THE STADIUM & THE CITY VOLUME 2 - TECHNICAL REPORT

SECTION C – GOVERNANCE AND FINANCIAL FEASIBILITY

Prepared by the Major Stadia Taskforce

May 2007

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 PERTH STADIUM
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CONTENTS
1.0 Governance and Venue Management C-5 3.0 Impact on Sports C-39 8.0 Project Implementation C-73

1.1 Background C-6 3.1 AFL C-40 8.1 Project Delivery C-74

1.2 Negotiations To Date C-8 3.2 Rugby C-41 8.2 Transitional Issues C-74

1.3 Current Situation C-11 3.3 Cricket C-42 8.3 Implementation Process C-75

1.4 Governance Models For Major Australian Stadia C-12 3.4 Other Hirers C-43

1.4.1 Melbourne Cricket Ground Trust, Victoria C-12 3.5 In Conclusion C-43

1.4.2 Major Sports Facilities Authority (MSFA), Queensland C-13 4.0 Funding and Delivery Options C-45

1.4.3 Sydney Olympic Park Authority (SOPA), New South Wales C-14 4.1 Summary of Funding Requirements C-46

1.5 Venue Management C-15 4.2 Potential Sources of Funding C-46

1.6 Taskforce Final Recommendations C-18 4.3 Summary and Conclusions C-50

2.0 Financial Forecasts C-19 4.4 Possible Delivery Options C-50

2.1 General Assumptions and Definitions C-20 4.5 Contractual Options C-52

2.2 Operating Assumptions C-27 4.6 Recommended Delivery Structure and Options C-53

2.3 Revenue Assumptions C-30 5.0 Risk Matrix C-55

2.4 Cost Assumptions C-30 6.0 Stakeholder and Community Consultations C-61

2.5 Projected Stadia Operating Results C-30 6.1 Consulted Stakeholders C-62

2.6 Net Operating Result to Venue Owner C-31 6.2 Community Consultations C-62

2.7 Projected Hirer Net Revenue from Venue Operations C-33 6.3 Stadium Website C-63

2.8 Review of Masterplan Proposals C-36 6.4 Survey C-63

2.9 Sensitivity Analysis C-37 7.0 Major Events and Their Impacts C-65

2.10 In Conclusion C-38 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

SECTION C
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 PERTH STADIUM
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1.0
GOVERNANCE
AND VENUE
MANAGEMENT

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

SECTION C
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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
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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 • The WACA owns the freehold of the WACA ground. • The Town of Vincent owns the freehold of the ground.
which have leased the venue to the WAFC for 99 years
(with 84 years remaining). • Venue management is considered a distraction for the • The Town of Vincent has entered into a management
sport whose primary role is to foster the development agreement with Allia Holdings Pty Ltd.
• Major concerns raised by other sports seeking of the sport.
to access venue in regard to independence of • Up until January 2006, Allia Holdings Pty Ltd was
management and cost to access the venue. owned by Perth Glory who is currently the major tenant
of the MES, giving rise to concerns regarding conflict
• Perceived conflicts arising in the role of the WAFC as of interest and independence when dealing with other
both a venue manager and the peak body for AFL in major sports and tenants.
WA.
• 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.
Source: Interim Report
PERTH STADIUM
 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-
Figure 1: Public Perception on Governance of Major Stadia in Perth
SECTION C
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;
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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:
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.
Source: Perth Stadium Consulting Team
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1.2 NEGOTIATIONS TO DATE Figure 2: Indicative Governance Model presented to Prospective Major Stadium Tenants
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
PERTH STADIUM
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
SECTION C
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.
Source: Perth Stadium Consulting Team
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
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development (or redevelopment) of a new stadium. During the Table 6: Key Benefits for Football in WA associated with the Major Stadium proposed by the Taskforce.

negotiations the WAFC raised the prospect of the Government paying Key Benefits for Football in WA associated with the Major Stadium
the WAFC significant compensation to terminate the existing lease proposed by the Taskforce.
and management rights arrangements.
Status Major
Commentary
Quo Stadium
However, when asked to provide the Taskforce with an estimate of
Total capacity of the venue will increase by 39.3% at the
compensation payable and the basis of its determination, the WAFC Total Capacity 43,082 60,000
60,000 seat major stadium.
has refused to do so. Alternatively, the WAFC has requested that the
The total number of public admission seats will increase by
Taskforce provide the WAFC with an offer of compensation, however Public Admission Seats 39,647 54,600
37.7% at the 60,000 seat major stadium.
as noted previously, the Taskforce are of the view that the WA
The capacity of corporate facilities will increase by 57.2% at
Football are in fact better off if a new major stadium is built, and that Corporate / Function Seats 3,435 5,400
the 60,000 seat major stadium.
there is no basis for additional compensation.
Clean Stadium a a The venue will remain a clean stadium for all hirers.
Another aspect raised during the negotiations on governance of The average attendance for WCE matches is projected to
Average Attendance WCE* 40,744 55,000+
interest is the possibility of the independent Trust being comprised increase by 35.0% at the 60,000 seat major stadium.
of representatives of the major sports which would use the stadium. The average attendance for FFC matches is projected to
Average Attendance FFC* 36,569 50,000
Such governance models have been used in the past although they increase by 36.7% at the 60,000 seat major stadium.
are far less common today. The Taskforce considered this approach Priority Access Rights during The AFL teams will continue to have priority access rights to
but rejected it as it has been found to produce inferior governance a a
Season the venue (e.g first access to book events).
outcomes. The members of any governance body should be Remaining Economic Useful 30-40 The EUL of the new stadium will be approximately 3 times
5-10 years
appointed for their individual skills and expertise not on the basis Life (EUL) years greater than the EUL of some of the stands at Subiaco Oval.
that they might represent a sporting code or body. That is common Football will be provided priority access to a new venue at
industry practice and relevantly is how the major AFL clubs in limited cost compared to significant costs associated with an
Western Australia appoint their board members. Cost of extension of EUL to extension of the EUL of Subiaco Oval which is assumed will
+$600m -
Football need to be funded by the WAFC. Funding of this investment
Table 5: Key Elements of the Taskforce’s Amended Governance Model Proposed to the WAFC by the WAFC may require significant increases in ticket
Key Elements of the Taskforce’s Amended Governance Model Proposed to the prices.
WAFC
The WAFC is currently responsible for maintaining the
• 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 existing stadium at Subiaco Oval. In contrast, the WAFC
Obligation to maintain the
option subject to satisfactory performance; a r would be relieved of this obligation at the 60,000 seat
stadium asset
• The WAFC will actively participate in the design and development of the stadium; major stadium with the Government (as the owner) having
responsibility for maintaining the asset.
• Football, as an anchor tenant of the venue, will have priority access rights to the venue
during the football season; State of the Art facilities for The new venue will provide the AFL teams, their spectators
r a
teams and spectators and, in turn, football as a whole, state of the art facilities.
• 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) Additional Potential Annual
Football in WA are forecast to derive potential additional
and signage available for sale by the hirer under the terms of each hiring agreement; and Return to Football - Average - +$3.0m
revenues of $3.0m from the new venue in an average year.
• As shown in Table 6 following the WAFC will be in a financially better position under Year
the new arrangements and, in turn, is expected to terminate the existing lease and *WCE and FFC average attendances are based on mid-points of attendance forecasts presented in the WAFC’s “Subiaco Oval Redevelopment”
management rights agreement over Subiaco Oval. document dated 21 October 2005. Function room seats for the status quo are based on dining capacities presented in the WAFC Masterplan.
Source: Perth Stadium Consulting Team
Source: Perth Stadium Consulting Team

PERTH STADIUM
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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;
Further, the WAFC seek to retain the management rights to the
redeveloped Subiaco Oval and are critical of other operators (private
Table 7 provides a concise summary of the current positions
of the WAFC and the Taskforce with respect to the governance
and public) on the basis of the inefficiencies of their operations arrangements for a new major stadium.
and conflicting profit motives. However, the WAFC estimate that
In summary, at the time of completing this Final Report, the Taskforce
the operating costs for the redeveloped Subiaco Oval would be in
has achieved general support amongst prospective tenants (Rugby
the order of $7.0m per annum which is generally in line with the
WA, WACA and FFA) of any new government funded stadium of
consultant’s forecasts of stadium overheads for the new stadium,
the Taskforce’s preferred governance model, provided that there is
details of which are provided in Section C2.4. Further, the WAFC
a mechanism to ensure key tenants are able to raise any matters
then suggest that they would seek an “operator management fee”
of concern directly with the Stadium ownership body (Trust or
for managing the venue which is essentially the same profit element
Authority).
that they criticise other operators (private and public) for seeking.
So in summary, the WAFC claim they are the best operator for the In contrast, the WAFC do not support the Taskforce’s governance
redeveloped Subiaco Oval on the basis of being cost efficient and model and propose an arrangement which would perpetuate the
not profit motivated yet their forecasts of venue overheads are in current arrangements whereby the WAFC would continue to control
line with the Taskforce’s overheads forecast and the WAFC wish to the new venue through to 2090.
receive an “operator management fee” yet the quantum of which is
not disclosed.
Table 7: Current Positions of the WAFC and the Taskforce

• Agreed pricing principles and the establishment of a further Current Positions of the WAFC and the Taskforce

regulatory body to resolve non-football pricing disputes; Issue Taskforce WAFC

• 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
• 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
• Independent, professional venue manager
• The Trust to be controlled by the WAFC
• Term of venue management agreement
✓ ✘
✓ ✘
✘ ✓
✓ ✘
Considered appointment of WAFC as WAFC appointed on non-standard
manager on standard commercial terms and uncommercial terms and conditions
conditions
✓ ✘
✘ ✘ No longer support a “Trust”
5 + 5 subject to performance 20 + 20 years

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.
• Lease over stadium
• Compensation for termination of current lease and
management rights – value yet to be determined
due to lack of information provided by the WAFC
Source: Perth Stadium Consulting Team
✘ ✓ until 2090
Believe that the WAFC and Football WA will Not preferred outcome, however unofficial
be significantly better off once a new and advice of WAFC’s expectations is that
expanded stadium is developed, therefore significant compensation should be payable
do not believe any significant compensation
should be payable to the WAFC, but do
recognise the intangible value of “control”
held by the WAFC

SECTION C
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The Taskforce unanimously agrees that it is appropriate and timely for
a new approach to governance of major sporting stadia in Western
1.4 GOVERNANCE MODELS FOR Table 8: Key Governance Elements of the MCG Trust
Key Governance Elements of the MCG Trust
Australia. This is necessary as the Government will be required
to invest the vast majority of capital funds in the stadia which on
MAJOR AUSTRALIAN STADIA Role • To manage, control and make improvements to the
Ground at the Trust’s discretion;

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
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).
• 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

4. Major tenants should be afforded direct access to the trust/ • A Director holds office on terms decided by the Governor
authority to resolve any matters of concern which cannot be 1.4.1 Melbourne Cricket Ground Trust, in Council

effectively resolved with the venue manager Victoria Termination • Governor in Council can terminate appointment at any
time
As presented in Appendix A of this document (and highlighted Decision • Each question is decided by a majority of vote
in table three of volume one of the Interim Report) Government Source: MCG Act 1933
funded venues in Australia are predominantly governed by Trusts.
Originally, Trust structures included representatives of the sports
Table 9: MCG Trustees
who have since been replaced by Trustees who represent a broad
Melbourne Cricket Ground Trustees
range of business and professional interests, reflecting the scale and
complexity of the stadium business. John Wylie Carnegie, Wylie & Company
Anne-Marie Corboy CEO HESTA
The MCG has been selected as an example of an existing venue Rod Fehring CEO Lend Lease Communities Asia Pacific
in Australia governed by a Trust with the key governance elements
Bob Herbert Former CEO of Australian Industry Group
highlighted in Table 8.
Ross Inglis CEO Australian Jockey Association
The Board of the MCG Trust currently consists of nine members who Chris Lovell Managing Partner, Holding Redlich, Lawyers
are independent from any sport which is a tenant of the MCG and Kate Palmer CEO Netball Victoria
who manage the venue on behalf of the Government. An overview of Bruce Thompson CEO Keycorp Ltd
the current members of the MCG Trust is provided in Table 9.
John Cain Former Victorian Premier
Source: Perth Stadium Consulting Team

PERTH STADIUM
C-12
1.4.2 Major Sports Facilities Authority Table 11: Key Governance Elements of the MSFA in Queensland Table 12: Members of the MSFA Board of Directors

(MSFA), Queensland Key Governance Elements of the MSFA Members of the MSFA Board of Directors
Role • Decide the objectives, strategies and policies to be followed by the Wayne Myers – Chair Held senior management positions in large national
The Queensland Government has adopted an alternative model and Authority; and and multinational companies (e.g. NEC, AT&T, Lucent &
established the MSFA to manage and promote the use of the State’s AAPT), currently Managing Director of Sirocco Tech-
• Ensure the Authority performs its functions in a proper, effective nologies Group Ltd, Director of Unitab Ltd and Ergon
major sports, recreation and leisure facilities. The MSFA oversees and efficient way Energy Corp. Ltd
a range of major sports and entertainment venues throughout
Composition • Currently seven Directors – represents the maximum number per- Vernon Wills – Deputy Chair Background in the investment and finance industry,
Queensland, some of which it manages in house and others it mitted served as a Director of public listed companies within
manages by way of contract management. Similarly, to Perth the the finance, investment and mining industries
Appointment • By the Governor in Council, i.e. Cabinet - one Director has to be
major sports venues in Brisbane (i.e. Suncorp Stadium, The Gabba) appointed as Chairperson Jacqueline D’Alton Specialist in Wholesale Term Funding & Capital at
are dispersed around the city and not consolidated in one location as Suncorp Metway Ltd
Duration • Appointment cannot be longer than three years
is the case with multiple sports and entertainment venues located Geoffrey Trivett Managing Director of valuation and property consul-
at Sydney Olympic Park. Table 10 provides a summary of the major Terms • A Director is appointed on a part-time basis; tancy company G D Trivett & Associates

facilities under the control of the MSFA:
Table 10: MSFA Major Venues
Venue
• The Brisbane Cricket Ground (Gabba)
• Suncorp Stadium
• Dairy Farmer’s Stadium Townsville
• Brisbane Entertainment Centre
Management Arrangements
• 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
• Directors are entitled to be paid the remuneration and allowances Desmond Hancock Former National General Manager (Marketing and
decided by the Governor in Council; and Sales) of Rothmans Australia
• A Director holds office on terms decided by the Governor in Council Nerolie Withnall Former Partner at law firm Minter Ellison and holds
Directorships on a number of Boards
Termination • Governor in Council can terminate appointment at any time
Vicky Wilson Director of the Queensland Academy of Sport, netball
Meetings • Board meetings are to be held at least twelve times p.a. or if a commentator, former captain of Australian netball team
quorum of Directors asks to hold a meeting; and
Source: Perth Stadium Consulting Team
• 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

• Queensland Sports & Athletic Centre • Staff appointed directly by the Trust Source: MSFA Act 2001

• The Sleeman (Aquatic) Centre • Staff appointed directly by the Trust

To ensure the control of venues is independent of any sport the
• Gold Coast Stadium • Staff appointed directly by the Trust Directors on the Board of the MSFA have strong commercial
Source: Perth Stadium Consulting Team
expertise across numerous industries but do not represent an
individual sport as highlighted in Table 12.
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.

