the Parramatta facility’s success attributes. 
One recognises that there are access and environmental improvements planned, however, there are many problems with ANZ stadium; including, that people have already and continue to vote with their feet; that the experience outside the stadium is poor and it is tedious and energy sapping getting there.
One should seriously consider whether the stock standard approach of (re) build and they will come is correct; it is here that Lynch’s statement has relevance - why invest at all?
Surely the investment decision should be based upon what number, size and structure of stadiums the spectator market can support. 
The decision should probably not be based upon fallacious variables such as ‘we deserve the best stadia to attract the best events’ or ‘it’s good for tourism’.  
These were used to justify the original investment and are as invalid today as they were when the stadium was ‘the best in the world’.
The government needs to intellectually dig deeper and determine not only exactly why it should re-invest but also what it is going to do operationally differently to ensure success.
Sydney deserves a stadia strategy predicated on sound analysis starting with what the market can bear and not one based on re-investing in marginal assets.
Ian Macfarlane, is managing director of Strategic, a consultancy specialising in city marketing.


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