The Stadium and the City Vol 2 Section C

THE STADIUM & THE CITY VOLUME 2 - TECHNICAL REPORT

SECTION C – GOVERNANCE AND FINANCIAL FEASIBILITY

SECTION C

CONTENTS

1.0 Governance and Venue Management C-5

1.1 Background C-6

1.2 Negotiations To Date C-8 1.3 Current Situation C-11 1.4 Governance Models For Major Australian Stadia C-12 1.4.1 Melbourne Cricket Ground Trust, Victoria C-12 1.4.2 Major Sports Facilities Authority (MSFA), Queensland C-13 1.4.3 Sydney Olympic Park Authority (SOPA), New South Wales C-14 1.5 Venue Management C-15 1.6 Taskforce Final Recommendations C-18

2.0 Financial Forecasts C-19

2.1 General Assumptions and Definitions C-20 2.2 Operating Assumptions C-27 2.3 Revenue Assumptions C-30 2.4 Cost Assumptions C-30 2.5 Projected Stadia Operating Results C-30 2.6 Net Operating Result to Venue Owner C-31 2.7 Projected Hirer Net Revenue from Venue Operations C-33 2.8 Review of Masterplan Proposals C-36 2.9 Sensitivity Analysis C-37 2.10 In Conclusion C-38 3.0 Impact on Sports C-39 3.1 AFL C-40 3.2 Rugby C-41 3.3 Cricket C-42 3.4 Other Hirers C-43 3.5 In Conclusion C-43

4.0 Funding and Delivery Options C-45

4.1 Summary of Funding Requirements C-46 4.2 Potential Sources of Funding C-46 4.3 Summary and Conclusions C-50 4.4 Possible Delivery Options C-50 4.5 Contractual Options C-52 4.6 Recommended Delivery Structure and Options C-53

5.0 Risk Matrix C-55

6.0 Stakeholder and Community Consultations C-61

6.1 Consulted Stakeholders C-62 6.2 Community Consultations C-62

6.3 Stadium Website C-63

6.4 Survey C-63

7.0 Major Events and Their Impacts C-65

7.1 Potential Major Events C-66 7.2 Requirements of Major Events C-67 7.3 Economic Impacts of Major Events C-69

7.4 In Conclusion C-72

8.0 Project Implementation C-73

8.1 Project Delivery C-74 8.2 Transitional Issues C-74 8.3 Implementation Process C-75

SECTION C

1.0

GOVERNANCE

AND VENUE

MANAGEMENT

1.4 Governance Models For Major Australian Stadia C-12

1.4.1 Melbourne Cricket Ground Trust, Victoria C-12

1.4.2 Major Sports Facilities Authority (MSFA), Queensland C-13 1.4.3 Sydney Olympic Park Authority (SOPA),

New South Wales C-14

1.5 Venue Management C-15

1.1

BACKGROUND

The issue of governance concerns the ultimate decision making body or process which will determine the management of the facility. It is equivalent to a Board of management in commercial and statutory authority contexts. The body responsible for governing the major stadium would be different to the body which manages the facility on a day-to-day basis. That body would be appointed by the governing body (the Board) and would operate the facility in accordance with the governing principles and goals set by the governing body. Historically, management and sometimes even the ownership of major stadia have been closely associated with individual sports. This requires that sporting bodies, focused on the development of their particular sport and presentation of events are being also required to undertake major decisions regarding building maintenance and refurbishment. This approach does have the benefit of giving the sporting bodies a level of control over their venue which can be a crucial part of the infrastructure for their sport.

The sports in WA are currently heavily involved with their respective venues. The WAFC manage Subiaco Oval under a 99-year lease agreement which expires in September 2090 and the WA Cricket Association holds the freehold title and manages the WACA ground. Members Equity Stadium (MES) is owned by the Town of Vincent and is managed by Allia Holdings Pty Ltd which until January 2006 was a subsidiary company of the Perth Glory Football Club, being the major tenant of that venue. In contrast, the performing arts such as the West Australian Ballet or the West Australian Symphony Orchestra perform at the Perth Concert Hall with management of the venue undertaken by a professional venue management company.

The issue of governance has been a difficult matter in the Taskforce’s deliberations due to the overhang of history on these issues.

Nevertheless, the Taskforce has concluded that a new approach needs to be taken in relation to the governance of the State’s major stadia. This is necessary as the proposed multi-purpose stadium will accommodate several major sports (AFL, Cricket and Rugby) as their “home” venue for the foreseeable future. In addition, the Government will be investing the vast majority of the cost of the stadium which would require it to include the new facility on its balance sheet (rather than on the balance sheets of the respective

sports codes). That in turn would require the Government to have governance control of the stadia. Senior officials at the Department of Treasury and Finance have advised the Taskforce that if the Government were to invest the majority of the capital in a new or redeveloped stadium it would require the assets to be recorded on the balance sheet of the State and for the Government to have overall control over the governance of the venue.

Consultations with Rugby WA have indicated that the Western Force has experienced difficulties in negotiating hire arrangements with the WAFC and Allia Holdings Pty Ltd (MES) to host Super 14 matches at these grounds. In addition, the Football Federation of Australia (FFA) has also expressed concerns as to the terms and conditions imposed by Allia Holdings Pty Ltd with regard to accessing MES. As highlighted in the Interim Report, this is a direct consequence of the current governance arrangements in place across these venues. Table 1 provides an overview of the perceived existing management issues relating to current venue management arrangements for Perth’s major venues.

Table 1: Existing Management Issues relating to the 3 Major Perth Venues

Existing Management Issues relating to the 3 Major Perth Venues

Subiaco Oval WACA MES

• Crown land with Management Order to City of Subiaco which have leased the venue to the WAFC for 99 years (with 84 years remaining).

• Major concerns raised by other sports seeking to access venue in regard to independence of management and cost to access the venue.

• Perceived conflicts arising in the role of the WAFC as both a venue manager and the peak body for AFL in WA.

• The WACA owns the freehold of the WACA ground. • Venue management is considered a distraction for the

sport whose primary role is to foster the development of the sport.

• The Town of Vincent owns the freehold of the ground. • The Town of Vincent has entered into a management

agreement with Allia Holdings Pty Ltd.

• Up until January 2006, Allia Holdings Pty Ltd was owned by Perth Glory who is currently the major tenant of the MES, giving rise to concerns regarding conflict of interest and independence when dealing with other major sports and tenants.

• The company has since sold the franchise but separated the management of the stadium from the interests of the soccer team.

• Concerns raised over fees charged to non-resident sports.

• Non-resident sports franchises have also raised concerns regarding the cost of access to the venue.

