[COM] Adelaide Oval Redevelopment

[silverscreen]

Gosh. And even more.......

RAW: Adelaide Oval Takes Spin

Apr 13th


So let’s get a few conceptions about how the SACA member briefings are going right.

First, at Adelaide Oval last night. SACA CEO John Harnden stated on the Channel 10 news last evening that he expected around 1,000 new members and guests to attend (from around 7,000 members invited.) In the end only 300 or so turned up. Given the expectations, needless to say they were all well fed and watered. This followed Saturday’s members’ open day at the oval at which barely a dozen attended.

While Les Burdett was wheeled out to give his usual ringing endorsement of drop in pitches, a new SACA spin has emerged. A drop in pitch can be ready to play on within a couple of days of being laid. But what they don’t mention is that it takes two weeks to lay them and take them out (plus $1m), reducing the cricket season at the Oval to barely more than four months in the year.

Then there as Harnden’s extraordinary claim (as reported in Indaily) that “Well, the western grandstand was finished; it was finished on time; it was finished within the budget; it was ready for the Ashes.”

Well no John. The Western Grandstand went $25m over budget, a 30% blow out in costs. This blow out has been admitted to SACA members by its President, Ian McLachlan as well as to the Parliament. Yet, the SACA has never told its members just where and why the cost blow outs occurred.

Harnden also stated that there was no Plan B, in the event the current proposal failed to garner the support of the 75% of members who vote on the proposal by 2nd May. This is in conflict again with his President who has stated that such a vote would not necessarily be the end of the matter, a position not contradicted by the State Government.

It was also revealed in Indaily today that the costs of this campaign, printing, country trips etc, are being met by the State Government through its $10m grant to the SMA to further advance the proposal. Just why the taxpayers are paying the SACA to do their dirty work is not clear. We don’t see the Minister or Premier attending and spruiking it. Nor for that matter SANFL bosses (other than in their puff pieces in the Advertiser) nor the AFL.

Meanwhile in Naracoorte yesterday, before a modest crowd deeply sceptical that the project could be built for the money involved, Mr McLachlan in his old stomping ground met with some difficult questions. Much was made by McLachlan about the footbridge and entry concourse before questions asked required him to note that none of that was funded by the $535m the State Government has promised and in the event they did not happen, there was no contingency in place. Maybe members will need to climb scaffolding to get into the ground after this development proceeds.

You have wonder why the chief spruiker for this project needs to rabbit on about features not included in the budget in order to attract votes.

Further, McLachlan said that if there was a cost over-run, perhaps they would have to cut back on some features, though none could be specified. This is the same man who told that assembly and the Parliament sub-committee that one will never know what the total cost will be until tenders are in and indeed the thing is actually built.

Great, so a builder will be sending his over spend request to the SACA for perhaps tens of millions when finished and it will be only then the SACA will say ‘well, we might have to cut back on a few things here.’ On this basis, you can see why the Western Grandstand costs blew out on McLachlan and Harnden’s watch.

Finally, following the SACA Adelaide Oval meeting, with car windscreens used to affix No case brochures, web site traffic at www.saveadelaideoval.com kicked up significantly, with around 100 of the 300 patrons present logging on to see what opponents were saying.

If all this gives the SACA ‘the warm glow’ they were expecting as Indaily suggested, they must be living in freezing conditions at present.

PS Following our article yesterday confirming the City Council’s position, one City Councillor advised Kryztoff that they were pleased to see the Council’s position being publicised by others, if not by the Council itself. The member also suggested a great deal of scruntiny needed to be made of the ‘so-called’ Information Booklet put out by the SACA.

[Waewick]

the problem with his facts is they are generally wrong and the problems with there insights is they are mis guided and reflect there lack of knowledge about the process of a construction development

sure - be anti the development, but lets not start getting into factual arguements you can't back up (directed at the website not the poster)

I've said this somewhere else - John Harnden is no mug and brings significant experience to the SACA for this kind of dev.

[silverscreen]

Hi Waewick - Harnden gets a mention in the Kryztoff Raw blogs I just posted.