SECTION C
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1.4.3 Sydney Olympic Park Authority Table 13: Key Governance Elements of the Sydney Olympic Park Authority Table 14: Members of the SOPA Board of Directors

(SOPA), New South Wales Key Governance Elements of the Sydney Olympic Park Authority
Members of the SOPA Board of Directors

David Richmond – Chair Former Director-General of Olympic Coordination

The NSW Government in July 2001 established the SOPA which Role • Promote, co-ordinate and manage: Authority
is responsible for the management of public assets of the Sydney - The development and use of Sydney Olympic Park including the Chris Christodoulou Deputy Assistant Secretary of the NSW Labour
Olympic Park, Homebush Bay. In addition to the management of the provision and management of infrastructure; and Council
sports venues, SOPA is also responsible for the management of open - Cultural, sporting, educational, commercial, tourist, recreational, Penelope Figgis Vice-Chair, Australia and New Zealand IUCN
space, parklands and developments within the Sydney Olympic Park. entertainment and transport activities and facilities World Commission on Protected Areas

• Protect and enhance the natural and cultural heritage of SOPA; Gabrielle Kibble Chair of Sydney Water
SOPA anticipates that by 2025 the Park will provide commercial
and residential facilities to support a population of 15,000 residents. • Provide, operate and maintain public transport facilities within the Jack Cowin Founder and Executive Chairman of Competitive
Park; and Foods Australia Pty Ltd, Director of the TEN Televi-
SOPA is governed by the SOPA Act with Table 13 highlighting the key sion Network, Chairman of investment bank CIBC
elements of the Act. • Liaise and maintain arrangements with Olympic organisations. of Australia

Employment • The Authority cannot employ any staff – staff within the John Coates President of the Australian Olympic Committee
Similar to the MSFA, members of the Board of Directors at SOPA Government service can be employed to enable SOPA to perform
are independent from any sport and have an extensive commercial its functions. Brian Newman CEO Sydney Olympic Park Authority
background as is presented in Table 14. Composition • Currently seven Directors. Source: Sydney Olympic Park Authority

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.
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.

• At least one appointed member must represent the private sector; Table 15: SOPA Major Venues
and Venue Management Arrangements
• The Minister appoints one member as the Chairperson and may • Telstra Stadium • Contracted to professional venue manage-
appoint a member as the Deputy Chairperson. ment company
CEO • Responsible for the day-to-day management of affairs in line with • Acer Arena (previously Superdome) • Contracted to professional venue manage-
specific policies and general directions by the Board. ment company
Duration • Appointment cannot be longer than five years but members can be • Aquatic & Athletic Centres • Previously contracted to SCG Trust, now
re-appointed. SOPA, pending a redevelopment
Terms • A Director is appointed on a part-time basis. • Golf Centre • Private Lease
• Directors are entitled to be paid the remuneration and allowances • Sports Centre • State Government
decided by the Minister.
• Sydney International Tennis Centre • Tennis NSW
Termination • The Minister can terminate an appointment at any time.
• Sydney Showground • Royal Agricultural Society
Decision • Each question is decided by a majority of vote.
• Waterview Convention Centre • Private Lease
Source: SOPA Act 2001
Source: Perth Stadium Consulting Team

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.

PERTH STADIUM
C-14
 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.
SECTION C
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”
C-15
approach to asset management, with the routine deferral of required Food and Beverage
maintenance, is no longer appropriate or acceptable within the
industry, where events are big business and very dependent on Food and beverage is of great importance. Firstly, in terms of the
commercial success. 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
Turf Management beverage provides a significant contribution to the operating result.
Turf management has become a major issue for venues. This is
The days of the “beer with the pie and sauce at the footy” are gone
impacted by the limited sun on parts of the turf with the increased
– although these items are still in high demand. The requirement
size of the stadium roofs, the increased number of major events
now is for quality and variety for the general public, with a range of
played on the ground, and the sensitivity of the highly trained
outlets and eating environments, through to the highest standards
sports persons to variations in turf surfaces, particularly if there is
for corporate suite holders, who may pay significant money for the
an increased risk of injury. Television appearance is also important,
privilege of attending events at the venue for a year. This has required
and even if the ground is not a problem for the players, a patchy
a complete change in the food and beverage facilities and their
surface does not look good on television. Problems at Telstra Dome
operation, again an important consideration during the planning and
and initially at Suncorp Stadium indicate how damaging this can be
design stages of the stadium where input from a specialist catering
to the image of a venue as well as the impact on the actual event.
consultant and the operator is required. Expenditure per head is a
Turf issues need to be adequately addressed in the design stages of
key operational indicator, so efficient delivery of food and beverage to
the venue, with input from the venue operators as well as specialist
maximise expenditure can be as important as the quality and range of
turf providers, and require experienced field managers and adequate
the final product.
operational funding to enable turf replacement and enhancement as
required.
Corporate Facilities
Multi-use and Multi-Sport Corporate suites and boxes have been part of stadium developments
for about 20 years. In addition there are also typically a range of
The commercial imperatives of venues require that stadia are no
corporate hospitality and membership options for those wanting
longer single sport developments, but must cater for multi-sports and
an enhanced event experience. The mix should provide a range of
even multi-events. A major impact on this has seen the move away
options for companies of various sizes and requirements from high
from ownership and management by a single code. The Brisbane
worth individuals to the regular footy fanatic. The mix, pricing and
Cricket Ground (the Gabba) is a good example of how this can be
revenue from these facilities will vary depending on the market of the
changed without a major disruption to the incumbent code and any
particular city, profile of events and the event agreements. Recent
loss of revenue. Over the last ten years the Gabba has moved from
trends in facilities include the introduction of “corporate seating”
a venue managed by a Trust that was dominated by the interests of
options where companies can purchase two or more seats in quality
the major hirers, particularly cricket, to a Trust representing business
areas with access to lounge and dining facilities, and recognition of
interests, to the current management by the Major Sports Facilities
the need to provide flexibility in the range of product available.
Authority. This has enabled the sports to now have responsibility for
the presentation of their events, and enabled the development of the The sale of the corporate suites was seen as an opportunity to
second tenant, the Brisbane Lions, without competition or conflict generate revenue by the owner to fund the development of stadia.
between the two hirers. 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.

PERTH STADIUM
C-16
 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.
SECTION C
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.
C-17
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;
C-18
• The need to ensure that there is: 2 A Government-appointed Trust should be established by the
Government with Trust members selected/appointed on the basis
- Financial transparency; of their relevant business and professional skills and background.
- Equitable and flexible access for all tenants; and All Trust members should be independent of key venue tenants/
hirers.
- A focus on ongoing investment in maintenance and
operational upgrades for the economic / operational life of the 3 The Government should establish a single Trust/Authority
facility. to oversee WA’s major Government funded sports and
entertainment infrastructure.
• The scale of Government investment in the facility which would
require the Government to: 4 No public funds should be allocated to the redevelopment/
development of an existing or new stadium unless it is under the
- Include the new facility on its balance sheet (rather than on direct control of the Government appointed Trust/Authority.
the balance sheets of the respective sports codes);
5 Major tenants should be afforded direct access to the Trust /
- Take responsibility over its overall governance; and Authority to resolve any matters of concern which cannot be
effectively resolved with the venue manager.
- Be accountable for publicly funded infrastructure investment.
While the Taskforce and the consultants have received in-principle
Governance and management issues of new facilities have become
support for the proposed governance model from Rugby WA, the
critical matters for Government. It is imperative that its actions,
Football Federation of Australia (soccer) and the WACA, the WAFC
decisions and associated accountability frameworks are in the public
has rejected the proposed solution and seeks to retain its control
interest, especially those involving considerable public funds.
over the governance and management of the venue, irrespective of
location, for the remaining term of its lease over Subiaco Oval, i.e.
The Taskforce considers it is imperative that any injection of public
until 2090.
funds requiring substantial commitments by the Government must
be for the benefit of the wider community and not for a single group
The Taskforce has assessed the merits of the WAFC proposal and
or body now or in the future.
rejects it on the basis of the Government’s own prudential guidelines
and the principles of independent and professional governance and
Governance Recommendations management of such facilities. For the reasons stated here, the
Taskforce strongly urges the Government to adopt its governance
Based on the extensive research and stakeholder consultation the recommendations.
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.
PERTH STADIUM
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
2.10 In Conclusion C-38

SECTION C
C-19
This section provides an overview of the financial forecasts that were
developed for the stadia options available to Government. It should
2.1 GENERAL ASSUMPTIONS
be noted that while this section presents the assumptions applied in
the developing the financial forecasts, it should be read in conjunction
AND DEFINITIONS
with Volume 1 and 2 of the Interim Report as it does not replicate the
information previously presented to the Taskforce. Further it should Role of the Major Stadium
be noted that commercially sensitive information that has been
used in developing the financial forecasts for the stadium have been The rationale for the development of the Perth Stadium is to provide
excluded from the following sections and are included in a separate a venue for major events and for the teams participating in national
Section of this report (Section D) and are not available for general competitions. This strategy will enable WA to compete effectively
distribution. 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.

