https://www.smh.com.au/sport/nrl/roy-column-on-stadia-20180320-p4z593.html
Seven reasons why the economics of the new Sydney stadiums stacks up
Three of Australia’s four football codes are played on rectangular grounds and their headquarters are all in Sydney – NRL, Rugby Australia and FFA.
Sydney, with its biggest stadium (Homebush) circular and its next biggest (Moore Park) 30 years old, is already losing premier matches to other capital cities with superior facilities.
That’s the big picture summary in support of the NSW Government’s now vacillating decision to pull down both stadiums and spend $2.5 billion building new ones.
Yet the arguments against this have degenerated to the publication of social media comments, such as the arrogant response to South Sydney’s Tom Burgess’s support for the rebuilds: “As soon as Brad Fittler has [leading economist] Saul Eastlake wearing the No 1 NSW Jersey I’ll listen to Tom Burgess on economics.”
Nothing in the current debate has angered the rugby league community more than this elitist tweet.
While Burgess may not have studied Economics, he has played in stadiums and would know something of the energy players draw from the crowd.
What follows is my counter to those arguments from the perspective of someone who did major in Economics at university.
1. "The money should be parcelled around the state in grants for facilities to aid grassroots sport."
This is reminiscent of much poorly managed aid to third world projects. Who will maintain the dressing sheds and ovals when the investment stops? Cash strapped councils? What is the value captured by the investment, other than the improved fitness of the marginal youth who use the new facilities. Governments would find it more effective to ban kids obsessed with electronic games on sunny days.
2. "The $2.5b should be invested in schools and hospitals."
The NSW Government is cash rich and has already budgeted for the stadia twice, via the sell off of poles and wires and the $2.6b sale of the land titles registry. The money is available for schools, hospitals and stadia. As John Quayle, chairman of Venues in Western Sydney, says, “This is a once in a lifetime opportunity.”
3. "The economic benefit figures don’t stack up."
It has been frustrating extracting numbers from the government on the impact to NSW of hosting big events, including concerts, in the city stadia, other than data which says the tourism and events industry contributed $33.2 billion in 2015-16 to the state’s economy. Some value is non quantifiable. It is, as former Victorian Premier, Jeff Kennett said with regard to Melbourne’s integrated sporting and cultural precinct, “It’s why Melburnians love living there.”
The NRL conservatively estimates the economic impact of hosting one grand final and one State of Origin match in Sydney in each of the past 25 years to be $1.7 billion ($68m a year at original prices). John O’Neill says of his 2007 to 2010 term as chairman of Events NSW, “Our documents indicate that we planned to invest $1.3m in Bledisloe against an anticipate return of $7.1m. Our evaluation criteria were very narrow, with none of the multipliers that would normally be applied. The economic impact would have been many multiples of $7.1m for just one game.”
These co-called multiplier benefits are not so much the pump priming creations of Keynesian economics, or Rudd’s pink batts. They are the synergies and excitement that come from multiple opportunities for recreation, work, sport, and cultural activities when there is access to integrated facilities, such that total costs across all activities are lowered, people attracted to attend, media to cover and invest, and liveability to be enhanced.
4. "Major sporting bodies, such as the AFL and NRL, don’t pay tax and should therefore build their own stadia."
These peak sports bodies are non profit organisations. All profits are distributed, most to clubs, many of which make a loss, even if there are large community benefits. To compare Australia’s exemption status to the taxes paid by US sports is ludicrous. Of the 32 NRL franchises, 31 are privately owned by billionaires who write losses off against their other profit making businesses. All major stadiums in Australia, other than the AFL owned Etihad Stadium, are owned by state governments who charge the tenants hefty rents.
The Victorian Government has budgeted to spend approximately $200m on improvements to Etihad, with most of the money spent on bringing seating closer to the sidelines to enhance the experience of fans. The Victorian Government sees it as “relationship building” with its major code. Etihad will host, in August next year, the United States’ best basketball players in a match against Australia.
5. "There is nothing wrong with the existing stadiums."
Technological developments mean the life of a stadium in the United States is approximately 30 years, the age of Allianz and just over half the existing life of ANZ. According to Quayle, 80% of the content of Sydney’s sporting events is in rectangular stadiums.
If Sydney does not have a rectangular stadium suitable for seating 75,000 people, it will never host a major international sporting event. O’Neill, a former ARU chief executive, recalls, “Kennett successfully convinced us to take the Bledisloe to the MCG in 1997/8. A 92,000 crowd, compared to 42,000 at the Sydney Football Stadium. We went to Homebush in 2000 and created the current world record crowd of 110,000. The 2003 RWC was a financial bonanza for Sydney and NSW, with a final, two semis and a play off, all at Homebush and 83,000 for all games.” Sydney will never win another RWC until it has a rectangular stadium consistent with World Rugby guidelines.
6. "Let’s compromise and build just one stadium."
If the decision is ANZ, the Roosters, Waratahs and Sydney FC supporters will claim their stadium is already antiquated. If the decision is Allianz, it will benefit rugby union because its fans predominantly live in the eastern suburbs and north shore. But they won’t ever see a RWC in Australia. It will suit the AFL because they already have, courtesy of the taxpayer, a renovated SCG for the Swans, a boutique stadium at Homebush for the Giants and ANZ will retain its circular shape for the big games when the AFL expects to dominate the city.
But the Roosters are the only NRL club to gain. The new light rail link from Central to Moore Park may make Allianz more accessible to Dragons fans but they currently prefer Homebush because it is an easier trip by car or train. Sydney is moving westward and Transport NSW says 60% of the visitors to ANZ stadium come via rail. The numbers will increase when the Parramatta to Homebush light rail link is completed.
7. "If stadiums generated the revenue the NSW Government says, private companies would have invested in them."
The management rights to ANZ stadium was controlled by a company, partly owned by former AFL chairman, Mike Fitzpatrick. When the Baird Government sought to take control of the stadium to re-configure it to suit the rectangular codes, it bought the management rights back from Fitzpatrick and company for approximately $200m.
By the time ANZ is eventually rebuilt, driverless vehicles will be here, offering complementary systems such as an autonomous phone bookable car (sharing) systems, leading to increased stadium memberships and reduced traffic congestion. There will be broad use of shared systems with fewer smarter and even fun cars doing more trips with more passengers per trip. This also offers new finances and lower costs, with public/private partnership(PPP) transport and event opportunities with electronic passes and codes for discounts via clubs and stadia.
The new transport technologies mean the relative disadvantage the Harbour City faces in not being able to have the North-South-East-West matrix and radial transport systems that benefit Melbourne, NYC, Paris and London for example, will now be less of a disadvantage due to an efficient distributed system, a matter now being analysed by Transport NSW.