[stumpjumper]

Can you provide us with a business model for your 3 stadium policy?

I don't think I have to. I'm just asking for some sort of business plan of the AO proposal. OK, that has been addressed by the numbers the government's analysts have provided - $111 million benefit per year according to SACA President Ian McLachlan. You could accept the figures or not.

I think there are still questions about the management. Exactly who will be doing what to whom? ACC? State government?

On another angle, here's a comment from a long-time SACA member: 'SACA needs this redevelopment. 'Without the development, SACA will struggle for years under its debt and SA cricket will suffer relative to the other states. A vote against the development is a vote against SA cricket.'

I think there's a question there about how good was the planning that incurred SACA's debt (the now well-documented ?$85 million) in the first place and who made the decisions leading to it. Ian MacLachlan says SACA is 'comfortable' with the debt, but I wonder how much SACA's position is influenced by financial pressure rather than the merit of the proposal?

[Waewick]

Hi Waewick - Harnden gets a mention in the Kryztoff Raw blogs I just posted.

yes but not in any meaningful way.

[stumpjumper]

perhaps the Government can overlap the agreements to lease with legislation to prioritise the use which is why any WC or Olympics would also take precedence.

but I'm sure they have no involvement in the actual lease between SACA and ACC.

It would be nice to know the answer before voting yes or no, Waewick.

From the AFL's point of view, SANFL's financial ability to support the Crows and Port, both of whose AFL licences SANFL owns will be improved by SANFL selling West Lakes. Meanwhile AFL is very keen to assume ownership of Etihad Stadium in 2025 while it encourages SANFL to sell its only property asset to become a co-tenant with access to AO by licence, subject to the superior access rights of the SA government.

If the development goes ahead, AFL football will have a monopoly at AO, Adelaide's only large sports venue, at no cost to the AFL now or in the future given SANFL's cash inheritance.

Meanwhile, the AFL is pouring money into its Greater Western Sydney and Gold Coast teams. The AFL made a significant contribution to the $144.2 million Carrara Stadium on the Gold Coast, and is estimated to have spent up to $200 million to set up GWS.

What I'm suggesting is not a conspiracy theory. I'm just pointing out how successful the AFL has been in ensuring, at no cost to itself other than the $1 million it put towards the $5 million Power package in June 2010, the future of AFL football in SA. My concern is that this has been achieved at a minimum cost to the SA taxpayer of $535 million, without consulting them

[Prince George]

I must say, I'm finding the whole issue of sports economics much more interesting than I ever did in the past. Take for instance the report from the South Australian Centre for Economic Studies mentioned by SJ - we aren't given access to the report itself (that was paid for by the SMA, so it's up to them to make it public or not), so we're with just the information that they include in their press release. And when you look there, there are some interesting things in those details:

Key figures:
The South Australian Centre for Economic Studies report offers the following breakdown of total impact of $111 million increase in revenues:

• $49 million is extra revenues received at Adelaide Oval and $63 million is extra revenue at other businesses in the City of Adelaide
• Expenditure across accommodation, cafes and restaurants throughout the city will grow by $10 million
• Cultural and recreational activities will grow by $9.9 million
• Net retail revenues outside of Adelaide Oval will increase by $8 million per year
• The total impact of $111 million increase in revenues is associated with 405 full-time equivalent jobs

(my emphasis) Without the actual report, all I can do is ask if the extra revenues at Adelaide Oval accounts for the revenue lost from AAMI, that is - is it $49M greater than the current AO + AAMI revenue? Likewise, I note that the release makes a point of saying "the City of Adelaide" throughout - are these figures including the revenue that is lost elsewhere (ie at West Lakes)? I realise that this must seem like nit-picking, but I don't believe that many words are used accidentally by our public bodies.

My skepticism is further prompted by the fact that when independent economic researchers evaluate stadium building programs, they simply don't find evidence of economic development, and I find it hard to believe that we would be the first. For example, look at this set of slides, from a conference hosted by the Australian Sports Commission. In particular, look at slides 4-10, I'll excerpt some here:

Many cities in the USA have invested vast amounts of money on sports stadiaon the basis of arguments relating to the economic benefits to the city from such investment. Most of these strategies have been based on professional team sports: American football, baseball, ice hockey, and basketball.