PERTH STADIUM
C-20
 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.
SECTION C
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).
C-21
Basis of Assumptions and Sources of
Information
The assumptions applied to the financial models are generally based
on financial and operational data provided by relevant sporting codes
in Perth, Ogden IFC, the MSFA in Queensland, and publicly available
data from comparative venues across Australia.
Stadium Options
As previously outlined in Section C1, the governance impasse
with the WAFC resulted in the number of venue options under
consideration increasing from the original terms of reference for
Stage 2. The stadium options under consideration are presented in
Table 16.
Key Assumptions
The following overarching key assumptions have been applied in the
development of the financial forecasts:
• In accordance with the recommendations made with respect to
ownership and governance in Volume 1 of the Interim Report and
re-confirmed previously in Section C1 it has been assumed that
the ownership of the venue will be vested in a Trust;
• The responsibility for the day-to-day management and operation
of the venue will be contracted to a professional venue
management operator, engaged to operate the stadium on behalf
of the owner and will be paid a management fee;
• The new stadium / stadia is assumed to be completed by
late 2011 and to have a structural life of 50 years. Major
refurbishments will be required at 20 year intervals together with
an annual asset refurbishment allowance equivalent to 1.5% of
capital costs;
• The options presented are not site specific;
• It is assumed that there will be no new competitive facilities
developed to cater for the events proposed for the stadium
option, and that any existing venue will be decommissioned if not
redeveloped as part of the final stadium development strategy;
• The operating cash flows are pre-funding and do not include
pre-opening costs associated with establishing the operation,
C-22
negotiation of hiring and contractual arrangements and preparing
the venue for opening. These costs have been included in the
capital cost budgets detailed in Section D2;
• The stadium will be offered to hirers as a “clean” stadium, a
definition of which is provided in Table 22 following later in this
Section;
• To some degree the financial results of the venue are dependent
on the on-field performance and therefore crowd support of its
key hirers, i.e. the on-field performance of WCE, FFC and the
Western Force. Further, on-field performance and therefore
crowd support is likely to vary year by year and is therefore
difficult to predict with any degree of certainty. Accordingly, for
the purposes of this assessment we have provided financial
forecasts for an “average year” of operation of the venue over
its first 25 years of operation. This in turn has been based on
a detailed analysis of historic and forecast attendances for all
major events staged at the venue. Details of this assessment
are provided in Volume 2 Part 2 of the Interim Report and are
summarised in Section C2.2;
• Industry standard hiring arrangements have been assumed
which are based on precedent arrangements but are ultimately
dependent on negotiations with hirers, which could result in
the mix and revenue outcomes for the stadia owner and hirers
varying from those used. It should be noted however that the
rental assumptions for the major stadium have been increased
to offset the revenue forgone by the owner following the
detailed consultations with the individual sporting codes which
have suggested that a “clean” stadium model (with no stadium
membership program) would be the preferred solution for all
sports;
• It is not expected that the projected attendances will be subject
to a “ramp up demand” period as prospective hirers are
established franchises, some of which are currently experiencing
significant turn-away demand;
• It is assumed that 5% of all tickets will be complimentary;
• Under all stadium options, a minimum of 10% of the stadium
capacity will be available for general admission, i.e. non-season
ticket holders and corporate attendees;
• No additional AFL franchises will be established in Perth over the
next 20 to 30 years;
PERTH STADIUM
Table 16: Stadium Options Under Consideration
Table 17: Potential Sources of Revenues / Expenses Associated with Major Venue Operations
Table 18: Venue Memberships of Major Stadia in Australia
SECTION C
• There will be no WA team competing in the NRL in
the short to medium-term, however it should be noted
that the WA Rugby League has recently announced the
participation of the Western Reds in a second-tier rugby
league competition from 2008 – this competition has been
excluded from this analysis and could present potential
additional event days for a 25,000 seat rectangular
stadium; and
• All revenue and cost assumptions are stated in 2006 $
terms and are exclusive of GST.
Potential Sources of Revenues / Costs
associated with Major Venue Operations
There are a range of potential revenue sources that both the
venue owner (State) and hirers can derive from the operations
of major venues. Similarly, the owner and hirers face a range
of costs associated with owning and operating / hiring the
venue. Table 17 provides an overview of the different revenue
and cost sources associated with major venue operations and
the general allocation of such items between the venue owner
and hirer.
While there are some generally accepted industry benchmarks
for rental levels and cost apportionment, such as a 15%
rental plus venue related event costs, it is rare that any
rental arrangement is this simplistic and will depend on the
facilities available to the hirer to sell, the size of the venue,
and the competition between venues. Ultimately the revenue
share between the hirer and the owner is the outcome of
negotiations, where the deal may be made in a number of
different ways to provide return and risk and incentive for
both parties, recognising that rather than an owner and hirer
relationship this is actually a partnership.
Under the proposed hiring arrangement for the stadium /
stadia, the venue hirer would pay the venue owner a rent
based on a percentage of gross ticket revenue and corporate
sales and will retain the remaining revenue associated with
admissions, corporate suites / boxes, function rooms and
merchandise sales. Revenue for the venue owner will include
the rent paid by the hirer (or a share of the revenues) and the
revenue associated with naming rights, signage / advertising,
pourage rights, catering rights and venue memberships (if
available). The hirer has to reimburse the owner for venue
related event day expenses.
The permutations and combinations of the commercial arrangements
are numerous however in reality there is a symbiotic relationship
between the venue owner and hirer. The owner will benefit from
the success of its hirers, and the hirers will benefit from a well
maintained and well operated stadium. State ownership of the
stadium on behalf of the people of WA, will ensure the appropriate
balance between commercial imperatives and social and community
objectives. This relationship is further strengthened when the owner
is effectively the State (on behalf of the local community) which has a
broader range of social and community objectives other than merely
a short-term profit motive.
Venue Memberships
The financial / commercial objective of the venue owner is to achieve
a break-even position for the stadium operations and to generate
a small surplus to contribute towards ongoing capital costs of the
venue (assumed at 1.5% of capital costs). Given the fixed nature of
venue ownership costs the preferred position of the venue owner is
to secure revenue streams with a smaller degree of volatility and, in
turn, greater certainty.
As highlighted in Table 18 venue memberships have traditionally
provided a significant revenue stream for the venue owner with
all major stadia across Australia having some form of venue
memberships in place, with the exception of Subiaco Oval.
Venue memberships are a popular product for major multi-sport
venues, as they provide access for all events, and are highly sought
after by both sporting fans and those who particularly want to
attend the major events with access to the best possible seats and
additional facilities and services. Membership packages typically
appeal to middle to high income sports fans and corporate clients,
who choose the informal atmosphere that a membership offers,
with the option for dining if desired, rather than the more formal
atmosphere of the corporate suite.
In Australia, about 10% to 20% of seats are allocated to
memberships, and in all stadia, venue owners have had to manage
issues with individual hirers to protect the rights of their members,
both in terms of the perceived competition of the membership
program with other programs they may offer and other issues such
as empty seats in prime areas when members do not attend events.
This is particularly the case in sold out events.
C-23
Table 19: Venue Memberships at Major Stadia in Australia An overview of the number and types of memberships available at Table 20: Types of Membership Packages offered for Events at Suncorp Stadium

major Australian stadia is presented in Table 19. Types of Membership Packages offered for Events
at Suncorp Stadium

The key benefits of venue memberships are: Issuer Price of Premium Membership

Hirer Queensland Reds $119 - $330

• A secure revenue stream for the stadium owner irrespective of
the on-field performance of individual teams; Queensland Roar $235 - $345

Brisbane Broncos $455 - $655

• The timing of the revenue, i.e. venue memberships are generally
sold at the beginning of the season; and Owner Suncorp Stadium $1,100 - $3,058

• The market appeal of the product and, in turn, the premium that
Table 21: Types of Membership Packages offered for Events at the Gabba
venues can charge for the membership package.
Types of Membership Packages offered for Events at The Gabba
Venue memberships offer access to all events held at a venue
Issuer Price of Premium Membership
whereas club memberships are limited to a particular sports
code. Venue memberships are sold at a significant price premium Hirer Brisbane Lions $257 - $433
compared to club memberships, as highlighted in Table 20 and Table Trust The Gabba Trust $990 joining fee + $490 p.a.
21. As such, the threat to the membership base of an individual sport
is limited, particularly where there are a number of sports and no
other opportunity for purchasing a single package across all events.

PERTH STADIUM
C-24
 In a venue where a significant number of events experience turn-
away demand (e.g. presently at Subiaco Oval) venue memberships
can disadvantage the hirer as these could otherwise be sold by the
club. At the new stadium, turn-away demand is projected to occur at
only a few blockbuster events with average attendances for the WCE
assumed at 53,500 and the FFC at 48,500.
The potential impact of not having venue memberships at the 60,000
seat major stadium would result in a decline of stadium revenue
of approximately $4.5m (plus a decline in F&B revenue) assuming
3,000 venue memberships are sold at an average price of $1,500
per membership. Some potential alternatives to venue memberships
include:
• Fixed match day rent for major hirers;
• Increase of the stadium owner’s share of gross admission, F&B
and merchandising revenue (fixed or sliding scale);
• Increase of the stadium owner’s share of corporate suite / box
sales revenue; or
• Retention of a certain number of corporate suites by the stadium
owner.
To cover its overhead expenses and long-term maintenance costs
the venue would have to charge an additional fixed match day rent
equivalent to the amount (i.e. $4.5m) that venue memberships
would generate. Therefore, most alternative arrangements to venue
memberships simply represent an increase in a venue’s share of
another revenue source, although the increased share has resulted in
rental levels that are far higher than industry benchmarks which may
impact the ability to secure events.
As previously outlined, the sports codes in Perth have expressed
their concern in regards to venue memberships. It was perceived
that venue memberships would conflict with the policy of providing
the venue(s) to hirers as “clean” stadia. As such the sports perceive
the preferred solution would be to pay a greater share of another
revenue source to the venue manager which has been incorporated
into the financial models as previously highlighted. Further, the
consultants have converted the 3,000 venue members into public
seating attendees during stage 2 (i.e. our attendance projections have
not been impacted by this change) and increased the rental to 24%
SECTION C
of gross ticket sales (from previously 10%), and 10% of the gross
revenue of all corporate sales made by the hirer.
Alternatively, consideration could be given to a way to better manage
the impact of the membership program so that it can still be provided
to meet a recognised market opportunity, which cannot be provided
by individual sports or events, and deliver a revenue stream for
the owner. This includes further consideration of the number of
members and the conditions and inclusions of the membership
program to minimise impacts on the sports and events, including the
limitation on membership rights for specific major events such as the
Bledisloe Cup or other major international events, without completely
jettisoning such a lucrative, highly sought after and widely accepted
program.
The current financial model includes a rental of 24% against gross
ticket sales. If the sporting codes agree to introduce a stadium
membership program then the stadium’s share of gross ticket sales
would revert back to approximately 10% as assumed in the Interim
Report. However, if it is agreed not to proceed with a membership
program and this rental rate is reduced during negotiations, the
impact on the stadium operating returns will be significant. It is
therefore recommended that no firm decision be made on stadium
memberships until such time as the level of acceptable rental is
agreed in principle with major hirers.
Definition of “Clean” Stadium
As previously outlined, in the Interim Report it was proposed that
the stadium owner will sell 5% of all seats (3,000 seats for $1,500
each) as venue memberships, generating an annual revenue stream
of $4.5m for the venue owner. However, the results of detailed
consultations with the individual sporting codes have suggested
that a “clean” stadium model would be the preferred solution for all
sports. As highlighted earlier, from a financial perspective the venue
owner has to recoup the foregone venue membership revenue
by charging higher fixed rents, increase its share of other revenue
sources in hiring arrangements, or a combination of both.
C-25
Therefore, the revised financial forecasts are based on the
assumption that the stadia will be offered as “clean” stadia. The
definition of “clean” stadium presented in Table 22 has been
assumed for the purpose of this study.
Table 22: Definition of “Clean” Stadium
Definition of “Clean” Stadium
• The venue is provided to hirers free of any seating and membership restrictions, i.e. the
venue will be provided to hirers as a 60,000 seat stadium including all corporate facilities,
excluding those required for the owner and major sponsors, such as a naming rights
sponsor;
• The owner has the right to the sell the naming rights for the venue / and or individual
grandstands with all revenue retained by the owner (refer to Section C 2.3 for further detail
on naming rights);
• The owner has the right to sell pourage rights and retain the revenue associated with
these rights and will provide access rights for an alternative sponsor supplier to minimise
potential conflicts with hirers;
• The owner has the right to undertake or sell catering rights and retain the associated
revenue;
• The owner may negotiate to share some of the revenue associated with naming, catering
and pourage rights with venue hirers (on a case by case basis) as part of the overall
stadium hire arrangement;
• Revenue from signage that is visible to TV cameras flows to the hirer whereas signage
revenue generated from sections of the venue that is not visible to TV cameras (e.g.
stadium exterior or concourse level) of the venue remains with the owner; and
• Revenue from TV and other broadcast rights are retained by the venue hirers with any
access / installation costs to be borne by the hirer.
C-26
Exclusions
Depending on the final design and location of the venue(s) potential
additional revenue sources and cost items may eventuate, however
these have not been included. Such items could include:
• Revenue from any car parking around the venue. One of the
key principles of the venue design and operation is the active
promotion of the use of public transport with a targeted public
transport usage of 50-70% by patrons. This is reflected in the
design of the stadia and associated transport infrastructure
together with the recommended policy of integrated ticketing
which will mean the cost of all public transport on the event day
is incorporated in the ticket price. In accordance with standard
industry practice the venue owner and hirers bare no net costs
or revenues associated with an integrated ticketing policy.
Accordingly it is not expected that any material revenue will be
generated by the venue from car park operations;
• Potential revenue generated from commercial tenancies included
in the stadium development, i.e. retail outlets, offices etc. The
quantum of these will depend on the final design of the venue(s)
but are not expected to be material;
• Revenue from non-event day function room hire and stadium
tours. Revenues from these activities are not expected to be
material and will depend on the final location, event profile and
competition in the market place;
• Any revenues associated with the sale of surplus properties
(for development purposes) adjacent to the stadium have been
excluded from the forecast operating cash flows and have been
considered in determining potential sources of funding for the
venue; and
• Any asset ownership costs such as the cost of the Trust
operation, building insurance, land taxes, rates etc. have been
excluded as these will be dependent on the design of the venue
and / or its location.
PERTH STADIUM
 2.2 OPERATING ASSUMPTIONS Table 23: Key Capacity and Configuration Considerations for Major Stadium
Key Capacity and Configuration Considerations for Major Stadium

• The capacity needs to be large enough to secure major events and to compete effectively with the Eastern States
Stadia Seating Configuration for events, particularly with Suncorp Stadium (52,500 seats) and Telstra Dome (53,400 seats);

• The capacity needs to be large enough for the major stadium to be considered for major events, such as Rugby
In Volume 2 Part 2 of the Interim Report the consultants Internationals and Test Cricket, yet designed to be intimate enough to not have a detrimental impact on the
recommended a capacity of 60,000 seats for the major stadium atmosphere at regular events. Ideally stadia should operate at more than 50% capacity for the average regular
event so as to ensure a vibrant atmosphere. Suncorp Stadium (52,500 seats) and Telstra Dome (53,400 seats)
based on a series of capacity and configuration considerations provide examples of venues with capacities and facilities that cater well for both major and regular events;
that were presented to the Taskforce. The key considerations are
• The larger the stadium, the further you are from the action on the field which would reduce the atmosphere and
presented in Table 23. the intimacy of the live event and hence the desirability factor of attending an event;

• The WA AFL market is relatively young when compared to Victoria. Trends from Victorian AFL teams suggest that
the above average growth for WCE and FFC is not likely to continue indefinitely as attendances are likely to reach
market maturity / a saturation point:

- Average annual attendance growth for AFL fixtures in Victoria has slowed since 1987, for example from
2000-2005 the average annual attendance growth across all Victorian clubs was only 0.36%. This compares to
an average annual growth rate of 1.82% across all AFL teams which indicates that the Victorian market has
reached maturity. For example, the traditional clubs of Essendon, Collingwood and Richmond have recorded
strong growth rates from the late 1980s to mid 1990s, however from 2001 to 2005 the average annual attendance
for Collingwood has declined by 3.53%, Essendon by 2.26% and Richmond by 4.94%.

