More stadium questions

CAPE Town Stadium has been a thorn in the side of Capetonians since it was built.

Under pressure from the government and Fifa, in 2006 newly elected mayor Helen Zille lifted the moratorium she had placed on it, saying she was satisfied the “stadium would not be a financial burden on ratepayers”.

The promises of economic and social benefits from the World Cup and newstadiums never materialised. Instead we have a legacy of debt and corruption.

Cape Town is perhaps the only host city trying to find a way to defray some of its stadium’s considerable operating and maintenance costs. To this end, they investigated five business plan options.

They also foisted on us the disastrous Cape Town Cup “flop”, which lost ratepayers R28 million and was investigated, based a complaint from me, by the Auditor-General, Thembekile Makwetu.

However, the flaw of the business plan feasibility study is that it investigated, per its terms of reference, only the five business models the city proposed. This tunnelvision, development-centred approach ignored the fact that the stadium will never be used for the purpose it was built and will always be a drain on ratepayers, whatever the city does.

The city rejected other suggestions for the stadium, ranging from the fanciful to the achievable. They are silent about, and ignore, in-stadium options to reduce costs including lifecycle costing methods used at well-run facilities like ANZ Stadium Australia.

According to the city, it seems, it’s better to have a “world-class” facility we can’t afford than a scaled-down, but still usable, one. Of course, according to them, the public doesn’t understand and jumps to conclusions, as chief financial officer Kevin Jacoby accused me of this week.

The city states annual total expenditure on the stadium is about R40m. But as I found out this year, it excludes significant employee costs that are about R20m for 2015/16; repairs and maintenance; public liability insurance; significant municipal services; current and projected life-cycle asset costs, etc. My estimate of the stadium’s true costs is in the R200m range, including the once-off Cape Town Cup loss.

This week Jacoby disputed this estimate, which was based on the partial, actual information they reluctantly gave me in May.

I did this exercise because the city has refused to give me information. In fact, Jacoby refuses, on principle, to provide any information.

What Jacoby did confirm, though, is the business model approved (“resolved”) will include commercialisation of the stadium and precinct, as they’ve intended and we’ve known all along. I don’t know what this means practically, because they refuse to tell me in what capacity the city as owner will act in this arrangement and how much it will cost us. The published business plan options that consultants prepared, at great expense, proposed retail, informal and formal trading, entertainment, hospitality, parking and commercial activities in and around the stadium.

In June this year I asked the auditor-general to investigate the business plan model, the city’s failure to investigate in-stadium alternatives to reduce/defray costs and discrepancies in the annual expenses.

Makwetu replied this week that he “viewed your allegations in a serious light, (but) have decided not to conduct a separate investigation. The matters raised by you in respect of expenditure incurred will be considered as part of the 2015-16 audit cycle (now complete; the audit report is being finalised) in line with our mandate and scope of work”.

He said the “business plan model falls outside the scope of the AGSA’s regularity audit, as it is a management prerogative”.

He dryly noted the lack of “communication” between the city and me, but advised me to pursue it with city management to “ensure the issues raised are clarified and addressed to your satisfaction”, which this week I again unsuccessfully tried to do. The AG said if my inquiries remained unresolved, I should consider referring the matter to the Public Protector.

There’s not much comfort in his letter except to wait for the annual financial statements and audit report. But he left me with a pearl of an opinion, a conundrum I’m still ruminating on:

“The City of Cape Town has classified the stadium as a community asset for annual financial statement purposes. The stadium is not expected to make a profit, but will be utilised for the benefit of the citizens. Thus, in essence, any plan that is proposed to make the use of the stadium more profitable is not in line with the City’s classification of the stadium.”

I’ve asked Makwetu if it means what I think it means: commercialisation of the stadium, Green Point Park and their precincts – “community assets” – is “not in line” (not permitted) unless the city changes its classification, which can only be done after the usual processes. This week I asked the city manager specifically which legislation or regulation allows for the commercialisation of community assets. I was rebuffed.

Particularly under Mayor Patricia De Lille, the DA-run city, politicians and many bureaucrats have adopted a combative style in their dealings with citizens, as I have experienced. So their dissembling over the stadium precinct is not surprising.