Cape Town Stadium sees pathway to losing ‘white elephant’ status

Cape Town Stadium last year cost R79.6m (£4.1m/€4.9m/$5.4m) to maintain, with the City of Cape Town doubling its contribution, but authorities are confident that the venue can shed its ‘white elephant’ image thanks to a recently-signed deal with Western Province Rugby.

The City of Cape Town took on management of the facility, developed at a cost of R4.4bn for South Africa’s staging of the 2010 FIFA World Cup, back in 2018 under the Cape Town Stadium banner. Cape Town Stadium’s annual report was presented to a council meeting this week, with figures revealing that ratepayers contributed R55.1m to its upkeep in the 2018-19 financial year, up from R27m the previous year.

Over the past decade, the City has spent an average of R39m per year on maintaining the venue, against annual income of R9.5m. However, revenue increased to R22.1m last year, against a targeted R18.7m, thanks to extra events and film shoots at the stadium.

Commenting on the stadium’s financial status, Ian Neilson, Cape Town’s Deputy Mayor and Mayoral Committee Member for Finance, told the Cape Argus newspaper: “There are some numbers that we can attribute to inflation, but the trouble is that because it is such a big stadium, there are fixed costs associated with a big stadium.

“There are also costs that are events-related; just opening the doors of the stadium already costs so much.”

TheStadiumBusiness understands that management are of the belief that stadium finances are now turning a corner, with new commercial deals in the offing including main stadium rights such as catering and pouring rights, along with a likely naming rights deal, agreements that are likely to bring in significant revenue.

The development of Cape Town Stadium was affected by the deadlines involved in delivering the 55,000-capacity venue for the World Cup. The City had to start construction before re-zoning the land it sits on. Consequently, the stadium has been effectively restricted to just sports and leisure use.

This restriction meant that any commercial usage outside sport and leisure required special exemptions or long-winded bureaucratic permit applications. However, the new Cape Town Stadium operating entity has its own board of directors and can take operational decisions without direct city authority delay or interference. It can also undertake more commercially-oriented deals.

In November, it was announced that Western Province Rugby will move to Cape Town Stadium in 2021. The City of Cape Town’s Council approved a binding heads of agreement between the city, Cape Town Stadium and Western Province for the team to make the venue its home from February 1, 2021. The deal will potentially span the next 99 years.

A “mutually beneficial” revenue share model has been agreed upon that grants Western Province preferential access to play all of its matches at Cape Town Stadium. Under the agreement, the city will be responsible for repairs, maintenance and operational costs at the stadium, which will retain its multi-purpose status and continue staging other sports and events.

As part of the deal, additional suites are being constructed at Cape Town Stadium through the conversion of former press areas. Neilson added: “I think the big change will happen when Western Province Rugby comes in, and when we are finished building the additional suites at the stadium, completed in time for rugby season.

“This will not only make it more profitable when rugby is played there, it will make it more profitable for any other event. One can charge a lot more for a seat in the box than for a normal seat. It will also increase the income streams of other events.”

Image: Cape Town Stadium