• The WAFC suggests that under a scenario of moderate on-field performance the WCE are projected to reach an
attendance of 55,000 by 2013 and 60,000 by 2020 whereas the FFC are projected to reach an attendance of 40,000
by 2010 and 46,000 by 2020;

• The WCE and FFC will be the anchor tenants of the new venue. The operating models developed by KPMG assume
that the WCE season matches will record the highest average attendances of all hirers and are projected to be
53,500 in a stabilised year. KPMG has developed attendance projections for both AFL clubs in stage 1 under two
scenarios:

- Continued growth in club attendances at long-term average rate for five years for the WCE (2.85%) and FFC
(4.19%), then mature market growth rate based on recent growth by Victorian clubs (0.36%). Based on these
assumptions the WCE would reach an average attendance of 49,250 and the FFC of 47,250 by 2027.

- Continued growth in club attendances at long-term average rate for five years for the WCE (2.85%) and FFC
(4.19%), then growth in line with Perth’s average annual projected population growth rate for the period from
2005 to 2025 of 1.36% (Source: Western Australian Planning Commission, WA Tomorrow No. 6). Based on these
assumptions the WCE would reach an average attendance of 58,300 and the FFC of 56,000 by 2027.

• There is value in some level of scarcity of tickets for major events. Scarcity is beneficial as:

- It promotes success through sold out events;

- Encourages patrons to purchase season tickets to ensure access to events; and

- It justifies a premium ticket price for major events – “demand management”.

• It should be noted that whilst consideration was given to retain the additional seats for the Olympic Games, Telstra
Stadium reduced capacity from 115,000 for the Olympic Games to 84,500 seats;

• In the medium to long-term Perth is likely to remain a two AFL team town;

• The cost of construction and maintaining excess capacity seats is significant; and

• There is not a direct relationship between population size and stadium size. For example, Wembley Stadium
London (90,000 seats) is smaller than the MCG although the population of London is much larger.

SECTION C
C-27
After considering the above factors the Taskforce has
requested the consultants to design the major stadium with
an initial capacity of 60,000 seats which is expandable to
70,000 seats to meet future demand.
The seating mix / configurations assumed for the purposes
of preparing financial forecasts for each stadia option are
presented in Table 24 and are aligned to the facility briefs
developed for each of the venues.
As highlighted in Table 25 the 60,000 seat major stadium
would have a 39% greater overall capacity than the current
Subiaco Oval with public and general admission seats
projected to increase by 38% and corporate seats (including
function rooms) by 57%.
Further, the multi-purpose 60,000 seat major stadium is
designed to provide 22,000 operable / retractable seats
to cater for the needs of rectangular sports, in particular
rugby. These seats will provide rugby spectators with an
uncompromised viewing experience. In comparison, neither
the existing Subiaco Oval nor the proposed masterplan for
Subiaco Oval proposed by the WAFC incorporate the specific
needs of rectangular sports in the form of retractable /
operable seating. For a detailed discussion on operable seating
please refer to Section B5.
C-28
Event Days Table 24: Seating Mix Assumptions
It is assumed that the multi-purpose 60,000 seat major
stadium will be host to AFL, International Cricket, Rugby Super
14, International Rugby and International Soccer. As such, it is
believed that the multi-purpose 60,000 seat major stadium will
host a minimum of 40 event days per annum. However, if it
is decided to develop a purpose built 35,000 seat rectangular
stadium as well as, or in preference to (pending the outcome
of governance discussions with the WAFC), the 60,000 seat
oval stadium then the event schedule will be spread over the
various options. Table 26 provides a summary of the forecast
event schedule under the various stadium configuration
options.
Table 25: Seating Configuration – Major Stadium vs. Subiaco Oval
It should be noted that the total event days included in the
financial analysis represent “base event days” for each of
the venues. There are additional potential events which may
be held at the different stadia from time to time (e.g. Finals
matches, Bledisloe Cup matches, concerts, club promotion
days etc.). Such events have been excluded from the
financial forecasts due to their dependence on either on-field
performance of hirers or agreements with national sports
bodies.
In order to confirm the event capacity of the proposed multi-
purpose 60,000 seat stadium the event calendar presented
in Table 27 includes both the “base event days” included in
the financial model as well as a number of potential additional Table 26: Event Day Assumptions – Average Year
events which may eventuate.
As shown in this annual calendar (based on actual matches
scheduled for 2006-07) the 60,000 seat multi-purpose stadium
can accommodate both the base events (these are included in
the financial forecasts) as well as a number of potential events
which are largely dependent on the on-field performance of
the anchor tenant sporting franchises, i.e. AFL finals, Pura
Cup finals etc. In addition there is scope for the venue to host
other one-off events such as concerts and other entertainment
events such as the Edinburgh Tattoo and additional soccer
internationals, an international rules event, a NFL Exhibition
Game etc.
PERTH STADIUM
Table 27: Projected Multi-purpose 60,000 seat Major Stadium Event Schedule – Actual Year In accordance with our recommended operating model (refer The projections adopted by the WAFC however indicate
Sample Event Calendar for a 60,000 seat Multi-use Stadium based on the 2006/07 Year Section C1) in determining the base and potential event indefinite growth and as previously mentioned evidence from
Dec-06 Jan-07 Feb-07 Mar-07 Apr-07 May-07 Jun-07 Jul-07 Aug-07 Sep-07 Oct-07 Nov-07
schedule for the major venue it has been assumed that with Victorian teams suggests that attendances are likely to reach
1 Twenty20 WCE Rd 22
2 Force Rd 1 WCE Rd 10
the exception of pre-event “familiarisation” training sessions, a saturation point. Further, the projections do not account
3 the 60,000 seat major stadium will not be used as a regular for seasons in which either team could experience a poor
4 Twenty20 Force Rd 13
5 WCE Rd 6 WCE Rd 18
training venue for any sporting franchise hirer and will not be on-field performance which could alienate less loyal football
6 Soccer Intl used as “home ground” for any sporting franchise. supporters.
7 WCE Rd 2 WCE Rd 14 AFL Qualifying
and Elminiation
8 Finals
Based on the WAFC’s projections to 2020 under a moderate
Projected Average Attendances
9 Force Rd 6 Rugby Test
Tour Match
10 FFC Rd 11 on-field performance scenario a stadium capacity of 60,000
11 Super 14 Semi
would be sufficient to accommodate the average attendances
The average attendances adopted in the financial model
12 Twenty20 Finals FFC Rd 19
13 FFC Rd 7 for both the WCE (60,000) and the FFC (46,000).
14 FFC Rd 3 AFL Semi
are based on the attendance projections that have been
15
Cricket
FFC Rd 15 Finals
determined and documented in Volume 2 Part 2 of the Interim However, based on the results of our detailed analysis of
16 Force Rd 7
17
Test Match
Report. These attendance projections have been developed historical attendances at all AFL fixtures over the last 20
18
A-League
Final
WCE Rd 20 based on historic attendances at sporting and other events in seasons (refer to Volume 2 Part 2 of the Interim Report),
19 Super 14 Final
20 WCE Rd 8
Perth and across Australia, the utilisation of existing venues in together with an assessment of forecast population growth
Potential
21 Pura Cup
Final
WCE Rd 16 AFL Prel. Perth, population growth projections and future directions of for Perth, we have adopted more conservative projections
22 WCE Rd 4 Final

23
the major sporting codes as identified from consultations with of average home game attendances over the next 25 years
24 Force Rd 4 WCE Rd 12 the individual sports. of 53,500 for the WCE and in the case of the FFC, we have
25 NAB Cup FFC Rd 9 FFC Rd 21
26 assumed an average home game attendance of 48,500 which
Based on the base event days previously presented, the
27 Force Rd 12
is slightly higher than the 46,000 assumed by the WAFC under
28 ODI 1 FFC Rd 17 projected event and annual attendance in an average year
29 FFC Rd 5 a moderate on-field performance scenario.
30 ODI 2 Force Rd 8 FFC Rd 13
of operation (over the first 25 years of operation of the new
31 FFC Rd 1 venue(s)) are outlined in Table 28. The projections for Twenty20 Cricket have been revised
Base Event Days Potential Additional Events
Source: Perth Stadium Consulting Team downwards from the Interim Report as it was assumed in the
In October 2005, the WAFC provided the Taskforce with high
Interim Report that one international Twenty20 match would
and moderate growth projections for the FFC and WCE based
be held at the 60,000 seat major stadium per annum. Further
on an academic study highlighting the impact of on-field
information recently provided by Cricket Australia has indicated
performance on club memberships and population growth
Table 28: Average Attendance Assumptions – Average Year that the annual event is likely to be a domestic cricket event
(Source: WAFC Subiaco Oval Redevelopment, Update to the
which, in turn, is likely to translate into lower attendances.
Major Stadia Taskforce, 21 October 2005). The WAFC suggests
that: Further, the projections for the Cricket Test Match have been
lowered from the projections presented in the Interim Report.
• Under a scenario of moderate on-field performance the
Firstly, given the recent Test Match outcomes, it is now
WCE are projected to reach an average attendance of
assumed that the event will be played over an average of
55,000 by 2013 and 60,000 by 2020 whereas the FFC are
four event days as opposed to five event days as assumed in
projected to reach an average home game attendance of
the Interim Report. Secondly, a comparison to other venues
40,000 by 2010 and 46,000 by 2020; and
indicates that crowd attendances at Cricket Test matches
• If the clubs were to experience strong on-field fluctuate strongly based on the strength of the opponent. For
performance the WCE could reach average home game an average year, the revised average attendance at Cricket Test
attendances of 67,500 and the FFC of 57,500 respectively matches are now assumed at 15,000 per day at the 60,000
by 2020. seat major stadium and 13,000 per day at the 35,000 seat

SECTION C
C-29
stadium. These forecast attendances are in line with
the performance achieved by Test Match cricket at
better quality venues on the East Coast of Australia,
i.e. Gabba (Brisbane).
Taking into account the record of the Western
Force in its inaugural year, the average home
game attendances of more mature East Coast
rugby franchises, forecast population growth etc.,
average home game attendances in an average
year of performance (over the next 20-30 years)
for the Western Force has been set at 28,000 for
the 60,000 seat major stadium. Marginally lower
average home game attendances have been
assumed for the 35,000 seat rectangular venue due
to the impact of “turn-away” demand associated
with staging blockbuster events in a smaller venue.
The Perth Glory is projected to attract a crowd of
12,100 per season game in an average year over the
next 25 years which is higher then the record low
average attendance of approximately 7,500 in 2006-
07 but lower than the previous record attendance of
14,700 achieved in 1999-2000.
2.3 REVENUE ASSUMPTIONS
The consultants have provided the Taskforce with the revenue
assumptions applied in the analysis of the financial feasibility of
the various stadium options. However, the ability to achieve these
forecasts will depend on the results of the myriad of commercial
agreements which will need to be conducted with respect to the
ownership, governance and operations of the venue. The Taskforce
has determined that the detailed revenue assumptions provided by
the consultants are commercial in confidence. The sporting codes
have provided the Taskforce with confidential information relating to
their current operations and the Taskforce considers that the release
of this information will potentially compromise the future operations
of the individual sporting codes. Further, the Taskforce considers
that the release of this information will potentially compromise the
Government’s future position in respect to dealing with this project.
As such, this confidential information has been included in a separate
Section D3.
2.4 COST ASSUMPTIONS
2.5 PROJECTED STADIA
OPERATING RESULTS
This section presents the projected stadia operating results. It should
be noted that the Taskforce has considered that the public release
of more detailed information has the potential to compromise the
Government’s future position with respect to dealing with this
project. As such, further information has been provided in Section D5.
Table 29 provides a summary of the estimated total revenues and
expenses (before revenue and expense sharing arrangements) that
will be generated by the different stadia options. The multi-purpose
60,000 seat major stadium is estimated to generate total revenues of
$93.7m and incur total expenses (including match day expenses) of
$14.1m.
The subsequent sections present the stadia operating results after
allocation / sharing of revenues and expenses between the venue
owner and hirers based on the previously outlined assumptions.
Table 29: Projected Stadium Profit and Loss Statement before Revenue / Expense Sharing Arrangements
– Average Year

The projected attendances for the same event are

assumed to be lower in a smaller venue than at the
60,000 seat major stadium (e.g. Western Force in
a 35,000 seat venue) as one to two blockbuster
matches per season in the 60,000 seat major
stadium (greater then 35,000 spectators) are likely
to result in higher average attendances for the
season than would be the case in a smaller venue.
The consultants have provided the Taskforce with the cost
assumptions applied in the analysis of the financial feasibility of
the various stadium options. However, the ability to achieve these
forecasts will depend on the results of the myriad of commercial
agreements which will need to be conducted with respect to the
ownership, governance and operations of the venue. The Taskforce
has determined that the detailed cost assumptions provided by the
consultants are commercial in confidence. The sporting codes have
provided the Taskforce with confidential information relating to their
current operations and the Taskforce considers that the release of
this information will potentially compromise the future operations
of the individual sporting codes. Further, the Taskforce considers
that the release of this information will potentially compromise the
Government’s future position in respect with dealing with this project
and, as such, this confidential information has been included in a
separate Section D4.

