Thursday, 9 May 2013

Christchurch Stadium - regenerative or redistributive?

Apologies for the long absence from the blogosphere - research to be written up, teaching to be done has meant scarce time has been redirected from this blog.

It is the issue of the Christchurch Stadium that I turn to today, and a couple of recent articles on Stuff ("Stadium concept 'would be money maker'" and "New stadium plan 'smart, bold'") that have made some rather interesting claims.

Christchurch lawyer Geoff Saunders:

"This idea came from my own frustration at going to Jade Stadium for meetings for 30 years and seeing it sitting there completely deserted apart from the groundsman cutting the grass," he said.
"I just thought that with the amount of money being spent on it there needed to be a way to use it a lot more. We want to make the stadium into a money maker rather than a white elephant." 
He said the office rent would help the stadium avoid the same fate as the Forsyth Barr Stadium in Dunedin, which lost $1.9 million in its first six months.
"Crowds are very cyclical in sports grounds. If you try to do budgets based on income from sports events, it is very challenging," he said. 
Saunders said the development would also attract office clients back to the city centre who had left for suburban offices after the earthquakes. 
He said the plan was just a concept and he had not investigated how it might be developed and funded. 
Craig said it was important to make any new stadium a lively place with offices, hotels, retail and clubs. 
"A lot of stadiums are just large objects that sit there and are only used for 30 days of the year. There is an opportunity here to make a very large chunk of the city centre that, rather than being a dead space for most of the year, is much more active," he said.

A stadium will only ever be used sparingly. That is reality. Westpac Stadium is used for between 40-50 event days per year - and it has been making operating surpluses since it has been opened. Westpac Stadium was also built with a mere 1/3 of its funding from local and regional government. It is not clear yet where exactly the funding for Christchurch's stadium plans is coming from, but it is fair to say that it will be largely funded by taxpayers - locally, regionally and nationally to some degree. As such, if my taxpayers money is going into funding a stadium, I would like to see some evidence that this amenity is going to be at least self-sustaining, and should not be detrimental to the local area. The idea that office buildings will make the stadium profitable is missing the point. If the office blocks are the profit-making parts of the venture, why not just build the office blocks? If they must be built as part of a stadium plan, we have to acknowledge that the rents earned by stadium offices will simply be transferred from other office spaces elsewhere within the city. It may well be the case that office space is at a premium in Christchurch, in which case the stadium offices may be beneficial to the city of Christchurch in that clients who were previously unable to obtain office space may now be able to do so. If, however, the offices are simply populated by clients who relocated from the suburbs, then this isn't making money (nor necessarily welfare enhancing either) at all - it is merely redistributing the rents on office space from the suburbs back into the CBD.

It is exactly the same argument as the claim that stadiums generate conference revenues too - which is only beneficial if the conferences wouldn't have been held in the city in the first place without the stadium conference spaces.*

Sure, the office rents may make the bottom line of the stadium better (if indeed things pan out as projected). But from a wider (city or regional) perspective, is it really regenerating or simply redistributing? That's the question that ratepayers need to be asking of their policymakers.

* Two years ago I attended an academic conference in Melbourne which was hosted at the iconic Melbourne Cricket Ground (it was a sports management conference, so it was a great choice of venue for a sports fan). The conference would easily have fitted into any standard sized conference venue within Melbourne, as size was not a factor. During the conference, which was hosted in members areas around the stadium, a Sheffield Shield cricket match was being played between Victoria and South Australia (I think). There would have been no more than 200 spectators in this stadium (that can host in excess of 100,000 people) on each of the three days that the conference was held. The crowd doubled during breaks between the organised sessions at the conference.


  1. Sam, good to see you back. When I read the "New stadium plan 'smart, bold'" article I had many of the same thoughts. One further question I would ask is about the opportunity cost of any taxpayer money used for the stadium. There are many other (better?) things to use money on in Christchurch right now.

    1. Too right, Paul. Is a stadium an essential or luxury for Christchurch? I know they have the 'temporary' stadium, but surely there are more compelling alternative uses of scarce government funds at this time. Decisionmakers should at least be open about the fact that it is highly unlikely to be a money maker for the city. If you build it for public good purposes, show us the value of the public goods it will generate.

  2. It isn't hard to imagine lots of tenants being willing to pay more for office space overlooking the grounds. But it's also not hard to imagine that much of that would be a transfer from the folks who rent space on the grounds - leakage of ticket revenues as tenants and their friends watch the match from the office tower...

    1. Just you wait, Eric - I wonder if they will include office-dwellers as part of the official attendance figures (tongue planted firmly in cheek)? Interesting developments in Boston recently with plans to renovate Wrigley Field, which has implications for people who have viewing areas at the top of apartment buildings overlooking the stadium. Needless to say the moves to make the stadium more enclosed are not going down too well with these people. Interesting that this plan seems to be going the other way?

      I also wonder just how much of an inconvenience stadium activity will be to office activity - a more concrete form of crowding out, perhaps, with people switching off at work to concentrate on the game? You have to figure that congestion could be a nightmare for people working late on match day, too (bearing in mind that many games are played on week nights rather than exclusively on weekends). What about the impacts on other activities, while we are trying to maximise its usage? Or would they just come from elsewhere in Christchurch?

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