SECTION C

Currently, the revenues generated through these venues are

predominantly used to cover overhead expenses with any surpluses generally used to fund the development of the individual sport. In the past, limited funds have been set aside by the venue managers to fund cyclical maintenance and the cost of asset refurbishments over time. Consequently these venue managers have been reliant on the provision of government grants to cover such expenses.

The Taskforce has unanimously agreed that an independent governance arrangement needs to be established for any new or refurbished stadium development. This decision reflects:

• The multiple tenants which will be using the facility making the new stadium a multi-use facility rather than a single purpose facility as is currently the case across the major stadia in Perth; • The domination of Government investment in the facility which

would require it to take the asset to its balance sheet. It would be unique in those circumstances for the Government not to also have governance control of the asset;

• The demands of other major sporting codes for independence in the governance arrangements to ensure all sports are afforded equitable access on a transparent basis; and

• The consolidation of the oversight role of Government-funded venues into a single body such as a Trust or Authority ensures the management and operation of such venues is undertaken in a coordinated and consistently professional manner from a

whole-of-Government, whole-of-community perspective. For example, a single oversight body will ensure that Government-funded and owned venues do not compete with each other to secure major national and international events to the disadvantage of the public interest.

The Taskforce developed a survey as part of public consultation process details of which are presented in Appendix C. Interestingly, as highlighted in Figure 1, 74% of respondents have indicated that given the high degree of public investment required in stadium developments the venue should be governed independently from sports.

In the case of a multi-use venue, the separation of the ownership / ground management function from that of tenant sport / hirer is critical to effectively and equitably manage the requirements for each event and to allow a coordinated approach to investment and refurbishment planning. Obvious tensions arise when a potentially competing national sport also controls the access to and pricing of the major venue in a city. A number of the national sporting codes consulted as part of this study highlighted concerns over the conflict that does arise when one sport controls access to a multi-use venue, i.e. the current Subiaco model. The WAFC claims that sporting codes dislike Trust structures however (other than the WAFC) the sporting codes consulted during this review have expressed their support for a Trust structure provided that members of the Trust are independent from any sport that is a tenant of the venue. To address the existing management issues the Taskforce concluded in its Interim Report that independence in the management of stadia is desirable. This is certainly the model today where governments have invested heavily in the development of major multi-sport venues in Sydney, Melbourne and Brisbane.

South Australia is in a similar situation to WA, where the major stadia (i.e. AAMI Stadium and Adelaide Oval) are in need of redevelopment, are controlled by the sports and operate as single purpose grounds. Based on the recommendations made by the consultants (refer to Volume 2 Part 5 of the Interim Report) the Taskforce recommended in its Interim Report that:

1 The governance of national / international level sporting

infrastructure should be independent of sporting codes and be managed through a trust or similar entity directly responsible to Government;

2 That no public funds should be allocated to the

development of a major stadium unless it is under the direct control of Government as above; and

3 Pending the resolution of preferred site(s), the resolution of governance control at the existing major venues (Subiaco Oval, WACA and MES) be negotiated with the current managers, having regard for existing agreements, the contributions that have been made in the past; and the opportunities afforded to the sports from a new development.

Further, the Interim Report suggested that the State Government ensure that requirements for all sports are considered equitably when determining public investment in stadia. The State Government has accepted the Interim Report.

The Taskforce and its consultants identified the preferred key governance outcomes for the major stadium which are presented in Table 2:

1.2

NEGOTIATIONS TO DATE

To promote the Taskforce’s goal of independent stadium management the consultants developed an indicative

governance framework (refer to Figure 2) that was tabled and discussed with all prospective hirers of the major stadium. While the Taskforce and the consultants have received a favourable response in principle to the proposed governance model (i.e. an independent governance and venue

management solution) from Rugby WA, Football Federation of Australia (Perth Glory), WA Rugby League and the WACA, the WAFC has rejected the proposed solution. All sports indicated the desire to have a formal process to engage with the Trust and venue manager.

While Rugby WA have indicated their support for the appointment of an independent Trust to oversight the governance and management of the stadium as well as the appointment of an independent venue manager they also suggest the establishment of a Stadium Management Committee to also oversight the management of the venue. Membership of the Committee is proposed to include Government representatives as well as sporting code (hirer) representatives. We would suggest that the establishment of a Stadium Management Committee is an unnecessary layer of management which further complicates the structure and process. In addition the inclusion of sporting code

representatives has the potential to give rise to conflicts of interest and questioning of the independence of decision making. Having said this the Taskforce recognises the fundamental need to ensure that key sporting codes need to be afforded direct communication access to the Trust and venue manager.

The WAFC has been unprepared to relinquish the lease and the level of control they currently enjoy over Subiaco Oval and its associated revenue streams. The WAFC preferred position is for Subiaco Oval to be redeveloped as the major new stadium at public expense and for the Commission to retain the existing lease and management rights to the new venue

Figure 2: Indicative Governance Model presented to Prospective Major Stadium Tenants

Table 2: Taskforce’s Preferred Key Governance Outcomes for Major Stadium

Taskforce’s Preferred Key Governance Outcomes for Major Stadium • Fairness and equity to all venue users;

• Increased transparency and accountability;

• Reduction of unnecessary competition between State funded venues as far as is practicable;

• Maximisation of the financial, economic and social benefits for all stakeholders; • Effective risk management (e.g. asset, operational, financial etc.);

• Protection of the Government’s significant investment in the venue and allow effective asset management; and

• Generation of sufficient returns to fund lifecycle asset, maintenance and refurbishment costs.

SECTION C

until 2090. In the event that an alternative site is to be developed, the WAFC is seeking lease and venue management rights over the new facility until 2090 under its existing terms for Subiaco.

The Taskforce and its consultants met with the WAFC on several occasions to discuss the issue of governance and wrote to the WAFC outlining the Taskforce’s position and requesting provision of relevant financial information to assist it in its considerations. The Taskforce agreed to sign a confidentiality agreement (subject to minor amendments) requested by the WAFC in order to access financial information, however that was not followed through by the WAFC and only limited financial information relating to the venue operations at Subiaco Oval has been provided to the Taskforce to date.

The WAFC provided the Taskforce in November 2006 with a counter-proposal on governance for the major stadium titled “All Stadia Management Model” with the key elements outlined in Table 3. In an effort to find a workable governance and management model with the WAFC, the Taskforce considered a range of factors prior to responding to the WAFC with an alternative, compromise solution. These factors are presented in Table 4.

The Taskforce advised the WAFC that it considered it unacceptable for the WAFC to have control of the Trust and the management of the venue, and have the right to “veto” any proposed changes to the Constitution which documents the agreed principles of the venue management and operations.

After considering the factors highlighted previously and in an effort to seek mutual agreement with the WAFC, in November 2006 the Taskforce proposed a revised governance model which is outlined in Table 5.