PERTH STADIUM
C-30
2.6 NET OPERATING RESULT
TO VENUE OWNER
Net Operating Result to Venue Owner
after Venue Overhead Expenses
Table 30 presents the forecast net returns after venue
overhead expenses (before lifecycle maintenance costs)
that each venue will potentially generate to the owner in an
average year of operation (over the next 25 years).
The key findings from these forecasts are as follows:
• As a result of the consolidation of the event calendar into
a single venue the multi-purpose 60,000 seat stadium
generates the largest net revenue (after stadium overhead
expenses) of all the venue options. Conversely the
spreading of the event schedule over multiple venues
reduces the net revenues generated by the 60,000 seat
major venue;
• The 35,000 seat cricket rugby venue (Option 3) and the
dedicated 35,000 seat rugby stadium (Option 4) are
forecast to not generate sufficient revenues to cover their
overhead costs with a forecast net operating deficit of
$1.2m and $1.5m, respectively. The dedicated 25,000 seat
rectangular stadium (Option 5) is also forecast to generate
a net deficit of approximately $1.7m in an average year of
operation; and
• As noted previously, and as shown at the bottom of
Table 30 if a single venue management model is adopted
to manage multiple venues, potential savings in venue
overheads in the order of $1.16m (Options 1 and 5) to
$1.68m (Options 2a and 4 or Options 2b and 3) could be
achieved.
SECTION C
Net Operating Result to Venue Owner
after Venue Overhead Expenses and
Table 30: Projected Venue Profit and Loss Statements after Venue Overhead Expenses
Lifecycle Maintenance Costs
In addition to the initial capital costs associated with the
provision of major public infrastructure such as stadia, there is
an ongoing requirement to set aside additional funds to meet
the long term lifecycle maintenance costs of keeping the asset
in a fit for purpose condition. These lifecycle maintenance
costs are estimated to be in the order of 1.5% of the value
of the initial capital expenditure, escalated to take account of
increases in underlying costs. Accordingly, for the purposes Table 31: Projected Stadia Development and Lifecycle Maintenance Costs
of this assessment we have adopted 1.5% of the estimated
stadium capital costs (escalated) of the various venue options
(details of which are provided in Section D2), a summary of
which is provided in Table 31.
Table 32 provides a summary of the forecast financial results
for each venue option (in an average year) after allowance for
lifecycle maintenance costs. The capital cost estimates for
the various stadia options incorporate forecast escalation in
Table 32: Projected Venue Profit and Loss Statement after Overhead Expenses and Lifecycle Maintenance Costs
building costs and therefore represent estimated construction
costs on completion, which is assumed to be in September
2011, based on the East Perth site (refer Section B10).
Therefore in order to compare like for like $’s (2011) it is
necessary to index the estimates of net stadium revenues
detailed earlier in Table 30 which are in 2006 $’s terms by
forecast inflation (3% per annum) through to 2011.
The key findings from these forecasts are as follows:
• The multi-purpose 60,000 seat stadium (including
and excluding Super 14 as a hirer, i.e. Options 1 and
2a) are the only venue options which are forecast to
potentially generate sufficient net revenue to cover both
their respective overhead costs and fund their required
contribution to a reserve to meet lifecycle maintenance
costs. However, while Option 2a is projected to generate a
net operating surplus of $1.88m in $’s 2011 (in an average
year) it would require the development of a dedicated
35,000 seat rectangular stadium (i.e. Option 4) which
is projected to incur a net operating loss of $5.64m per
annum; and
C-31
• None of the rectangular venue options are forecast to
generate sufficient net revenues to meet their overhead
costs and fund their respective lifecycle maintenance
reserves. In fact, under Option 3 being the 35,000 seat
cricket / rugby venue, Option 4 being the dedicated 35,000
seat rectangular stadium (with Super 14, Perth Glory and
Provincial Rugby as the key hirers) and Option 5 being a
25,000 seat rectangular stadium with only Perth Glory and
Provincial Rugby as hirers, revenues generated by these
venues are insufficient to meet their respective overhead
costs let alone their respective lifecycle maintenance
costs.
In summary, the results of the preliminary financial analysis
indicate that the development of multiple venues will not
only require the Government to fund significant additional
capital costs but will also need to provide ongoing funding to
meet the lifecycle maintenance costs associated with two
major venues. A further analysis of the financial implications
of the development of both a dedicated oval and dedicated
rectangular venue is provided in the following paragraphs.
C-32
Combined Stadia Options Table 33: Combined Stadia Option A: Oval 60,000 Seat Major Stadium & 35,000 Seat Rectangular Stadium
Based on the venue options under consideration there are two
potential combined stadia solutions available to Government.
As previously mentioned, the combined management of the
60,000 seat major stadium and either a 25,000 or 35,000
seat rectangular venue could generate significant savings
in overheads of approximately $1.16m (Options 1 and 5) to
$1.68m (Options 2a and 4) in 2006 $ terms. It should be
noted that a third potential combined stadia solution has been
considered (i.e. Options 2b and 3). However, as previously
mentioned, during Stage 2 of the study the sports (WACA and
Rugby WA) have withdrawn their support for combined cricket/
rugby venue (i.e. Option 3). Therefore, such a combined stadia
option has not been further investigated.Table 33 and Table
34 provide an overview of the net stadia operating results
to Government under each of the two available combined
stadium options if these savings were to be proportionately
attributed to the individual venues.
Option A:
60,000 seat Major Oval Stadium and 35,000 seat
Table 34: Combined Stadia Option B: 60,000 Seat Multi-purpose Major Stadium & 25,000 Seat Rectangular Stadium
Rectangular Stadium
Under such a scenario the 60,000 seat major oval stadium
would host the events of AFL, Rugby International,
International Cricket and International Soccer whereas the
Western Force, Perth Glory and Provincial Rugby would play
at the 35,000 seat rectangular stadium. Table 33 provides a
high-level summary of the combined forecast financial results
of this combined stadia option, after allowance for venue
overheads and lifecycle maintenance costs of both venues.
Combined, the two venues are projected to generate a net
operating result of $6.91m (in 2011 $’s terms) however after
taking account of potential overhead savings of $1.95m (in
2011 $ terms) from the joint management of both venues net
operating result is forecast to increase to $8.86m. However,
the inclusion of the projected lifecycle maintenance cost
contributions of $12.62m would result in a projected net
operating deficit of $3.7m in an average year of operation of
these two venues.
PERTH STADIUM
Option B:
Multi-purpose 60,000 seat Major Stadium and 25,000
seat Rectangular Stadium
Under a second scenario, Option B, the multi-purpose 60,000
seat major stadium would be the home of AFL, Western Force,
International Cricket and Soccer Internationals, whereas Perth Glory
and Provincial Rugby would be held in a dedicated 25,000 seat
rectangular stadium (MES). Table 34 provides a high level summary
of the combined forecast financial results of this second multi-
stadia option, after allowance for venue overheads and lifecycle
maintenance costs of both venues.
This option would result in a projected combined net operating result
of $9.23m (in 2011 $s terms) resulting in a higher combined net
operating result compared to Option A. This combination is projected
to provide lower joint management overhead savings of $1.35m (in
2011 $s terms) but, on the other hand, is projected to incur lower
lifecycle maintenance costs of $11.67m when compared to Option
A. After the inclusion of lifecycle maintenance costs this combined
stadia option is projected to incur a net operating deficit of $1.09m
in an average year. As such, the projected net operating result under
Option B is $2.66m greater than the projected net operating result
under Option A.
The preceding analysis clearly demonstrates that the development of
a multi-purpose 60,000 seat major stadium and a dedicated 35,000
seat rectangular stadium is likely to require ongoing financial support
of the State Government to fund the shortfall in contribution to the
lifecycle maintenance costs of both venues. The analysis further
suggests that the development of a multi-purpose 60,000 seat major
stadium and a dedicated 25,000 seat rectangular stadium is also
2.7 PROJECTED HIRER NET
REVENUE FROM VENUE
OPERATIONS
This section presents the projected net revenue (in an
average year) for the individual hirers of the different stadia
options under consideration based on the previously
outlined assumptions. The net revenue presented is based
on the hirer’s share of revenue generated from events
held at a venue minus the associated event day expenses
(which were assumed to be fully paid by the hirer). Where
possible the consultants have provided commentary on
how the projected net revenues compare to the current
revenue generated by the teams / codes at current
stadium facilities in Perth. It should be noted that more
detailed tables outlining the projected net revenue for
venue hirers are presented in confidential Section D6.
Table 35: Projected Net Revenue from Venue Operations – Fremantle Football Club – Average Year
FFC
Table 35 provides an estimate of the net revenue that FFC will
generate from staging their home games at the new 60,000 seat
stadium in an average year of operation.
It is projected that in an average year the FFC would generate net
revenues of $13.76m (including 1 NAB Cup match but excluding
potential finals matches) from playing at the 60,000 seat major
stadium while the venue owner is projected to generate a net
revenue of $3.36m from hosting the FFC’s matches.
It should be noted that the above revenue estimates specifically
exclude the following:
• Signage revenues that would accrue to FFC under a “clean”
stadium policy;
• Ticket premiums associated with the sale of a range of
membership packages which would also accrue to the FFC. The
admission revenue calculations provided are based on the face
value of tickets and specifically exclude the premium charged for
various packages such as season memberships, centre line clubs
etc.; and
• Club merchandise revenue sold through retail channels outside
of the venue. The merchandise sales calculations provided are
based on the merchandise sales within the venue.

likely to require an ongoing contribution to lifecycle maintenance

costs of both venues by the State Government.

Further, as highlighted in Table 32 previously it is forecast that in

an average year of operation the multi-purpose 60,000 seat major
stadium option including and excluding Super 14 as a hirer (i.e.
Options 1 and 2a) are the only stadium options which have the
capacity to generate sufficient revenues to cover their respective
stadium overheads and also make the forecast required contribution
(1.5% of capital costs) to ongoing lifecycle maintenance costs.

