Beware the coming soccer circus
While the Opposition bangs on about waste and excess in the Government's spend on Pink Batts and primary school halls, I haven't seen a mention of the looming soccer circus. You could stuff a lot of school halls full of Pink Batts for $2.9 billion.
Maybe that's just the nature of Australian politics - every wannabe baby-kisser loves to be associated with a major sporting event and never mind the cost. Besides, who knows who might be in government by 2022, fully primed for photo ops?
And cost Australia hosting the soccer World Cup will, as Yoda might phrase it.
The $2.9 billion is what PricewaterhouseCoopers reckons hosting the cup could cost after meeting FIFA's stringent and sometimes outrageous conditions. According to FIFA - the quaint governing body that can't organise a video replay to prevent blatant cheating - no Australian stadium is good enough and no other major sporting events will be allowed within a couple of months of the round ball tournament.
Hilariously, Australia has already signed up to comply with FIFA's whims and fancies despite the only costing apparently being the PwC study commissioned by Frank Lowy's FFA.
Uh-oh, that sounds rather like an ''independent expert report'' and most of us know what independent expert reports are like: they tell those paying for it pretty much what they want to hear. Think all those independent expert reports for the likes of Timbercorp and Great Southern, the report that found AMP buying GIO was a good idea and the amazing divergence of opinion whenever the two sides of a contested takeover each hire an ''independent'' expert.
Given the track record of such hired experts, in my opinion there is good reason to be wary, very wary, of the PwC numbers.
Before blow-outs
Even taken at face value, it's pretty scary stuff: they're already talking of an Australian World Cup running at a tangible $1.3 billion loss and that's before all the usual blow-outs and complications and after optimistic assumptions about the number and type of tourists that might come. (You might need a considerably larger security spend on English soccer fans than you do on British and Irish Lions rugby fans, for example.)
And there's another reason why the FFA/PwC numbers could be fraught with fiscal danger: for some strange reason, they're a big secret.
People and organisations in my experience tend not to be overly protective of robust reports of which they're proud. Ask PwC for the copy of the report and you're told, not unreasonably, that it was commissioned by FFA and therefore belongs to them so it's up to FFA to release it.
Ask FFA for a copy and the answer is ''no''.
It has been selectively leaked though to the AFR which last week described it as a ''PricewaterhouseCoopers business case prepared for the government''. My understanding would be more like ''an FFA pitch for a couple of billion dollars of taxpayers' funds''.
I'm reduced to working off the AFR report of the PwC report which ''assumes'' a maximum spend of $2.9 billion on stadia and predicts that the nation would receive in return $345 million in net benefits.
And that's where the report leaps into the wonderfully vague world of intangibles. You see, you can only come up with those $345 million in net benefits if you also predict a very abstract $1.64 billion windfall from the promotion of ''Brand Australia''.
The last time I saw crucial intangibles of that order was in ABC Learning's last set of accounts.
German model
It looks like the PwC/FFA study draws heavily on the German experience of staging the latest World Cup with a claimed 1.1 million visitors. Put on a soccer tournament when your neighbours are a couple of hundred million soccer fans and there's a good chance several will drop by for a look. Stage the same tournament on the other side of the earth, well, you can't just walk over.
A much better comparison might be made with the Sydney Olympic Games, the ''best ever'', of course. And a great party too for everyone involved, a fantastic time to be a Sydneysider. Even crime rates dropped sharply. There was a suspicion something mildly mind-altering may have been added to the water for the duration.
And there was massive global coverage of ''Brand Sydney'' and ''Brand Australia'' with the games and everything about them receiving positive play. One can only wonder what valuation PwC might have put on that at the time, especially with the then-rich North American market that isn't soccer-crazy but enjoys a good Olympics.
But the rich wave of international tourists didn't really come. The events were generally filled with wonderfully generous Australian fans. And New South Wales is still paying for the hangover with that ``Brand Sydney'' stuff proving very intangible indeed.
So far it seems the hoi polloi haven't caught on to what an enormous spend the soccer mob has signed us up for if we win the bidding competition. (And that's not a cheap game to play either - you could fund Australia's Copenhagen delegation many, many times over and still have change for team t-shirts and budgie smugglers.)
There's been a story about gaps already appearing between the NSW and Federal Governments over exactly who would pay the $200 million just to make Sydney's ANZ Stadium acceptable for FIFA, but that is less than 7 per cent of FIFA's ''business case'' cost.
And for a really good laugh, there's an internet soccer writer who's opined in relationship to the AFL apparently not wanting to get out of FFA's way:
''The economic benefit created by hosting a World Cup would be massive, so FIFA and the FFA will be in a position to financially compensate the AFL for any losses.''
Yeah, right. And if you believe that, you could probably hang out a shingle for writing independent expert reports.
Michael Pascoe is a BusinessDay contributing editor.
unable to attach link as new user - SMH article from yesterday