...

Baade(1996), Noll and Zimbalist(1997), and Coates and Humphreys (1999), however, showed no significant direct economic impact on the host cities from such stadium development. Crompton(1995, 2001) also argues that economic impact arguments in favourof such stadium construction using public subsidies have been substantially exaggerated.

...

Kasimati(2003) analysedall impact studies of the summer Olympics from 1984 to 2004 and found, in each case, that the studies were done prior to the Games, were not based on primary data, and were, in general, commissioned by proponents of the Games. He found that the economic impacts were likely to be inflated since the studies did not take into account supply-side constraints such as investment crowding out, price increases due to resource scarcity, and the displacement of tourists who would have been in the host had the Olympics not been held there.

Later they also mention that when the sports/events are "spectator driven" rather than "participant driven" (meaning most of the people who attend are spectators rather than participants - the Police and Fire-fighter Games is an example of a "participant driven" event) the economic impact becomes harder to predict, and also that "Often forecast spectator numbers are huge overestimates".

On the other hand, at the same time as throwing rocks at the economic arguments, the slides themselves also note that "there are other possible benefits to cities from such developments". And that to me is the actually important part here - put all the economics to one side, how much is a new oval worth to us for its own sake? For myself, an update at the oval would be a fine thing, but it's not worth $500M+ to me.

[Omicron]

Take your economics out of this thread immediately, Your Highness, and don't come back until you have some populist conjecture!

[Waewick]

what I find interesting that of the 53 votes cast (undecided is not a vote) we have 9% anti

given this place is more pro-development I'm going to imagine that we would be over represented in the yes side of things.

but would it be by enough to move to the 25% of no required?

[stumpjumper]

If the proposal goes ahead, it will be very interesting to look back in a few years time and see if the $111 million benefit has materialised.

Here'a an excerpt from a paper which discussed the failure of government-sponsored projects in Adelaide. The following concerns the National Wine Centre:

"This project highlights the issue that public ‘icon’ projects are frequently launched without an adequately identified business need. In fact, unlike private-sector projects, taxpayer funded projects are frequently conceived and defined to meet a political need or justification while the business need is cobbled together to ‘legitimise’ the expenditure of significant public funds. This is not to say that a political need is not legitimate, but the ‘what?’ and ‘why?’ questions must be clearly stated and agreed by all stakeholders if large, complex projects are to have any chance of proceeding successfully."

http://epress.anu.edu.au/anzsog/imp/mob ... /ch05.html

I assume that 'proceeding successfully' means operating as expected with costs and benefits something like those projected.

In the case of AO, 'business need'' could perhaps be replaced by 'community need'.

I suggest again that the biggest beneficiary of the AO proposal would be the party which has contributed least - the AFL, whose two licences in SA will be protected for years from the possibility of competition from the other football codes. No more AAMI Stadium, no alternative venue to AO which is locked to AFL.

All credit to Andrew Demetriou, whose record of negotiation on behalf of the AFL is unmatched. I believe Demetriou was pivotal in simultaneously aligning the interests of SACA, SANFL/AFC/PAFC and the government while sidelining the ACC and the public, but having the public pay! A brilliant piece of commercial negotiation, it has to be said, even if you don't agree with the outcome.

PS - I believe that SANFL has mortgaged some of its equity in West Lakes. That mortgage would probably be paid out on the sale of the property. I wonder if the mortgagee is the AFL?

[stumpjumper]

Take your economics out of this thread immediately, Your Highness, and don't come back until you have some populist conjecture!

[Will]

Can you provide us with a business model for your 3 stadium policy?

I don't think I have to. I'm just asking for some sort of business plan of the AO proposal. OK, that has been addressed by the numbers the government's analysts have provided - $111 million benefit per year according to SACA President Ian McLachlan. You could accept the figures or not.