SECTION C
C-33
Table 36: Projected Net Revenue from Venue Operations – West Coast Eagles – Average Year
Table 37: Projected Net Revenue from Venue Operations – Western Force – Average Year
Table 38: Projected Net Revenue from Venue Operations – ARU (Rugby Internationals) – Average Year
C-34
WCE
Table 36 provides an estimate of the net revenue that the
WCE will generate from the staging of their home games
at the new 60,000 seat stadium in an average year of
operation.
It is projected that in an average year the WCE will
generate net revenues of $14.99m from playing at the
60,000 seat major stadium while the venue owner would
generate net revenues of $3.69m from hosting these
matches.
As in the case of the FFC the above net revenue
projections exclude the following additional and potentially
significant revenue sources which will accrue to the WCE
as a result of having the opportunity to play their home
games in a new 60,000 seat stadium:
• Signage revenues that would accrue to WCE under a
“clean” stadium policy;
• Ticket premiums associated with the sale of a range
of membership packages which would also accrue to
the WCE. The admission revenue calculations provided
are based on the face value of tickets and specifically
exclude the premium charged for various packages
such as season memberships, centre line clubs etc.;
and
• Club merchandise revenue sold through retail
channels outside of the venue. The merchandise sales
calculations provided are based on the merchandise
sales within the venue.
Western Force
Table 37 provides an estimate of the net revenue the Western Force
will derive from staging its Super 14 home fixtures at the new 60,000
seat stadium.
The Western Force are projected to generate net revenues of $7.88m
from playing at the 60,000 seat major stadium and $8.98m from
playing at a dedicated 35,000 seat rectangular venue.
As with the case for the FFC and WCE these forecasts specifically
exclude signage revenues, membership / package premiums and
(venue external) club merchandise sales that would accrue to the
Western Force under the proposed “clean” stadium policy.
ARU (Rugby Internationals)
Table 38 provides an estimate of the net revenue that the ARU will
generate from the staging of Rugby Test match at the new 60,000
seat stadium in an average year of operation.
If the annual International Rugby Test match is held at the 60,000 seat
major stadium it is projected the ARU would generate net revenues
of $2.65m in an average year. The venue owner is forecast to derive
rental revenues of $660,000.
At the time of writing this report no comparative data was available,
however it would be reasonable to conclude that the ARU would be
financially better off at the new stadium given a 57% increase in the
number of corporate seats and a 37% increase in public / general
admission seating available at the new stadium in comparison to the
current facilities at Subiaco Oval.
Provincial Rugby
Table 39 provides an estimate of the net revenue that Provincial
Rugby will generate from staging their home games at the 35,000 or
25,000 seat rectangular venues.
Provincial Rugby is projected to generate net revenues of $1.23m
from playing at a 35,000 seat stadium and $1.18m from playing at a
25,000 seat rectangular venue. At the time of writing this report we
have been unable to obtain comparable financial and operational data.
PERTH STADIUM
Cricket Australia / WACA
(International Cricket)
Table 40 provides an estimate of the net revenue that Cricket
Australia / WACA will derive from staging international cricket
fixtures at the new 60,000 seat stadium or the 35,000
combined Cricket / Rugby venue.
Cricket Australia / WACA are projected to generate net
revenues of $5.82m from international cricket events
scheduled at the multi-purpose 60,000 seat major stadium
whereas the venue owner would generate $1.16m from these
events. In a 35,000 seat combined cricket / rugby venue
Cricket Australia / WACA would generate net revenues of
$5.74m and the venue owner $874,000.
As is the case with international rugby events, Cricket Australia
effectively control the staging of international cricket events
in Australia. At the time of writing this report we have been
unable to obtain comparative operational and financial data
with respect to the staging of international cricket at the
WACA. However, we believe that expanded capacity and
significantly improved standard of facilities and services would
enable Cricket Australia and the WACA to be financially better
off by staging international cricket events at a new stadium
(60,000 or 35,000 seats) than at the existing WACA facility.
The increase in average attendances at international cricket
events staged at the Gabba since its redevelopment clearly
supports the view that Cricket Australia / WACA will benefit
from staging their major event at the new venue.
SECTION C
FFA (International Soccer) Table 39: Projected Net Revenue from Venue Operations – Provincial Rugby – Average Year
Table 41 provides an estimate of the net revenue that the
FFA will generate from the staging of an international soccer
match at the new 60,000 seat stadium in an average year of
operation.
As previously outlined it has been assumed that 1 international
soccer event will be hosted at the 60,000 seat major stadium.
It is projected that this event would generate $1.20m for the
FFA and $287,000 for the venue owner.
At the time of writing this report the consultants did not have Table 40: Projected Net Revenue from Venue Operations – Cricket Australia / WACA (International Cricket) – Average Year
access to any comparative data on games held previously at
Subiaco Oval.
Perth Glory Football Club
Table 42 provides an estimate of the net revenue that Perth
Glory will generate from staging their home games at the
35,000 or 25,000 seat rectangular venues.
Perth Glory is projected to generate net revenues of $1.34m at
a 35,000 seat venue and $1.30m at a 25,000 seat venue.
Table 41: Projected Net Revenue from Venue Operations – FFA (International Soccer) – Average Year
At the time of writing this report the consultants did not have
access to any comparative data on games held previously at
MES after the inception of the A-league in 2005-06.
Summary
In summary, where reliable comparable historical data is
available (WAFC, WCE, FFC, Western Force), it is estimated
that all key hirers will be financially better off from staging
their home game events at the new stadium / stadia (60,000 Table 42: Projected Net Revenue from Venue Operations –Perth Glory – Average Year
seat stadium or 35,000 / 25,000 seat rectangular venues)
in comparison to the revenues derived from staging these
events at the existing Subiaco Oval. Further it should be noted
that this comparative financial analysis excludes the potentially
significant additional revenues that these sporting franchises
will derive from signage, ticket premiums achieved from
various season membership packages and merchandise sales
derived from sales outside the venue.
C-35
2.8 REVIEW OF MASTERPLAN
PROPOSALS
Review of WAFC Masterplan
The WAFC has not provided the Taskforce with a business plan for
its proposed Masterplan for the redevelopment of Subiaco Oval.
As such, the Taskforce was unable to undertake a review of the
projected operations of the 55,000 seat stadium proposed by the
WAFC. Limited information included in the Masterplan proposal
suggests that the WAFC estimate that the operating costs for the
redeveloped Subiaco Oval would be in the order of $7.0m per annum,
however the WAFC do not provide a detailed breakdown of these
costs. The estimated overheads costs by the WAFC are generally in
line with the consultant’s forecasts of stadium overheads for the new
stadium, details of which are provided in Section D4.
Review of MES Business Plan
Rugby WA in consultation with Perth Glory, Rugby League and
Football West (Soccer) have developed a business plan for a 35,000
seat rectangular stadium at MES. The following provides an overview
of this business plan (please refer to Appendix D of this Section for a
copy of the complete MES business plan provided by Rugby WA):
Event Schedule and Attendance Projections
The business plan suggests that the venue would host premier
events such as the Super 14 and A-league competitions (i.e. Western
Force and Perth Glory), second tier competitions (e.g. National
Rugby Union Club Competition), international / test level matches
and community / entertainment events. Rugby WA suggests that
combined these competitions would have a need for 61 events
in 2008 growing to 91 events by 2012 and 94 events by year 10.
However, Rugby WA has received advice from a turf management
consultant which suggests that the optimum level of use would not
allow the stadium to host all of these events. The optimum usage
level being 56 events by 2008, 66 events by 2012 and 70 events by
year 10.
C-36
The business plan suggests that in a generic year 10 the following
average attendances (per event day) would be achieved:
• Rugby Union
- Western Force (Super 14): 35,000 for season games and
19,000 for pre-season games;
- Rugby Test: 35,000
- Australian Provincial Championship: 14,000 for season games
and 5,500 for pre-season games; and
- Community Events: 5,000.
• Soccer
- Perth Glory: 34,883 for season games and 20,000 for pre-
season games;
- Soccer Internationals – Socceroos: 35,000;
- Soccer Internationals – Perth Glory: 15,000; and
- Community Events: 10,000.
• Rugby League
- 35,000 for season games and 20,000 for pre-season games.
• Concerts / Entertainment Events
- 25,000 per event.
The Taskforce believes that the average attendance projections
adopted in the MES business plan are optimistic. For example, there
is currently no West Australian rugby league team that competes
in the national NRL competition yet the business plan projects that
the competition would achieve full capacity crowd attendances for
14 season games by year 10. Similarly, it is assumed that every
Western Force season game would attract a full capacity crowd of
35,000 patrons. The Taskforce perceives this assumption as optimistic
considering that the NSW Waratahs, one of the traditional rugby
franchises, achieved a long-term average attendance of approximately
30,000 per game. In comparison, the Taskforce has assumed that an
average attendance of 26,500 per game for the Western Force in a
35,000 seat venue (in an average year).
Further, while the business plan suggests that international rugby test
matches would be held at the venue, the Taskforce is of the view that
significantly higher attendances for “blockbuster” rugby test matches
could be achieved at a multi-purpose 60,000 seat major stadium.
Capital Costs
The sinking fund contributions within the MES business plan are
estimated between 0.75% to 1% of stadium development cost in the
first 3 years of operations and then gradually increasing to 3% by year
10 and thereafter. Further, the MES business plan estimates stadium
costs (for the purpose of determining sinking fund contributions) of
$120m. The Taskforce has been advised by its consultants that the
current day costs of developing a 35,000 seat rectangular stadium
(excluding external costs such as transport infrastructure etc.) at East
Perth are estimated to be $207.6m and that sinking fund contributions
would be in the order of 1.5% per annum. Consequently, the MES
business plan assumes a sinking fund contribution of $3.6m in
current day costs (in year 10) compared to $3.1m assumed by the
Taskforce.
Venue Overhead Expenses
The MES business plan assumes venue overhead expenses of
$1.76m per annum with no further information provided as to the
breakdown of these costs. In contrast, the Taskforce’s consultants
have advised that the venue overhead expenses for 35,000
rectangular stadium would be in the order of $4.73m. As such, the
Taskforce is of the view that the venue overhead assumption applied
in the MES business is significantly underestimated.
Conclusion
The Taskforce believes that the revenue assumptions within the
MES business plan are too optimistic due to significantly higher
attendances and number event days than assumed by the Taskforce.
Further, the venue overhead expenses presented within the business
plan are almost $3m per annum lower than the assumption applied
by the Taskforce for a 35,000 seat rectangular stadium. As such,
the Taskforce believes that hirers would need to pay significantly
higher rents than currently assumed within the MES business plan.
Therefore, the Taskforce has adopted the financial forecasts prepared
by the consultants with respect to a dedicated 35,000 seat stadium.
PERTH STADIUM
2.9 SENSITIVITY ANALYSIS As will be presented in Section 3 following, the Taskforce
believes that all hirers will be in a better financial position by
Table 43: Sensitivity Analysis – Projected Venue Net Operating Result
(including Potential Overhead Savings)

playing at the Major Stadium. A sensitivity analysis assessing

the impact on financial returns to hirers of a variation in
As noted earlier, the financial returns to the venue owner
average attendances has been perceived as unnecessary as
and hirers are dependent, to a large extent, on the average
all hirers are projected to be “better off” under the currently
attendance (corporate and public / general admission) at major
projected “base case”. A sensitivity analysis comparing the
events. Accordingly any significant change in forecast average
impact of fluctuating attendances on hirers would therefore
attendances will have a significant impact on forecast financial
always result in hirers being “better-off” by playing at the
returns. The following section assesses the impact on financial
Major Stadium. For example, 20% lower than projected
returns to the owner of a 20% variation (both positive and
attendances at the Major Stadium would leave hirers in a
negative) of forecast average attendances.
better financial position than if hirers were to experience 20%
Table 43 highlights the currently projected net stadium lower attendances at their current venues.
revenue for the stadium owner including potential overhead
savings from the joint management of 2 venues and the
projected net revenues under a worst-case (20% lower
Table 44: Sensitivity Analysis – Projected Venue Net Operating Result
attendances) and best-case (20% greater attendances)
(excluding Potential Overhead Savings)
scenario. It should be noted that revenue from naming
rights, pourage rights and signage as well as venue overhead
expenses have been assumed to remain unchanged due to
their fixed nature or long-term agreements with sponsors.

As shown in Table 43 if average attendances are 20% lower

than previously projected, then the multi-purpose 60,000 seat
major stadium option, hosting all major oval and rectangular
events (AFL, Super 14, International Rugby, Cricket and
Soccer) is the only stadium option which has the capacity
to generate almost sufficient revenues to cover the stadium
overheads and also make the forecast required contribution
(1.5% of capital costs) to ongoing lifecycle maintenance costs.
In fact, including potential venue overhead savings the multi-
purpose 60,000 seat major stadium would achieve its break-
even point if attendances were 19.4% lower than currently
projected.

As highlighted in Table 44 if the potential overhead savings

from the joint management of 2 venues are excluded from
the projected net stadium operating result then none of the
venues would generate a positive return under the worst-case
scenario. Excluding potential overhead savings the multi-
purpose 60,000 seat major stadium would reach its break-
even point if attendances were 14.3% lower than currently
projected.

SECTION C
C-37
2.10 IN CONCLUSION ensure that sports would also contribute to annual maintenance and
lifecycle maintenance costs.

During the Taskforce’s consultations with the sports in the second

The results of the preliminary financial forecasts and capital cost
estimates indicate that the development of a 60,000 seat multi-
purpose stadium (including operable seating), is the only stadium
configuration which has the potential to fund its day to day operating
costs and venue overheads, as well as the majority of its associated
lifecycle maintenance costs and meet all the sports requirements.
The spreading of the event schedule over multiple venues (oval
and rectangular), will not only require the Government to fund
significant additional capital costs associated with building two major
venues, but may also require the Government to provide ongoing
contributions towards lifecycle maintenance costs.
Accordingly, it is recommended that, pending resolution of ongoing
issues relating to governance of the new venue, the Government
should proceed with the development of a multi-purpose
(incorporating operable seating) 60,000 seat stadium to host all AFL
and Super 14 fixtures, as well as international cricket, soccer and
rugby events and one off concerts. Members Equity Stadium should
be retained, largely as is, hosting A League football matches and
provincial rugby games. Should attendances at these events outgrow
the current capacity of MES, then they could be accommodated
at the Major Stadium, utilising the operable seating solution.
Alternatively the Government may consider at sometime in the future
(10 – 15 years) the development of a 35,000 seat rectangular stadium
at a site to be determined, pending the level of attendances for Super
14 and A League events as well as crowd support for potential re-
introduction of a local NRL franchise.
stage of the study the sports advocated a preference for no venue
memberships and a ‘requirement’ to be provided a clean stadium
as they enjoy now at Subiaco Oval. However sports agreed in return
for this position a willingness to pay a larger percentage share of
admissions in rent to cover the venue maintenance and contribution
to lifecycle maintenance costs (on the basis of a percentage where
the potential owner i.e. Government, would therefore share risk).
The financial model developed by the Taskforce for the multipurpose
stadium indicates overall stadium revenues of $93.7m with expenses
of $14.2m for match day costs and stadium overheads. Overall the
stadium owner could generate revenues of $17.37m from rents and
a share of other revenue sources which would cover the stadium’s
overhead expenses and contribute to lifecycle maintenance costs.
The Taskforce has formed the view that if the sports require a ‘clean
stadium’ without a venue membership program as the sports have
indicated, then the sports must accept that they will pay higher rents
than those currently in place. Even with the higher charge on general
admissions the Taskforce model clearly demonstrates that all sports
will be better off from overall higher returns and a greater capacity for
‘blue sky’ revenues.

The Taskforce and its consultant team have reviewed the financial
operating model after extensive consultation with sports. At present,
sports that use Subiaco Oval pay relatively cheap rent to the WAFC
in the range of 10-12% of face-value admissions and do not make
any noteworthy contribution to maintenance or life cycle costs – the
funds for which are generally sought from Government as ad hoc
capital funding for ‘improvements’ with no supporting justification
(such as strategic facility plans) provided by the owners i.e. sports.