A major concern to both the Taskforce and the WAFC during these negotiations was that football should be better off from the development of a major new stadium. Table 6 provides a summary of the Taskforce’s assessment of the net benefits to WA Football (WAFC, WCE & FFC) of a major new stadium.

The WAFC consistently rejected the Taskforce’s approach to governance of the major stadium including the proposals outlined above. The WAFC equally has insisted that it should retain its lease notwithstanding its requirement of Government to fund the

Table 3: Key Elements of the WAFC “All Stadia Management Model”

Key Elements of the WAFC “All Stadia Management Model”

• The proposed governance model applies whether a multi-sport venue or a primarily single sport venue is developed;

• Subiaco Oval is the preferred location however the proposed governance solution would also be applicable if the stadium is developed at an alternative location;

• The WAFC agree to the establishment of a Trust to oversight the management of the major stadium in accordance with an agreed Constitution, however the WAFC require control of the Trust through majority membership;

• The WAFC require the right, along with other venue hirers, to veto any proposed changes to the Constitution with none of the sporting codes indicating the requirement for veto rights;

• The WAFC be the venue manager for the estimated economic useful life of the new stadium – 20 years with a further option of 20 years (at WAFC’s discretion). The opera-tions of the venue manager to be oversighted by the Trust to ensure compliance with the provisions of the agreed Constitution So in essence under this model the WAFC would oversight their own venue management activities;

• After the expiration of the term of the management rights the ongoing control of the venue reverts to the WAFC under the terms of the lease over Subiaco Oval which expires in 2090;

• The management agreement with the WAFC cannot be effectively terminated for non-performance as under the WAFC governance model, the management rights to the venue would revert to the WAFC under the terms of the lease;

• The WAFC is to receive a management fee with any profits to be reinvested into the development of football across WA;

• The WAFC to be guaranteed the current levels of revenue generated from Subiaco operations;

• The WCE and FFC to only pay rent on any incremental revenue generated at the new stadium; and

• AFL will be given preferential access to the venue during the AFL season.

Source: Perth Stadium Consulting Team

Table 4: Key Factors considered by the Taskforce in Response to the WAFCs Proposed Model

Key Factors Considered by the Taskforce in Response to the WAFCs Proposed Model

• The existing lease and governance arrangements in place over Subiaco Oval which the then Government provided to the WAFC (at no cost) to assist Football resolve their financial problems at the time;

• Football being the anchor tenant of any multi-purpose major stadium but in which other national codes would also be tenants;

• The venue will likely be Government (i.e. taxpayer) funded – in this case the stadium would be included on the Government’s balance sheet which would necessitate it to have governance control;

• The WAFC will be a major benefactor of the new stadium and would therefore be adequately compensated for the early termination of the current lease and management arrangements over Subiaco Oval;

• The stadium is to provide benefits to all sports in WA in general and the wider community;

• The likely conflicts between hirers of the stadium relating to access and pricing; • The need to protect the Government’s investment in the venue (i.e. asset maintenance

and capital replacement over the life of the venue), and

• Greater expertise existing within Government for the planning, design and project management (a whole-of-Government approach) to major stadia.

development (or redevelopment) of a new stadium. During the

negotiations the WAFC raised the prospect of the Government paying the WAFC significant compensation to terminate the existing lease and management rights arrangements.

However, when asked to provide the Taskforce with an estimate of compensation payable and the basis of its determination, the WAFC has refused to do so. Alternatively, the WAFC has requested that the Taskforce provide the WAFC with an offer of compensation, however as noted previously, the Taskforce are of the view that the WA

Football are in fact better off if a new major stadium is built, and that there is no basis for additional compensation.

Another aspect raised during the negotiations on governance of interest is the possibility of the independent Trust being comprised of representatives of the major sports which would use the stadium. Such governance models have been used in the past although they are far less common today. The Taskforce considered this approach but rejected it as it has been found to produce inferior governance outcomes. The members of any governance body should be appointed for their individual skills and expertise not on the basis that they might represent a sporting code or body. That is common industry practice and relevantly is how the major AFL clubs in Western Australia appoint their board members.

Table 5: Key Elements of the Taskforce’s Amended Governance Model Proposed to the WAFC

Key Elements of the Taskforce’s Amended Governance Model Proposed to the WAFC

• The WAFC will become the venue manager of the new stadium based on standard commercial terms and conditions for an initial period of five years with a further five-year option subject to satisfactory performance;

• The WAFC will actively participate in the design and development of the stadium; • Football, as an anchor tenant of the venue, will have priority access rights to the venue

during the football season;

• The venue will be a “clean stadium” with the venue being provided to hirers free of any seating and membership restrictions and corporate suites (and other corporate facilities) and signage available for sale by the hirer under the terms of each hiring agreement; and • As shown in Table 6 following the WAFC will be in a financially better position under

the new arrangements and, in turn, is expected to terminate the existing lease and management rights agreement over Subiaco Oval.

Source: Perth Stadium Consulting Team

Table 6: Key Benefits for Football in WA associated with the Major Stadium proposed by the Taskforce.

Key Benefits for Football in WA associated with the Major Stadium proposed by the Taskforce.

Status

Quo StadiumMajor Commentary

Total Capacity 43,082 60,000 Total capacity of the venue will increase by 39.3% at the 60,000 seat major stadium.

Public Admission Seats 39,647 54,600 The total number of public admission seats will increase by 37.7% at the 60,000 seat major stadium.

Corporate / Function Seats 3,435 5,400 The capacity of corporate facilities will increase by 57.2% at the 60,000 seat major stadium.

Clean Stadium

_a

_a

Average Attendance WCE* 40,744 55,000+ The average attendance for WCE matches is projected to increase by 35.0% at the 60,000 seat major stadium. Average Attendance FFC* 36,569 50,000 The average attendance for FFC matches is projected to

increase by 36.7% at the 60,000 seat major stadium. Priority Access Rights during

Season

a

a

The AFL teams will continue to have priority access rights to the venue (e.g first access to book events).

Remaining Economic Useful

Life (EUL) 5-10 years

30-40 years

The EUL of the new stadium will be approximately 3 times greater than the EUL of some of the stands at Subiaco Oval.

Cost of extension of EUL to

Football +$600m

-Football will be provided priority access to a new venue at limited cost compared to significant costs associated with an extension of the EUL of Subiaco Oval which is assumed will need to be funded by the WAFC. Funding of this investment by the WAFC may require significant increases in ticket prices.

Obligation to maintain the

stadium asset

a

The WAFC is currently responsible for maintaining the existing stadium at Subiaco Oval. In contrast, the WAFC would be relieved of this obligation at the 60,000 seat major stadium with the Government (as the owner) having responsibility for maintaining the asset.

