Cape Town’s R4.4 billion stadium still costs the city R55 million a year to maintain

29-01-2020
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Business Insider
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* Cape Town Stadium currently costs the city R55.1 million a year to maintain. * The City of Cape Town said it established an entity to manage the stadium in 2018, and costs have since dropped by 24.1% against an original budget. * The City believes when Western Province Rugby moves to the stadium in 2021, its financial position will significantly improve.

The City of Cape Town currently spends R55.1 million a year on the upkeep of its iconic Cape Town Stadium on the Green Point Common.

The stadium, which was built at a cost of R4.4 billion for the Soccer World Cup in 2010, has since construction been unable to generate enough revenue to pay for its own upkeep.

After a consortium failed to profitably manage the stadium, the city established a municipal entity in 2018 to take over operations.

That entity has been able to reduce the maintenance cost, resulting in a 24.1% cost decline for the city in the 2018/19 financial year, the City’s mayoral committee member for finance, Ian Neilson, said.

“One of the entity’s key performance indicators is that the grant funding received is reduced by an agreed percentage on an annual basis to ensure the stadium becomes less reliant on City funding, and more self-sustainable,” Neilson told Business Insider South Africa.

The move of Western Province Rugby to the Cape Town Stadium from Newlands in 2021 is expected to have a significant impact on the stadium’s financial position, he said.

Over the past decade, the city has spent on average R39 million on the upkeep of the stadium per year, against an annual income of R9.5 million.

Revenue jumped to R22.1 million, against a target of R18.7 million, in the last financial year thanks to a larger number of events and film shoots than had been anticipated.

Neilson said maintenance costs are expected to continue to escalate due to general inflation, ageing infrastructure, and specialist replacement parts that have to be imported.

He said the management entity, named Cape Town Stadium, utilises a model similar to the Cape Town International Convention Centre, except that the city is the sole owner of the stadium company.

The economic impact of the stadium on the wider city far outweighs its costs, Cape Town Stadium CEO Lesley De Reuck argues.

Events hosted at the stadium has a positive impact on the occupancy rate at hotels, B&B’s and Airbnbs in the region, he said.

“Our events also contribute positively to the restaurants and pubs in the immediate vicinity of the Cape Town Stadium, as well as to major tourist hotspots in and around Cape Town.”