In the Interim Report the Taskforce proposed that rents for sports
tenants of the new stadium could be consistent with current levels
plus, if a ‘venue membership’ program was adopted. This would

PERTH STADIUM
C-38
3.0
IMPACT ON
SPORTS

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

SECTION C
C-39
The Taskforce aims to ensure that all of the sporting codes
who will be tenants at the new stadium (stadia) will be
“better off” in comparison to playing at their existing venues,
i.e. Subiaco Oval, WACA and MES. The following sections
detail that, based on the proposed venue governance and
management model and the proposed commercial terms
detailed previously, all key tenants will be better off at a new
multi-purpose 60,000 seat stadium.
3.1 AFL
During the consultation process the WAFC has repeatedly
emphasised that its aim is to ensure that football will be
“better off” in a new venue. In this context, football has been
defined as the operations of the WCE, FFC, WAFC, and the
development of football in general including junior football and
umpiring.
The Taskforce agrees with the WAFC that football in WA as a
whole should be “better off” in a new venue and believes that
a number of benefits highlighted in Table 45 should leave the
WAFC and football in a better position at the new venue.
Firstly, the WAFC will be provided with a “clean” venue which
has a 39.3% greater capacity than the existing venue which
will allow increased attendances and corporate sales at both
WCE and FFC matches and, in turn, will provide both clubs
with the opportunity to generate greater revenues.
Secondly, the WAFC will be provided with a new venue with
state of the art facilities with an estimated economic useful
life of 30-40 years. In contrast, the WAFC would need to
spend over $600m for the redevelopment of Subiaco Oval. It
is assumed that the WAFC would need to fund these costs
which would have a detrimental impact on football in WA as
a whole. The WAFC has informed the consultants that it does
not perceive that Subiaco Oval has a limited useful life as any
infrastructure could be funded through football or (though not
preferred) through an “expensive, elite stadium” model under
which patrons would be charged higher prices to finance
the infrastructure investment. In contrast, the multi-purpose
60,000 seat Major Stadium proposed by the Taskforce would
C-40
not require increases in ticket prices as it is largely grant Table 45: Key Benefits for Football associated with the Major Stadium proposed by the Taskforce
funded by Government.
Key Benefits for Football in WA associated with the Major Stadium
proposed by the Taskforce.
Further, the WAFC will continue to have priority access rights
Status Major
to the venue as is currently the case at Subiaco Oval. For Quo Stadium
Commentary
example, the WCE and FFC as anchor tenants of the 60,000
Total capacity of the venue will increase by
seat major stadium would have the first right to book event Total Capacity 43,082 60,000
39.3% at the 60,000 seat major stadium.
days at the venue during the football season. The total number of public admission seats will
Public Admission Seats 39,647 54,600 increase by 37.7% at the 60,000 seat major
Finally, it is believed that in an average year football in WA as
stadium.
a whole will potentially be approximately $3.0m “better-off” Corporate / Function The capacity of corporate facilities will increase
3,435 5,400
annually at the new venue. Further confidential information on Seats by 57.2% at the 60,000 seat major stadium.
the projected financial benefit for the WAFC from playing at The venue will remain a clean stadium for all
Clean Stadium a a
the multi-purpose 60,000 seat major stadium is presented in hirers.
Section D7.1. Average Attendance
The average attendance for WCE matches is
40,744 55,000+ projected to increase by 35.0% at the 60,000
WCE*
The Taskforce recognises that while the WAFC has a long term seat major stadium.
lease over Subiaco Oval this lease was originally provided at The average attendance for FFC matches is
Average Attendance
36,569 50,000 projected to increase by 36.7% at the 60,000
no cost to the WAFC to assist them in addressing the financial FFC*
seat major stadium.
difficulties faced by football in WA, and to help in securing
The AFL teams will continue to have priority
a national AFL franchise. Further, while the lease has an Priority Access Rights
access rights to the venue (e.g first access to
during Season
a a
unexpired term of 84 years the remaining economic useful life book events).
of some of the stands at Subiaco Oval is in the order of 5-10 The EUL of the new stadium will be
Remaining Economic 30-40
years. Accordingly, in order for the WAFC to enjoy ongoing Useful Life (EUL)
5-10 years
years
approximately 3 times greater than the EUL of
some of the stands at Subiaco Oval.
significant returns from the operations of Subiaco Oval for
Football will be provided priority access to a new
the remaining term of the lease it must invest in the order
venue at limited cost compared to significant
of $600m in the redevelopment of the asset. Therefore, the costs associated with an extension of the EUL
Cost of extension of EUL
Taskforce does not believe that there is any inherent net value +$600m - of Subiaco Oval which is assumed will need
to Football
of the remaining term of the Subiaco Oval lease and that the to be funded by the WAFC. Funding of this
investment by the WAFC may require significant
WAFC and football in WA will be substantially better-off under
increases in ticket prices.
the Taskforce’s new stadium proposal.
The WAFC is currently responsible for
maintaining the existing stadium at Subiaco
In conclusion, the Taskforce is of the view that the net
Obligation to maintain Oval. In contrast, the WAFC would be relieved of
present value (NPV) of the future income stream that football the stadium asset
a r
this obligation at the 60,000 seat major stadium
will derive from the new stadium will be significantly better with the Government (as the owner) having
responsibility for maintaining the asset.
than the NPV of the future income stream the WAFC will
The new venue will provide the AFL teams,
derive from the existing venue particularly if it assumed that State of the Art facilities
r a their spectators and, in turn, football as a whole,
football will fund all future capital expenditure associated with for teams and spectators
state of the art facilities.
maintaining or replacing Subiaco Oval. Therefore football is in
Additional Potential Football in WA are forecast to derive potential
fact better-off under the new Stadium option which we believe
Annual Return to Football - +$3.0m additional revenues of $3.0m from the new
does not warrant any further annual compensation to be - Average Year venue in an average year.
provided to the WAFC. *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.
Source: Perth Stadium Consulting Team
PERTH STADIUM
 3.2 RUGBY Table 46: Key Benefits for Rugby Associated with the Stadia Options Considered by the Taskforce

Key Benefits for Rugby WA associated with the Major Stadium

proposed by the Taskforce.
Table 46 highlights the key benefits, for Rugby WA, the Status Major
Commentary
Western Force and rugby in Western Australia as a whole, Quo Stadium
associated with the stadia options considered by the Total capacity of the venue will
Taskforce. Total Capacity 43,082 60,000 increase by 39.3% at the 60,000 seat
major stadium.
If the Western Force were to become a tenant of the multi- The total number of public admission
purpose 60,000 seat major stadium then the team would Public Admission Seats 39,647 54,600 seats will increase by 37.7% at the
60,000 seat major stadium.
be provided with a “clean” stadium with significantly higher
The capacity of corporate facilities will
public / general admission seating as well as corporate seating Corporate / Function Seats 3,435 5,400 increase by 57.2% at the 60,000 seat
capacity than currently available at Subiaco Oval. In such major stadium.
a venue, the Western Force would not have any capacity The venue will remain a clean stadium
Clean Stadium a a
constraints for key blockbuster events. Further, the venue for all hirers.
would provide the Western Force and its spectators with state The average attendance at the 60,000
of the art facilities and the use of retractable seating would Average Attendance seat major stadium is projected to
28,231 28,000
Western Force be similar to the actual attendance in
ensure uncompromised viewing of rectangular sports at the 2006.
multi-purpose 60,000 seat major stadium if retractable seating The Major Stadium incorporates
is provided. Uncompromising Viewing of
22,000 reconfigurable seats that can
be moved closer to the rugby side line
Rectangular Sports to lower r a and dead ball line. This represents 78%
Further, it is believed that Rugby WA will potentially be tier
of the projected average Western Force
approximately $1.7m “better-off” at a multi-purpose 60,000 rugby crowd.
seat major stadium. Further confidential information on the The EUL of the new stadium will be
projected financial benefit for Rugby WA from playing at the Remaining Economic Useful approximately 3 times greater than the
5 -10 years 30-40 years
Life (EUL) EUL of some of the stands at Subiaco
multi-purpose 60,000 seat major stadium is presented in Oval.
Section D7.2. There is limited cost for rugby
Potential associated with the development of
In conclusion, the Western Force would be provided with a opportunity a major 60,000 seat stadium. The
Cost of Extension of EUL to cost associated extension of the EUL of some of the
“clean” stadium, state of the art facilities and uncompromised Rugby with
-
stands at the existing Subiaco Oval
viewing of rectangular sports. transitional could potentially result in foregone
arrangements revenue for the Western Force during
the redevelopment phase.

The new venue will provide the

State of the art facilities for Western Force, its spectators and, in
teams and spectators
r a turn, rugby as a whole, state of the art
facilities.

Rugby WA is forecast to derive

Additional Potential Annual
potential additional revenues of $1.7m
Return to Rugby - Average - +$1.7m
in an average year from playing at the
Year
60,000 seat major stadium.
Source: Perth Stadium Consulting Team

SECTION C
C-41
3.3 CRICKET Table 47: Key Benefits for Cricket Associated with the Stadia Options Considered by the Taskforce

Key Benefits for Cricket associated with the Major Stadium proposed by the Taskforce.
Major
WACA Commentary
Stadium
Table 47 presents the key benefits for cricket in WA associated with
playing its international events at the 60,000 seat major stadium or a Total Capacity 24,000 60,000 Total capacity of the venue will increase by 150% at the 60,000 seat major stadium.
combined 35,000 seat Cricket / Rugby venue.
Public Admission Seats 22,566 54,600 The total number of public admission seats will increase by 141.9% at the 60,000 seat major stadium
If the WACA would play its international events at the 60,000 seat
Corporate / Function Seats 1,434 5,400 The capacity of corporate facilities will increase by 276.6% at the 60,000 seat major stadium.
major stadium it is likely to benefit significantly from the increased
public / general admission and corporate seating capacity. Clean Stadium a a The venue will remain a clean stadium for all hirers.

Average Attendance 12,200

A comparison of average attendances at the WACA and the Gabba International Cricket 19,600 The average attendance is projected to increase by over 60% at the 60,000 seat major stadium in an average year.
indicates that attendances at international cricket events in Perth (per event day) (2005-06)
would have significant upside potential at a new state of the art Remaining Economic Useful The EUL of the new major stadium will be 3-4 times greater than the remaining EUL of some of the stands at the
10 years 30-40 years
facility. As highlighted in Table 48 and Table 49 the Gabba has Life (EUL) WACA.
attracted 35.8% in 2004-05 and 50.8% in 2005-06 more patrons per Cost of Extension of EUL to
$50-100m - There is limited cost to cricket / the WACA associated with the development of the 60,000 seat major stadium.
international cricket event day than the WACA. Cricket

State of the art facilities for

The WACA ground is likely to require ongoing investment to extend
the economic useful life of some of the stands. If the WACA would
play its international fixtures at the 60,000 seat major stadium then
it would have access to state of the art facilities with a significantly
extended useful life.
r a The new venue will provide the WACA, its spectators and, in turn, cricket as a whole, state of the art facilities.
teams and spectators
Note: No figures are available for cricket as Cricket Australia control fixtures and revenues associated with International Test Cricket and ODI’s not the WACA.
Source: Perth Stadium Consulting Team
Table 48: WACA International Cricket Average Attendances 2004-05 and 2005-06

The consultants were unable to obtain operational information to

estimate the actual returns that international cricket fixtures generate
at the WACA (please refer to Section D7.3 for further confidential
information). However, the Taskforce is of the view that the increased
capacities and state of the art facilities at a new venue are likely to
result in a financially better position.

Table 49: Gabba International Cricket Average Attendances 2004-05 and 2005-06

PERTH STADIUM
C-42
 3.4 OTHER HIRERS 3.5 IN CONCLUSION
ARU Based on this comparative assessment the Taskforce and its
consultants believe that all key tenants of the new stadium have the
The ARU will significantly benefit from hosting its annual Rugby
potential to be significantly better off in both financial and qualitative
Test match at the 60,000 seat major stadium particularly due to
terms (facilities, services etc ) . Essentially all sports are being
the significant capacity increase of corporate facilities and general
offered the opportunity to stage their sporting events in a state of
admission / public seating compared to Subiaco Oval. The 60,000
the art venue, with significantly enhanced facilities, greatly expanded
seat major stadium will remain a “clean” stadium as required by the
capacities (all provided as a “clean “ stadium), with priority access
ARU and will provide state of the art facilities and uncompromised
arrangements.
viewing of rectangular events.

The fact that the 60,000 seat major stadium would become the
3rd largest venue in Australia to host rugby events could result in
the ARU awarding more “blockbuster” matches to Perth including
Bledisloe Cup matches. As such, the 60,000 seat major stadium
would allow Perth to compete directly with Sydney, Brisbane and
Melbourne for such events.

FFA
Similarly, the increased capacity of the 60,000 seat major stadium
could result in the FFA scheduling a greater number of Asia Cup
matches in Perth and consider awarding international matches against
“top” ranked opponents to Perth.

Perth Glory
Finally, the Perth Glory is believed to benefit from playing at a 25,000
or 35,000 seat venue. In the short-term, the key benefits for the
Perth Glory are less likely to be capacity-related but the club is likely
to be “better-off” from having access to a “clean” stadium with state
of the art / upgraded facilities.

Other Events
The 60,000 seat major stadium will generally allow Perth to
better compete for high-profile national and international sports
/ entertainment events. The type of events, the requirements
associated with hosting / competing for these events and the
potential economic benefit of such events is discussed in detail in
Section C7 of this report.3.5

SECTION C
C-43
 PERTH STADIUM
C-44
4.0
FUNDING AND
DELIVERY OPTIONS

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

SECTION C
C-45
4.1 SUMMARY OF FUNDING 4.2 POTENTIAL SOURCES OF Figure 3: Continuum of Financing Options

REQUIREMENTS FUNDING
G o v t F in a n c e d P u b lic P riv a te P riv a te S e c to r
In fra s tru c tu re P a rtn e rs h ip F in a n c e d In fra s tru c tu re

There are several options for funding public infrastructure

WT Partnership have provided detailed forecasts of the available. These are broadly described as:
estimated capital costs for each stadium option at the various
locations being considered. Table 50 provides a summary • Government financed through capital works program;
Table 50: Estimated Capital Costs for Stadium Options
of these costs. Please note that the estimated capital costs • Private sector financed and operated; and
include forecast escalation through to completion, which Site Specific Development Costs for the Major Stadium
is assumed to be as highlighted in Table 50, based on an • Public private partnerships (joint provision). 60,000 seats multi-use stadium
WAFC
Masterplan
assumed start date of September 2008.
Each of these financing options are presented on a continuum Kitchener
East Perth Burswood Subiaco Oval
The consultants have provided the Taskforce with a detailed in Figure 3. Park

overview of the funding requirements for the various Capacity 60,000 60,000 60,000
1
55,000
venue options. The information is considered commercial in Within this broad range, there are a number of different
delivery methods and procurement options available, such as Stadium Cost including
confidence and the Taskforce believes that the release of this $596m $632m $685m $447m
Escalation
information will potentially compromise the Government’s traditional design and construct contracts, alliances, BOOs
On-site car parking and Plaza 2
(Build, Own, and Operate) and BOOTs (Build, Own Operate $83m $31m $256m inc.
future position in respect with dealing with this project. As including Escalation
such, this information has been included in Section D8 of the and Transfer). The suitability of a particular procurement option Transport Infrastructure including 3
$29m $34m $83m $23m
depends on a range of project-specific considerations and the Escalation
confidential cabinet report.
available options are further discussed in the following sub Cost based on current day
$708m $697m $1,024m
4
$470m
construction Start (1st qtr 2007)
section.
Additional escalation for delayed
$71m $69m $101m $47m
start to September 2008
Government Financed Infrastructure Other Capital and Acquisition
Costs including Escalation
$32m $73m $12m 5
$114m