State of the Art facilities for

teams and spectators r

a

The new venue will provide the AFL teams, their spectators and, in turn, football as a whole, state of the art facilities. Additional Potential Annual

Return to Football - Average Year

- +$3.0m Football in WA are forecast to derive potential additional revenues of $3.0m from the new venue in an average year.

*WCE and FFC average attendances are based on mid-points of attendance forecasts presented in the WAFC’s “Subiaco Oval Redevelopment” document dated 21 October 2005. Function room seats for the status quo are based on dining capacities presented in the WAFC Masterplan.

SECTION C

1.3

CURRENT SITUATION

In their final submission to the Taskforce, (received 15 March 2007) the WAFC confirmed that they do not support the establishment of a Trust and proposed that Football should retain total control over the governance of the redeveloped Subiaco Oval by way of the existing lease over Subiaco Oval which expires in 2090. The WAFC would be accountable to the Minister for Sport and Recreation by way of a revised Operating Agreement.

The WAFC also proposed a number of potential refinements to the existing operating structure at Subiaco Oval including:

• Separate reporting of stadium performance to provide greater transparency;

• Establishing a number of key performance indicators (KPI’s) to be assessed by an independent body;

• Agreed pricing principles and the establishment of a further regulatory body to resolve non-football pricing disputes; • Clearly defined priority access arrangements for all users; • Establishment of a regulatory body to resolve access and

scheduling issues outside Football’s priority access period; • An agreed maintenance schedule;

• Establishment of a Capital Improvement Fund; and

• The documentation of User Agreements to address issues of pricing, access, scheduling etc.

It is interesting to note that the WAFC is of the view that the only means by which they can have certainty of their position going forward is to have control over the governance and management of the redeveloped stadium and they suggest that they will protect the interests of other key sports by way of User Agreements and appropriate resolution procedures. So in essence, the WAFC propose different governance and management models for Football to that of other users. The Taskforce’s governance recommendations propose one consistent arrangement for all sports and include the use of user agreements and dispute resolution mechanisms.

Further, the WAFC seek to retain the management rights to the redeveloped Subiaco Oval and are critical of other operators (private and public) on the basis of the inefficiencies of their operations and conflicting profit motives. However, the WAFC estimate that the operating costs for the redeveloped Subiaco Oval would be in the order of $7.0m per annum which is generally in line with the consultant’s forecasts of stadium overheads for the new stadium, details of which are provided in Section C2.4. Further, the WAFC then suggest that they would seek an “operator management fee” for managing the venue which is essentially the same profit element that they criticise other operators (private and public) for seeking. So in summary, the WAFC claim they are the best operator for the redeveloped Subiaco Oval on the basis of being cost efficient and not profit motivated yet their forecasts of venue overheads are in line with the Taskforce’s overheads forecast and the WAFC wish to receive an “operator management fee” yet the quantum of which is not disclosed.

Table 7: Current Positions of the WAFC and the Taskforce

Current Positions of the WAFC and the Taskforce

Issue Taskforce WAFC

• Establishment of independent “Trust” to oversight

stadium operations ✓ ✘

• Empowerment of Trust to review and decide all

material transactions with respect to the stadium ✓ ✘

• Establishment of independent regulatory and

performance assessment bodies ✘ ✓

• The Government appoint the Trust with members appointed on the basis of their relevant

professional skills and experience. Membership of the Trust to specifically exclude representatives of venue tenants and hirers

✓

Considered appointment of WAFC as manager on standard commercial terms and conditions

✘

WAFC appointed on non-standard uncommercial terms and conditions

• Independent, professional venue manager ✓ ✘

• The Trust to be controlled by the WAFC ✘ ✘ No longer support a “Trust”

• Term of venue management agreement 5 + 5 subject to performance 20 + 20 years

• Lease over stadium ✘ ✓ until 2090

• Compensation for termination of current lease and management rights – value yet to be determined due to lack of information provided by the WAFC

Believe that the WAFC and Football WA will be significantly better off once a new and expanded stadium is developed, therefore do not believe any significant compensation should be payable to the WAFC, but do recognise the intangible value of “control” held by the WAFC

Not preferred outcome, however unofficial advice of WAFC’s expectations is that significant compensation should be payable

Source: Perth Stadium Consulting Team

Table 7 provides a concise summary of the current positions of the WAFC and the Taskforce with respect to the governance arrangements for a new major stadium.

In summary, at the time of completing this Final Report, the Taskforce has achieved general support amongst prospective tenants (Rugby WA, WACA and FFA) of any new government funded stadium of the Taskforce’s preferred governance model, provided that there is a mechanism to ensure key tenants are able to raise any matters of concern directly with the Stadium ownership body (Trust or Authority).

In contrast, the WAFC do not support the Taskforce’s governance model and propose an arrangement which would perpetuate the current arrangements whereby the WAFC would continue to control the new venue through to 2090.

The Taskforce unanimously agrees that it is appropriate and timely for a new approach to governance of major sporting stadia in Western Australia. This is necessary as the Government will be required to invest the vast majority of capital funds in the stadia which on prudential grounds means it must have control of the facility. It is also appropriate given the multi purpose nature of the major stadium with multiple tenants and uses. Accordingly the Taskforce re-confirms the key governance recommendations outlined in its Interim Report. Namely:

1. The governance of national / international level sporting

infrastructure should be independent of sporting codes and be managed through a trust or series of trusts under the direction of Government;

2. The trust members should be appointed on the basis of their relevant business and professional skills and background and be independent of key venue tenants/hirers;

3. That no public funds should be allocated to the development of a major stadium until it is under the direct control of Government; and

4. Major tenants should be afforded direct access to the trust/ authority to resolve any matters of concern which cannot be effectively resolved with the venue manager

1.4

GOVERNANCE MODELS FOR

MAJOR AUSTRALIAN STADIA

The development of more independent and accountable

management arrangements have been developed in parallel with the development of major stadia in Australia, with Trusts and Authorities generally controlling the management of major government

funded venues. The following section provides an overview of the governance models currently in place at the Melbourne Cricket Ground in Victoria (as an example of a Trust structure) as well as the Major Sports Facilities Authority (MSFA) in Queensland and the Sydney Olympic Park Authority (SOPA) (as examples of Authorities), all responsible for major government investment in infrastructure over the last 10 to 15 years.

South Australia, where the investment in the development of stadia has been limited, has a similar governance structure to WA with sports in control of the major venues. This is currently also creating problems in resolving ongoing development opportunities for the stadia and the related sports (i.e. cricket and AFL).

1.4.1 Melbourne Cricket Ground Trust,

Victoria

As presented in Appendix A of this document (and highlighted in table three of volume one of the Interim Report) Government funded venues in Australia are predominantly governed by Trusts. Originally, Trust structures included representatives of the sports who have since been replaced by Trustees who represent a broad range of business and professional interests, reflecting the scale and complexity of the stadium business.