I think there are still questions about the management. Exactly who will be doing what to whom? ACC? State government?

On another angle, here's a comment from a long-time SACA member: 'SACA needs this redevelopment. 'Without the development, SACA will struggle for years under its debt and SA cricket will suffer relative to the other states. A vote against the development is a vote against SA cricket.'

I think there's a question there about how good was the planning that incurred SACA's debt (the now well-documented ?$85 million) in the first place and who made the decisions leading to it. Ian MacLachlan says SACA is 'comfortable' with the debt, but I wonder how much SACA's position is influenced by financial pressure rather than the merit of the proposal?

I disagree, I think you need to. Otherwise your opposition to the Adelaide Oval redevelopment becomes fundamentaly flawed. Because, how can you say there is not a solid business case for a stadium that will be used throughout the year, and then say that the best solution for Adelaide is to have 3 stadiums, one of which will cost $1 billion and be only used for 22 days per year and to retain AAMI for no defined purpose, but rather because 'we may need it in the future'.

[silverscreen]

Before we all get into the pointless and distracting question of alternative devts - and we know it would take a team of (unbiased!) accountants and lawyers to do this anyway, not a blogger this site, i want to be convinced of the promise of $111m in benefits. Where is the detail, where is the breakdown published, who prepared it and why do many bloggers here have such blind faith in the promises? Is it Easter bunnyitis or just a nostalgia for the big man in the red suit who unfortunately often disappointed.
Any answers?
BTW - more on kryztoff raw today. Go to it!

[stumpjumper]

I disagree, I think you need to. Otherwise your opposition to the Adelaide Oval redevelopment becomes fundamentaly flawed. Because, how can you say there is not a solid business case for a stadium that will be used throughout the year, and then say that the best solution for Adelaide is to have 3 stadiums, one of which will cost $1 billion and be only used for 22 days per year and to retain AAMI for no defined purpose, but rather because 'we may need it in the future'.

You have a point, Will. I do agree that a new city stadium + AO + West Lakes would be unsustainable.

So, how about a new city stadium + AO + West Lakes sold?

But the NRAH kills the new city stadium idea. Now, what about a further developed West Lakes + AO?

But if AFL football must come to the city, we are left with further developing AO and disposing of West Lakes.

I would only back that if there were a one or two season moratorium on work at AO to see if the 'joint tenancy' will work. A moratorium might be awkward but it beats making a $535 million mistake. And I'd still like to know exactly what the licence/lease framework is, and see the costings SACA has. The government obviously has access to the figures - why not the taxpayers whose money the government is planning to spend? For good measure, let's see what SMA has spent $12 million on to date. That was our money too,

A TV ad says that the Sunday Mail will report tomorrow that SACA has legal advice that the project can go ahead even if the May 2nd vote is 'no' (75% of voters present or proxied required for a yes, btw, not 75% of entitled voters). Maybe SACA's debt is hurting it more than it will say.

[Prince George]

Where is the detail, where is the breakdown published, who prepared it and why do many bloggers here have such blind faith in the promises? Is it Easter bunnyitis or just a nostalgia for the big man in the red suit who unfortunately often disappointed.

Let's not start getting hysterical, silverscreen. While the report the SMA talk about isn't publically available, it was prepared by the South Australian Centre for Economic Studies, a joint research centre of Adelaide and Flinders universities and a credible organisation. Although I don't readily believe that the SACES would simply make a huge error, it would still be best to actually see the report itself to understand:

1. is the press release from the SMA cherry-picking details and ignoring others (they even mentioned that the $111M headline figure is only in the best case scenario of an Ashes test year)?
2. what exactly were the SACES commissioned to report on, eg were they given instructions that prevent them from investigating the effect across the whole metro area, focussing instead just on the City of Adelaide?

As for people having "blind faith in the promises", don't forget that every human being suffers to a greater or lesser extent from Confirmation bias - the tendency to "favor information that confirms their preconceptions or hypotheses regardless of whether the information is true". And that applies as much to the No case as the Yes case, who may be accused in their turn of "pessimisstic doom-and-gloom nay-saying".