Monday, 24 September 2012

Auckland stadium review

This column by Herald columnist Brian Rudman stirred me into action this afternoon with the upcoming decision on what to do with Auckland's stadium situation.

On the one hand, as Brian points out, the decision is easy if you subscribe to the efficiency-of-use argument. The three big stadiums in Auckland (Eden Park, North Harbour Stadium and Mt Smart Stadium) all depend on local government to a greater or lesser degree. Indeed, the issues paper released by Regional Facilities Auckland (RFA) in June (linked here) indicates that Eden Park breaks even each year and has a large debt to service of $55m post-Rugby World Cup, Mt Smart is facing an upgrade bill of some $60m and requires local government funding each year, and North Harbour Stadium is very much dependent on local government funding to stay viable. There appears to be an argument, on the surface, that there are potential efficiencies to be gained by rationalising their use (the 'collaborative strategies' option presented by RFA).

On the other hand, however, there is a sense of uncertainty as to how feasible a rationalisation plan like this is. There are questions to be answered over how such a rationalisation might affect support for certain sports within Auckland - for instance rugby league - if they have to move from Mt Smart to Eden Park. Will Eden Park residents be happy with greater utilisation of the Park? Granted, the $250m upgrade for the Rugby World Cup had a lot of people asking whether it was worth the price tag for the present utilisation of the facility. Clearly RFA thinks that the extent of investment in the infrastructure for and around Eden Park means greater utilisation is necessary. Interestingly enough, the proposal put forward by RFA suggests that Eden Park be used for 'bigger' rugby league events (that is, over 20,000 supporters). The Warriors haven't averaged more than 20,000 in attendance since 1996. The sole game played at Eden Park in the 2012 season against Manly in the opening weekend brought 37,502 through the turnstiles. The Warriors have actually played twice at Eden Park, for an average of 37,957. Two games isn't a great sample upon which to make any predictions, in any case, but the reliability of that number of spectators regularly attending Eden Park games is somewhat questionable. Under RFA's second option (specialisation of functions), Eden Park would be the major stadium with Mt Smart and North Harbour Stadium smaller-scale backups (rather as they are now). RFA also proposes Mt Smart taking on speedway (moving from Western Springs). Mt Smart and North Harbour might also be developed into high performance centres for various sports.

The issue of rationalisation of sporting facilities has been experienced in Melbourne in recent years, with many AFL clubs moving games from traditional (and often smaller capacity) suburban grounds to large inner-city facilities including the Melbourne Cricket Ground and Etihad Stadium, along with AAMI Park. NRL clubs have also raised the idea that more games be played in larger facilities like ANZ Stadium and Allianz Stadium at the expense of smaller suburban grounds. Melbourne hosts some 18 professional sports franchises in its vicinity, and does work at coordinating the use of its major facilities. Sydney, too, has seen several NRL clubs in particular move from their traditional homes to the larger ANZ Stadium, which has meant greater utilisation of the major facilities across both cities. Melbourne and Sydney have dedicated major sports precincts which are the focus of much of the major sport within each city (Melbourne, for instance, has Hisense Arena and the Rod Laver Arena in close proximity to the MCG and AAMI Park, while Sydney has its Olympic precinct at Homebush which includes the ANZ Stadium). Auckland does not have such a precinct, and as such, a continuation of ad hoc development appears likely in the absence of some coordination.

It should also be pointed out, in the case of Melbourne and Sydney, that most of the clubs that play their home games in the large sports precinct facilities still train\at their home ground, which have effectively become smaller scale suburban sport-specific high performance centres. They are not as expensive to maintain, as the onus is largely on the clubs themselves to provide the necessary infrastructure and equipment. Many of these facilities also serve as local community sporting facilities, so have an element of public good about them.

In the short term, it seems prudent for Auckland to look for ways to leverage the investment from the RWC. Sydney leveraged it's Olympic investment as part of the 2003 RWC, and continues to do so. Melbourne leverages its Olympic and Commonwealth Games investment with the AFL, the NRL, Super Rugby, the Australian Open, etc. The decision is an important one and will determine whether, in future, we see an Auckland sports precinct along the lines of Melbourne or Sydney.

9 comments:

  1. The following comes from a recent post of mine on an EconTalk interview

    (http://antidismal.blogspot.co.nz/2012/08/econtalk-this-week_28.html)

    "Roger Noll of Stanford University talks with EconTalk host Russ Roberts about the economics of sports. Noll discusses the economic effects of stadium subsidies, the labour market for athletes, the business side of univeristy sports, competitive balance in sports leagues, safety in sports, performance-enhancing drugs, and how the role of sports in the lives of children has changed.

    The interview begins with a discussion of the financial impact of sports stadiums. Noll makes the point that for a stadium to just break even it has to be used around 250-300 nights a year! This is something to keep in mind when you hear local councils arguing that their city should have a new sports stadium."

    Would even a combined stadium get used 300 times a year, every year?!

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  2. Hi Paul,

    Modern NZ stadiums are typically built with multiple purposes in mind, as single purpose stadia (which is what is being built presently in the US) tend to be more costly (due to their specialised nature and subsequent underutilisation). In short, there is next to no chance that a facility would be used that often here (certainly not for events, in any case). If it did, it may well break even.

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