The MCG has been selected as an example of an existing venue in Australia governed by a Trust with the key governance elements highlighted in Table 8.

The Board of the MCG Trust currently consists of nine members who are independent from any sport which is a tenant of the MCG and who manage the venue on behalf of the Government. An overview of the current members of the MCG Trust is provided in Table 9.

Table 8: Key Governance Elements of the MCG Trust

Key Governance Elements of the MCG Trust

Role • To manage, control and make improvements to the Ground at the Trust’s discretion;

• Carry out any other function conferred on or given to the Trust by or under any other Act;

• With approval of the Minister the Trust:

- Can delegate its function or powers to the Melbourne Cricket Club; and

- Can grant leases for up to 99 years and licenses for up to 50 years;

• Can enter into management contracts for the Ground or appoint the Melbourne Cricket Club as the ground manager

Composition • Currently nine Directors including the Chairperson – represents the maximum number permitted

Appointment • By the Governor in Council, i.e. Cabinet - one Director has to be appointed as Chairperson

Duration • Appointment cannot be longer than five years but members can be re-appointed

Terms • Directors are entitled to be paid the remuneration and allowances decided by the Governor in Council; and • A Director holds office on terms decided by the Governor

in Council

Termination • Governor in Council can terminate appointment at any time

Decision • Each question is decided by a majority of vote

Source: MCG Act 1933

Table 9: MCG Trustees

Melbourne Cricket Ground Trustees

John Wylie Carnegie, Wylie & Company Anne-Marie Corboy CEO HESTA

Rod Fehring CEO Lend Lease Communities Asia Pacific Bob Herbert Former CEO of Australian Industry Group Ross Inglis CEO Australian Jockey Association Chris Lovell Managing Partner, Holding Redlich, Lawyers Kate Palmer CEO Netball Victoria

Bruce Thompson CEO Keycorp Ltd John Cain Former Victorian Premier

SECTION C

1.4.2 Major Sports Facilities Authority

(MSFA), Queensland

The Queensland Government has adopted an alternative model and established the MSFA to manage and promote the use of the State’s major sports, recreation and leisure facilities. The MSFA oversees a range of major sports and entertainment venues throughout Queensland, some of which it manages in house and others it manages by way of contract management. Similarly, to Perth the major sports venues in Brisbane (i.e. Suncorp Stadium, The Gabba) are dispersed around the city and not consolidated in one location as is the case with multiple sports and entertainment venues located at Sydney Olympic Park. Table 10 provides a summary of the major facilities under the control of the MSFA:

Table 10: MSFA Major Venues

Venue Management Arrangements

• The Brisbane Cricket Ground (Gabba) • Suncorp Stadium

• Dairy Farmer’s Stadium Townsville • Brisbane Entertainment Centre

• Queensland Sports & Athletic Centre • The Sleeman (Aquatic) Centre • Gold Coast Stadium

• Staff appointed directly by the Trust • Contracted to a professional venue

management company

• Staff appointed directly by the Trust • Contracted to a professional venue

management company

• Staff appointed directly by the Trust • Staff appointed directly by the Trust • Staff appointed directly by the Trust

Source: Perth Stadium Consulting Team

The consolidation of the oversight role of Government funded venues into a single body such as the MSFA, ensures the management and operation of such venues is undertaken in a coordinated and consistently professional manner from a whole-of-government, whole-of-community perspective.

For example, a single oversight body will ensure that Government funded and owned venues do not compete with each other “against the public interest” to secure major national and international events. In addition, such a model provides the opportunities for economies of operation, both from an ownership and management perspective. An overview of the key governance elements of the MSFA is provided in Table 11.

Table 11: Key Governance Elements of the MSFA in Queensland

Key Governance Elements of the MSFA

Role • Decide the objectives, strategies and policies to be followed by the Authority; and

• Ensure the Authority performs its functions in a proper, effective and efficient way

Composition • Currently seven Directors – represents the maximum number per-mitted

Appointment • By the Governor in Council, i.e. Cabinet - one Director has to be appointed as Chairperson

Duration • Appointment cannot be longer than three years Terms • A Director is appointed on a part-time basis;

• Directors are entitled to be paid the remuneration and allowances decided by the Governor in Council; and

• A Director holds office on terms decided by the Governor in Council Termination • Governor in Council can terminate appointment at any time Meetings • Board meetings are to be held at least twelve times p.a. or if a

quorum of Directors asks to hold a meeting; and

• The Minister may nominate an officer of the appropriate Depart-ment to attend Board meetings

Decision • Each question is decided by a majority of vote

Source: MSFA Act 2001

To ensure the control of venues is independent of any sport the Directors on the Board of the MSFA have strong commercial expertise across numerous industries but do not represent an individual sport as highlighted in Table 12.

Table 12: Members of the MSFA Board of Directors

Members of the MSFA Board of Directors

Wayne Myers – Chair Held senior management positions in large national and multinational companies (e.g. NEC, AT&T, Lucent & AAPT), currently Managing Director of Sirocco Tech-nologies Group Ltd, Director of Unitab Ltd and Ergon Energy Corp. Ltd

Vernon Wills – Deputy Chair Background in the investment and finance industry, served as a Director of public listed companies within the finance, investment and mining industries Jacqueline D’Alton Specialist in Wholesale Term Funding & Capital at

Suncorp Metway Ltd

Geoffrey Trivett Managing Director of valuation and property consul-tancy company G D Trivett & Associates

Desmond Hancock Former National General Manager (Marketing and Sales) of Rothmans Australia

Nerolie Withnall Former Partner at law firm Minter Ellison and holds Directorships on a number of Boards

Vicky Wilson Director of the Queensland Academy of Sport, netball commentator, former captain of Australian netball team

1.4.3 Sydney Olympic Park Authority

(SOPA), New South Wales

The NSW Government in July 2001 established the SOPA which is responsible for the management of public assets of the Sydney Olympic Park, Homebush Bay. In addition to the management of the sports venues, SOPA is also responsible for the management of open space, parklands and developments within the Sydney Olympic Park. SOPA anticipates that by 2025 the Park will provide commercial and residential facilities to support a population of 15,000 residents. SOPA is governed by the SOPA Act with Table 13 highlighting the key elements of the Act.

Similar to the MSFA, members of the Board of Directors at SOPA are independent from any sport and have an extensive commercial background as is presented in Table 14.

Table 13: Key Governance Elements of the Sydney Olympic Park Authority

Key Governance Elements of the Sydney Olympic Park Authority Role • Promote, co-ordinate and manage:

- The development and use of Sydney Olympic Park including the provision and management of infrastructure; and

- Cultural, sporting, educational, commercial, tourist, recreational, entertainment and transport activities and facilities

• Protect and enhance the natural and cultural heritage of SOPA; • Provide, operate and maintain public transport facilities within the

Park; and

• Liaise and maintain arrangements with Olympic organisations. Employment • The Authority cannot employ any staff – staff within the

Government service can be employed to enable SOPA to perform its functions.

Composition • Currently seven Directors.

Ministerial Control • SOPA is subject to the control and direction of the Minister for Tourism and Sport and Recreation in the exercise of its functions. Board • A minimum of four members including the CEO plus three members

appointed by the Minister.

• At least one appointed member must represent the private sector; and

• The Minister appoints one member as the Chairperson and may appoint a member as the Deputy Chairperson.

CEO • Responsible for the day-to-day management of affairs in line with specific policies and general directions by the Board.

Duration • Appointment cannot be longer than five years but members can be re-appointed.

Terms • A Director is appointed on a part-time basis.

• Directors are entitled to be paid the remuneration and allowances decided by the Minister.

Termination • The Minister can terminate an appointment at any time. Decision • Each question is decided by a majority of vote.

Source: SOPA Act 2001

Similar to the MSFA, members of the Board of Directors at SOPA are independent from any sport and have an extensive commercial back-ground as is presented in Table 14.

Table 14: Members of the SOPA Board of Directors

Members of the SOPA Board of Directors

David Richmond – Chair Former Director-General of Olympic Coordination Authority

Chris Christodoulou Deputy Assistant Secretary of the NSW Labour Council

Penelope Figgis Vice-Chair, Australia and New Zealand IUCN World Commission on Protected Areas

Gabrielle Kibble Chair of Sydney Water

Jack Cowin Founder and Executive Chairman of Competitive Foods Australia Pty Ltd, Director of the TEN Televi-sion Network, Chairman of investment bank CIBC of Australia

John Coates President of the Australian Olympic Committee

Brian Newman CEO Sydney Olympic Park Authority

Source: Sydney Olympic Park Authority

As with the MSFA, SOPA oversight a number of publicly funded major venues and predominantly outsource the venue management role as presented in Table 15.

Table 15: SOPA Major Venues Venue

Venue Management ArrangementsManagement Arrangements

• Telstra Stadium

• Acer Arena (previously Superdome) • Aquatic & Athletic Centres • Golf Centre

• Sports Centre

• Sydney International Tennis Centre • Sydney Showground

• Waterview Convention Centre

• Contracted to professional venue manage-ment company

• Contracted to professional venue manage-ment company

• Previously contracted to SCG Trust, now SOPA, pending a redevelopment • Private Lease

• State Government • Tennis NSW

• Royal Agricultural Society • Private Lease

SECTION C

1.5

VENUE MANAGEMENT

The days of the venue owner “handing the keys” of the stadium to the hirer no longer exist. The increasing sophistication of venue operations and event requirements necessitates professional venue management capability including the requirements of professional facility management to meet international standard benchmarks. Typically, a professional venue manager will have responsibility for:

Event Management and Planning

The sophistication of the venue and the event requirements demand that the facility manager is responsible for the preparation of the venue for events; co-ordinating the requirements of hirers; and delivering services to an international standard. The hirers have commercial imperatives which must be met and part of this is ensuring the high quality, low risk presentation of their events. Poor service, dirty or poorly maintained facilities have a real impact on the attractiveness of an event, and this combined with the increasing requirements of the event organisers, the valuable sports people and the discerning public, necessitate professional and experienced venue managers, who understand the requirements, and can deliver efficiently without increasing the costs of the event.

Security and Emergency Management

While this has always been a part of well-managed venues, the profile of emergency management and security has been elevated over the last five years with the increased threat of terrorism and in particular the threat level at high profile major events. As such, a sophisticated risk assessment, emergency management plans and associated crisis management plan together with the day-to-day implementation of security and risk management strategies is essential. This demands that the facility management team stay abreast of international trends and technological and other advances and be able to respond appropriately to changing threat levels over time and between different types of events. The requirement for venue managers is to provide the required security while delivering an event.

It is important that the requirement for security is recognised in the development of the facility, in particular the development of the access control system, the separation of the front of house and back of house activities and the ability to effectively monitor all areas through CCTV.

Risk Management

Risk management across all areas of business has emerged as a particularly important component of management over the last five to ten years. Event management is seen as a high risk business, with rapid increases in insurance costs as a result. The importance of maintaining adequate risk management systems across the business and particularly during events is necessary to manage this important cost area for venue owners. This can be achieved by the use of fully documented policies and procedures and certification under ISO standards for quality assurance and risk management.

Technology

The increasing level of technology provided in stadia across a range of areas such as scoreboards and video replay screens, turf management, signage, lighting, lifts and escalators, air conditioned areas, media and for the actual events requires venues to have a high level of technical capability. The facility manager works with the hirers to provide the services they require for the presentation of their events and the general operation of the stadium.

Asset Management

The development of a stadium is a considerable capital cost and a comprehensive asset management plan for day-to-day or routine maintenance as well as programmed maintenance and capital replacement is required post-construction. The asset management plan should be developed on the life cycle costing model and sufficiently funded prior to completion of the construction of the project, in accordance with international benchmarks and the WA Government’s Asset Management and Life Cycle Cost Guides prepared by the Department of Sport and Recreation. This approach will protect the value of the initial investment in the long term and ensure the appropriate on-going presentation of the venue throughout the life of the building. The “ad-hoc” and “catch up”

approach to asset management, with the routine deferral of required maintenance, is no longer appropriate or acceptable within the industry, where events are big business and very dependent on commercial success.

Turf Management

Turf management has become a major issue for venues. This is impacted by the limited sun on parts of the turf with the increased size of the stadium roofs, the increased number of major events played on the ground, and the sensitivity of the highly trained sports persons to variations in turf surfaces, particularly if there is an increased risk of injury. Television appearance is also important, and even if the ground is not a problem for the players, a patchy surface does not look good on television. Problems at Telstra Dome and initially at Suncorp Stadium indicate how damaging this can be to the image of a venue as well as the impact on the actual event. Turf issues need to be adequately addressed in the design stages of the venue, with input from the venue operators as well as specialist turf providers, and require experienced field managers and adequate operational funding to enable turf replacement and enhancement as required.

Multi-use and Multi-Sport

The commercial imperatives of venues require that stadia are no longer single sport developments, but must cater for multi-sports and even multi-events. A major impact on this has seen the move away from ownership and management by a single code. The Brisbane Cricket Ground (the Gabba) is a good example of how this can be changed without a major disruption to the incumbent code and any loss of revenue. Over the last ten years the Gabba has moved from a venue managed by a Trust that was dominated by the interests of the major hirers, particularly cricket, to a Trust representing business interests, to the current management by the Major Sports Facilities Authority. This has enabled the sports to now have responsibility for the presentation of their events, and enabled the development of the second tenant, the Brisbane Lions, without competition or conflict between the two hirers.

Food and Beverage

Food and beverage is of great importance. Firstly, in terms of the satisfaction of patrons – poor quality food is very memorable and will impact the future attendance of patrons, and also their expenditure levels. Secondly, in terms of financial viability of the venue, food and beverage provides a significant contribution to the operating result. The days of the “beer with the pie and sauce at the footy” are gone – although these items are still in high demand. The requirement now is for quality and variety for the general public, with a range of outlets and eating environments, through to the highest standards for corporate suite holders, who may pay significant money for the privilege of attending events at the venue for a year. This has required a complete change in the food and beverage facilities and their operation, again an important consideration during the planning and design stages of the stadium where input from a specialist catering consultant and the operator is required. Expenditure per head is a key operational indicator, so efficient delivery of food and beverage to maximise expenditure can be as important as the quality and range of the final product.

Corporate Facilities

Corporate suites and boxes have been part of stadium developments for about 20 years. In addition there are also typically a range of corporate hospitality and membership options for those wanting an enhanced event experience. The mix should provide a range of options for companies of various sizes and requirements from high worth individuals to the regular footy fanatic. The mix, pricing and revenue from these facilities will vary depending on the market of the particular city, profile of events and the event agreements. Recent trends in facilities include the introduction of “corporate seating” options where companies can purchase two or more seats in quality areas with access to lounge and dining facilities, and recognition of the need to provide flexibility in the range of product available. The sale of the corporate suites was seen as an opportunity to generate revenue by the owner to fund the development of stadia. However, the requirement of hirers to sell all corporate opportunities and have, as far as possible, a “clean” stadium to maximise

their revenue means that sales and appropriate revenue sharing arrangements must be in place to meet the requirements of both the venue and the hirers.

SECTION C

Media

There is an ever-quickening pace of change confronting sports event presenters and stadia. This is both in terms of the information detail demands of the media who cover these events and the associated technological complexity of its presentation. It is not practical for most events to overlay the technical facilities to service current requirements on a one-off basis. It is much more practical for such facilities to be permanently incorporated in the stadium and made available as required for each event. More importantly, it is more effective for the stadium’s technical staff to provide a consistent interface with media technical staff and also to manage the ongoing evolution of the systems and facilities required.

The presenters of the sports events will continue to deal with the media representatives and provide the information on the event and access to players for example, but in the same way as it is perceived that sporting codes should be left to focus on fostering their sport, they should not be distracted with the technology interface behind the scenes nor the capital demands of changing technology.

Commercialisation

The commercialisation of sport, as well as venue development and operation, is driving the requirements and decision making for the development and operation of venues. This is also reflected in the competition for major events between venues and in the way venues are managed with increasing focus on the operating result as well as the standards of management.

Event Experience

The total event experience has become as important as the event itself, with consideration given to the full spectrum from the arrival at the venue through to the departure. For major events, such as the Rugby World Cup, this was supplemented by stalls and street entertainers in the actual precinct which provides a festival atmosphere. At Suncorp Stadium, the local Caxton Street outlets in particular are a popular destination before and after events and have become an integral part of a Suncorp Stadium event.

However, in recognising this experience, it should be noted that a stadium operation in an operating commercial precinct can also be negative. It is difficult for regular customers to access businesses and parking restrictions on event days can impact on local businesses. Depending on the type of business, turnover can actually decrease during events. Activity around stadia should therefore be carefully planned with consideration to the actual event day operation as a priority – recognising the requirements for: traffic movement; public transport; buses and coaches; emergency vehicles, deliveries; and crowd movement before and after events.

Operator Input into Design

The recognition of the value of operator input during design is one of the most important trends in stadium development over the last decade. The increasing sophistication of venue management and events and requirement to meet international benchmarks and commercial targets has led to operational input becoming imperative, even for the most experienced architect. The operator needs to test and challenge the design and its fit out from every perspective of service delivery including cleaning, food and beverage or security; cost effectiveness in the long term and particularly in evaluation of the trade off between capital cost savings and long term maintenance and capital replacement costs. For example, the cost of cleaning can be significantly impacted by platforms that are not sealed or seats that are positioned so that areas cannot be cleaned effectively. These issues could be easily identified and rectified in the planning stage to avoid additional costs that will multiply throughout the life of the project.

1.6

TASKFORCE FINAL

RECOMMENDATIONS

The Issue

Under its Terms of Reference, the Taskforce was required to consider what the most appropriate ownership and governance arrangements would be for a new stadium or stadia. The main criteria being to ensure the long term interests of WA’s sporting bodies, the community and the Government are best served. During its deliberations the Taskforce took the following into account:

• Government best practice in other jurisdictions where similar major investment has been made;

• Previous experience of the WA Government in providing major capital grants for sporting infrastructure;

• The views of all key sporting codes and the broader WA community; and

• Obstacles to WA's major sporting bodies working together for mutual benefit and to efficiently and effectively utilise large scale government funding (historically this has been difficult).

As a result of its enquiry the members of the Taskforce unanimously agreed that an independent governance arrangement must be established if the Government is investing the majority of the capital cost of the new development. This decision reflects:

• The multiple tenants who will be using the proposed multi-purpose facility;

• The possible changing nature of users and their needs over the entire life cycle of the stadium;

• The demands of most sporting codes (with the exception of WAFC) for independence in governance arrangements;

• The need for an independent body to take responsibility for all aspects of risk management that such a large investment will require;

• The need to ensure that there is: - Financial transparency;

- Equitable and flexible access for all tenants; and - A focus on ongoing investment in maintenance and

operational upgrades for the economic / operational life of the facility.

• The scale of Government investment in the facility which would require the Government to:

- Include the new facility on its balance sheet (rather than on the balance sheets of the respective sports codes);

- Take responsibility over its overall governance; and

- Be accountable for publicly funded infrastructure investment. Governance and management issues of new facilities have become critical matters for Government. It is imperative that its actions, decisions and associated accountability frameworks are in the public interest, especially those involving considerable public funds.

The Taskforce considers it is imperative that any injection of public funds requiring substantial commitments by the Government must be for the benefit of the wider community and not for a single group or body now or in the future.

Governance Recommendations

Based on the extensive research and stakeholder consultation the Taskforce confirms its previous recommendations (see Interim Report) for the governance and management of Government funded, major sport and entertainment infrastructure.

These recommendations with minor amendments are listed below and further reflect the Taskforce’s strong commitment to the recommended governance approach:

1 The governance of Government funded national/international level sporting and entertainment infrastructure should be independent of sporting codes and other major hirers. This was supported by 74 per cent of respondents to a survey of Perth residents hosted on the Perth Stadium website.

2 A Government-appointed Trust should be established by the Government with Trust members selected/appointed on the basis of their relevant business and professional skills and background. All Trust members should be independent of key venue tenants/ hirers.

3 The Government should establish a single Trust/Authority to oversee WA’s major Government funded sports and entertainment infrastructure.

4 No public funds should be allocated to the redevelopment/

development of an existing or new stadium unless it is under the direct control of the Government appointed Trust/Authority.

5 Major tenants should be afforded direct access to the Trust / Authority to resolve any matters of concern which cannot be effectively resolved with the venue manager.

While the Taskforce and the consultants have received in-principle support for the proposed governance model from Rugby WA, the Football Federation of Australia (soccer) and the WACA, the WAFC has rejected the proposed solution and seeks to retain its control over the governance and management of the venue, irrespective of location, for the remaining term of its lease over Subiaco Oval, i.e. until 2090.

The Taskforce has assessed the merits of the WAFC proposal and rejects it on the basis of the Government’s own prudential guidelines and the principles of independent and professional governance and management of such facilities. For the reasons stated here, the Taskforce strongly urges the Government to adopt its governance recommendations.

SECTION C

2.0

FINANCIAL

FORECASTS

2.1 General Assumptions and Definitions C-20

2.2 Operating Assumptions C-27

2.3 Revenue Assumptions C-30

2.4 Cost Assumptions C-30

2.5 Projected Stadia Operating Results C-30

2.6 Net Operating Result to Venue Owner C-31

2.7 Projected Hirer Net Revenue from Venue Operations C-33

2.8 Review of Masterplan Proposals C-36

2.9 Sensitivity Analysis C-37

This section provides an overview of the financial forecasts that were developed for the stadia options available to Government. It should be noted that while this section presents the assumptions applied in the developing the financial forecasts, it should be read in conjunction with Volume 1 and 2 of the Interim Report as it does not replicate the information previously presented to the Taskforce. Further it should be noted that commercially sensitive information that has been used in developing the financial forecasts for the stadium have been excluded from the following sections and are included in a separate Section of this report (Section D) and are not available for general distribution.

2.1

GENERAL ASSUMPTIONS

AND DEFINITIONS

Role of the Major Stadium

The rationale for the development of the Perth Stadium is to provide a venue for major events and for the teams participating in national competitions. This strategy will enable WA to compete effectively for a “fair share” of major events and bid for additional events as the opportunity arises.

On this basis, it has been proposed that the event profile will include events that occur in Perth attracting attendances of about 25,000 people and above. This will include international events, such as the Rugby Union Test and International Cricket Test and One Day matches, as well as and the home games of the WCE and FFC AFL teams. The Western Force also requires 35,000 seats and a high level of corporate facilities which could be provided at the proposed Stadium.

Unlike a community venue where the success is largely measured by the number of events and activities, the success of a major venue will be measured by its ability to successfully host major events. In actuality, a large number of events has the potential to have a negative impact, both financially and operationally on a major venue. The days of the “caretaker manager”, where the keys of the stadium can be handed over to a tenant are in the past. In modern

state-of-the-art stadia, the infrastructure investment, security requirements and technology requires that every event be

professionally managed and controlled. This requires a certain level of staff, including food and beverage staff, which need to be rostered for the event; preparing the ground and cleaning the stadium before and after the event, erecting or covering signage; and managing the ticketing requirements.

The rationale of playing small capacity events at the stadium also needs to be evaluated in terms of the scale of a 60,000 seat facility which is overwhelming for an event of only 5,000 or less patrons. An “empty stadium” provides a negative feel for the event and for the venue.

SECTION C

The use of the venue must be effectively and discernibly managed. For example, staging additional events may have the potential to impact on the quality of the turf. Poor turf quality historically attracts media criticism and can significantly impact on the reputation of a stadium. Therefore any decisions regarding additional use of the venue should factor in the likely associated costs arising from the use. Logically, major events are more cost effective than smaller events.

Regular training by “home” teams is also normally not provided, particularly at venues where there is more than one home team, and therefore more than 10 or 11 events in a season. Team training, in addition to a heavy event schedule, puts the turf at risk and restricts the management team’s ability to hold additional events as they arise, or undertake turf or other venue maintenance between events. It is assumed that a training run would be provided prior to each event for each team, as per normal hiring arrangements.

Additional events will also impact other operating costs. In such a situation, the full time stadium operating team designed to

manage, for example, 30 events a year can be put under stress with the requirements of additional events. They may need to engage additional permanent staff, which is not reflected in the event day costs of the actual event, and cannot be offset by the additional revenue. These impacts are felt across the whole operation including the events team; rostering; reporting and financial management; public relations and communications. These significant impacts are not necessarily in direct correlation with the profile or size of the event.

There are instances where small events have been accommodated in larger venues. For example, Queensland Cricket events, including some Pura Cup events are accommodated at the Gabba, a much smaller venue than that proposed for the new Perth Stadium. This arrangement is more the result of history and the location of the Queensland Cricketers Club at the ground, than any other reason. Similarly, the MCG still host state-based cricket events, again the result of history and the position of cricket at this particular ground. Also, Telstra Stadium has attracted a number of Rugby League teams to host events at the Stadium to support the value of the annual corporate suite and boxes and memberships all sold by the stadium. The incremental cost (of these events) was offset by the value to the corporate sales and membership.

In the Perth context, with no incumbent tenancy issues and no sales of corporate suites or memberships by the stadium on an annual basis, there appears to be no requirement to include additional events that may unnecessarily impact the operation of the stadium financially or its ability to host the major core event profile.

Similarly, training should not be conducted at the major venue except for the regular training slots for each team included as part of a hiring agreement. As with small events, training increases the wear and tear on the turf – the most valuable asset of the stadium without associated net benefits. Just as the teams in other cities generally train on their home training ground, with their associated club facilities, so it is envisaged for Perth that each hirer that plays in the major stadium, would also have a home base which provides the individual home base for the team.

From time to time the WA Government may seek to host a small event at the stadium which is not operationally or financially viable, and which would be accommodated to meet the community or social requirements of the Government at that time.

The Taskforce recognises that Subiaco Oval is the home ground for the WCE. In keeping with the Taskforce’s “better off” commitment, it is proposed that if Subiaco Oval or Kitchener Park is the preferred site for the development of the 60,000 seat major stadium, then the Government would fund the development of a dedicated, state of the art training facility at an existing WAFL standard venue such as Leederville Oval (which is currently used by WCE as an alternative training venue). If either the East Perth or Burswood site is selected as the preferred location for the major venue, then Subiaco Oval could potentially be re-developed as a home ground for the WCE. In keeping with this recommendation, the financial forecasts for the various venue options are all based on the assumptions that the venue(s) will be used to stage major events only and will not be used as a home ground or training venue (or to stage large numbers of smaller events).