The traditional approach to financing infrastructure is for Pre-Opening Expenses including

$10m $10m $10m $10m
Escalation
the public sector to finance the construction of the asset.
Assumed Construction 6
It will fund such investments through operating surpluses Completion (End of Day)7
Sep 2011 Sep 2012 Mar 2013 Sep 2012
or borrowings (or some combination of the two). The WA
Total End of Day Project Cost $821m $849m $1,147m $641m
Government could certainly adopt this approach to deliver the
major and rectangular stadia. 1. The WAFC Masterplan only provides 55,000 seats (including 6,000 seats in the retained east stand) not the Taskforce recom-
mendation of 60,000 seats. The construction cost to increase the capacity to 60,000 seats could be in excess of $35m
excluding land resumptions, transport infrastructure, escalation and rebuilding the WCE facilities.
As noted previously, senior representatives of Treasury 2. The Masterplan indicates on site carparking under Kitchener Park which is also to be used as the bus station during events.
3. The proposed Transport Station is located under Kitchener Park and is located with the car park as indicated above. No infrastruc-
& Finance have advised the Taskforce that where the ture improvements are provided to West Leederville Station.
4. The costs were based on a start of construction at the end of the 2007 AFL season.
Government provides significant and the majority of funds for 5. This includes $55m identified as the cost to acquire the properties to the south of Roberts Road to allow for the realignment of the
a major project, Government is required to retain governance road and the adoption of good planning principles as identified in Chapter 7.4 WAFC Subiaco Oval Masterplan.
6. Completion date is based on a construction start at the end of the 2007 AFL season.
over that asset and the asset is also to be recorded on the 7. This assumes a start of planning and design work in September 2007.
All costs are exclusive of GST
balance sheet of the State. Currently the major stadia in WA
Source : Perth Stadium Consulting Team, WT Partnership and WAFC
sit on the balance sheets of the respective codes (Subiaco
Oval on WAFC’s and the WACA on the WACA’s balance sheet).
Government funding to enhance these facilities or to support
their operation have been in the nature of grants to the sports

PERTH STADIUM
C-46
 and have directly impacted on the Governments operating surplus.
The magnitude of the investment in this case would make grant
funding support impractical and inappropriate.
The WA Government, could essentially finance the asset and
infrastructure construction partially from the revenue received from
the sale of the land of the existing venues and the remainder through
borrowings through the Department of Treasury and Finance. The
level of funding required to be provided by the Government could
potentially be reduced through:
• Requiring the sports to make contributions to the financing of
the stadium (stadia). The AFL code (including the WAFC) has the
greatest capacity to contribute to the financing of a new stadium
however discussions have led the Taskforce to believe that such
funding would not be large and definitely less than 20% of the
cost of any development. If the WACA were to be sold as a result
of this process then cricket may be in a position to contribute
to the development costs from the proceeds of the sale of its
asset(s).
• The introduction of a redevelopment levy to be charged on
every ticket sold at Perth’s sport venues for a specified time.
Such a levy has recently been used to partially finance the
redevelopments of the MCG.
The MCG introduced a redevelopment levy of $1.20 / ticket in
2002/03 to assist with the financing of the Northern Stand. This
levy was introduced for a fixed term of 5 years with 2007 being
the final season in which it will be charged.
The introduction of a similar levy by the Western Australian
Government, say $2.00 over 5 years, could raise a total (gross
of collection and administration costs) of approximately $16m
(2007/08) based on the forecast average annual attendance at the
multi-purpose 60,000 seat stadium (Option 1);
• The increase of the Government’s share of the gaming revenue
generated from existing gaming licenses;
• Through the sale of venue memberships which could generate
$4.5m for the venue owner assuming the sale of 3,000
memberships at an average price of $1,500. However as outlined
earlier (refer Section C2.1 Venue Memberships & Clean Stadium)
SECTION C
the Taskforce has adopted a Clean Stadium approach, whereby
all seats are made available for sale by the hirers, in return for
the venue owner deriving a higher annual rental charge. It should
also be noted if it was decided to sell venue memberships (and
apply this revenue to service borrowings) then it is likely that
hirers would require a reduction in rental charges to compensate
them for the loss of the potential revenue derived from the sale
of the venue memberships, whereby there would be a shortfall
in meeting the cost of venue overheads, which may be met by
ongoing Government support through an annual grant;
• Proceeds derived from the sale of surplus lands, which will vary
depending which site(s) is selected for development. In addition
current ownership and development zonings (town planning)
are also likely to impact the potential value of any surplus land.
For example, the WACA currently hold freehold title to the site
occupied by the Western Australian Cricket Ground, whereby it
is unlikely the WA Government would derive any value from the
potential sale and / or redevelopment of this site. In addition,
while the WA Government is the ultimate owner of Subiaco
Oval, the Government has vested the land in the City of Subiaco
and has a lease with the WAFC through to 2090. In addition,
the current zoning for Subiaco Oval is for open space and
recreational purposes, and in our discussions the City of Subiaco
have indicated a strong preference for this zoning to be retained
irrespective of whether Subiaco Oval is selected as the preferred
site for the major stadium development.
The masterplans for Subiaco Oval, Kitchener Park, East Perth and
Burswood have all identified potential development sites which
could either be sold off for development purposes or potentially
retained and developed by the Government (solely or in a joint
venture). In the overall scheme of things the revenue from the
sale of these development precincts is not considered material
and will be dependent upon gaining appropriate planning approval
for the proposed development. Accordingly, for the purpose of
this funding assessment we have excluded a specific allowance
for the potential proceeds from the sale of surplus lands;
• The Federal Government from time to time contributes to the
development / redevelopment of venues. For example, in January
2007 the Federal Government announced a $25m contribution
towards the building of a new grandstand at the Sydney
C-47
 Cricket Ground. Similarly, in January 2007 the Federal
Government announced funding of up to $25m for the
upgrade of Adelaide Oval’s western stand conditional on
matching funds from the State Government; and
• A surcharge on parking within specified zones in the Perth
Metropolitan area.
Private Sector Financed Infrastructure
This form of procurement/financing involves private sector
provision of the asset and its ongoing operation. This type of
procurement will require consideration of the key question
whether there is an appetite for such significant private
sector involvement in the delivery and operation of the asset.
Generally, the commercial return and assumed risk from such
an investment will be the overarching criteria used by the
private sector in making such a decision.
The projected annual return of the new stadium will not be
sufficient to attract private sector interest in financing the
infrastructure delivery. As noted previously, whilst the venues
might be able to achieve a cash flow break-even position,
they will not generate a return on equity for a potential private
investor. Accordingly, it is likely that the Government would be
required to provide additional funding or guarantee in order to
secure private sector investment.
Public - Private Sector Partnerships
An alternative delivery mechanism, referred to as Public
Private Partnerships (PPPs) is to involve the private sector
in various aspects of project provision, potentially including
designing, building, maintaining, financing, owning and/or
operating the asset. Essentially the private sector assumes
portion or all of the risks associated with the delivery,
maintenance or operation of the asset in return for fee.
However, it is unlikely that the proposed stadium project will
generate surplus cash flows to fund any substantial debt (refer
Section C4.1 earlier) let alone equity, it is unlikely that a Public
Private Partnership (PPP) which involves the private sector
financing the development and / or operation of the venue will
be viable without an additional financial cost to Government
C-48
to compensate the private sector for their risk adjusted cost Table 51: Funding Sources of Recent Stadia (Re-) Developments in Australia
of capital. In return the Government benefits from transferring
all or portion of the delivery, maintenance and operating risk to
the private sector. The potential use of some form of PPP to
deliver the stadium project is discussed separately in Section
C4.4 following.
Examples of Funding of Major Stadia in
Australia
In recent times, Governments across Australia have
experienced great interest by the private sector to assist in
the delivery of major infrastructure projects which is strongly
driven by the increasing number and size of private equity
funds. As with infrastructure projects internationally, these
have been at times successfully delivered for roads, hospitals
and schools, but there are far more complications for public
assembly facilities, such as convention centres, arenas and
stadia, which have high risk, variable and unpredictable
revenue streams and where the operation and maintenance
function is closely integrated, blurring the availability
requirements of a typical PPP.
This differs from a hospital or school where the facility
maintenance has a regular and predictable requirement and
easily measurable availability. Nevertheless, the private sector
expects sufficient returns on their investment which in the
case of stadia in Australia has generally been insufficient to
warrant an investment by the private sector.
The majority of major stadia across Australia are owned and
funded by their respective State Governments. Exceptions
have been two of the Sydney Olympic venues, Telstra Stadium
and Acer Arena and Telstra Dome in Melbourne, as indicated in
Table 51.
Over the past decade the Queensland Government has
redeveloped its 2 major stadia in Brisbane. Whilst Suncorp
Stadium has been a “straight” redevelopment of the former
Lang Park Stadium the Gabba has been upgraded through
a progressive rebuild which is further outlined by Relative
Example 1. Both redevelopment were funded by the State
Government through loans and grants.
PERTH STADIUM
Relative Example 1: The Gabba: Relative Example 2: Telstra Stadium:
The venue has been redeveloped over several stages with actual construction commencing in 1995 as part of Stage 3 Telstra Stadium has been developed under a BOOT scheme with the risk associated with construction and the
which included the Northern Stand and lights.1 Data provided by the MSFA in Queensland suggests that Government operation of the venue being carried by the private sector. The venue was originally planned to be operated by Stadium
grants and loan draw downs since 1998-99 totalled approximately $153.67m: Australia Limited for a period of 30 years before being transferred back to the NSW Government (Source: Freehills). The
financing of the stadium has been very complex and included debt financing, equity investment and the public float of
Government Grants Loans provided by Queensland Treasury membership packages which accounted for the majority of project financing of $519.1m.

• 1998-99: Stage 4 - $26.191m
• 1999-00: Stage 5 - $27.481m
• 2003-04: Video Screens - $3.0m
• 1996: $25m at 0.5% interest - repayments funded from venue Initial funding sources – Telstra Stadium:
operations
• ANZ Bank Loan • Approximately $130m
• 1999: $32m at market rate - repayment funded from venue operations
• Multiplex Loan • Approximately $6m
• 2006: $40m – repayments funded by Community Investment Fund
receipts • Obayashi Loan • Approximately $4.25m

The Community Investment Fund established by the Queensland Government is funded from poker machine • Olympic Coordination Authority • Approximately $12m
revenues from an additional levy for poker machines in hotels and provides some of the funding for the MSFA’s major
infrastructure projects including Suncorp Stadium ($235m), The Gabba ($40m) and the Gold Coast Stadium ($160m). • 34,400 Gold Memberships @ $10,000 • $344m

Source: Perth Stadium Consulting Team • 600 Platinum Memberships @ $34,000 • $20.4m

1. Stages 1 and 2 of the redevelopment related to temporary transitional arrangements for the
Brisbane Lions and the removal of a greyhound racing track, however no financial information
relating to Stage 3 was provided by the MSFA.
Telstra Stadium and Telstra Dome were 2 venues which were
developed with a greater level of involvement by the private sector
and importantly with the private sector adopting patronage risk.
However limited investment by the private sector in the development
of larger venues in Australia has been recorded since the completion
of these 2 venues in 1999 and 2000, respectively. The funding of
these venues is highlighted in Relative Examples 2 and 3.
• Unknown • $2.45m
However, the public subscribed only 31% of the 34,400 Gold Memberships on offer whereby the underwriters provided
the shortfall. Further, the shares of Stadium Australia Group lost 80% of their original value within 1 week of listing at
the ASX. The venue generated sufficient income to pay interest on the outstanding debt, however was not sufficient to
reduce the principal loan amount. In November 2006, Stadium Australia Group eventually received a takeover bid by a
subsidiary company of the ANZ Bank valuing the venue at $190m (Source: The West, 16 November 2006).
Source: Perth Stadium Consulting Team
Relative Example 3: Telstra Dome:
The venue was also developed as a BOOT scheme. The $400m project has been fully funded by the private sector
however limited information is publicly available as to the exact contribution of the different parties involved in the
consortium, as displayed in Figure 4
Figure 4: Telstra Dome Funding Arrangement

In summary, both of the major stadium projects which have involved

substantial private sector funding have performed, in a financial
sense, less than originally anticipated. In the case of Telstra Stadium,
the public float proved to be a failure and financiers have now taken
control of the asset due to its inability to generate sufficient trading
surplus to repay borrowings. In the case of Telstra Dome, the funding
of the Stadium was directly linked to the sale of television rights and
the commitment of the AFL to schedule a significant proportion of
home games at this venue. The value of the asset was also enhanced Channel Seven provided up to $100m of the funding by purchasing all venue membership seats (4,500 seats) for a
period of 30 years as well as 2,500 undercover car-parking spaces. In return Channel Seven received the naming rights,
by the rights to some 2,500 car parks. ticketing rights, signage to the stadium, seats as well as indoor and outdoor advertising to all events at the venue for a
period of 25 years. The developer retained the right to operate the venue for a period of 25-30 years and has recently
sold the management rights to the venue to James Fielding Management Limited for a reported $330m. The AFL has
purchased and settled in advance ($30m paid in 2000), the ownership and management rights to the venue after the
expiration of the current owners tenure (25-30 years initial term).

Source: AFR, Docklands – the no-risk stadium, 2 September 1997

SECTION C
C-49
4.3 SUMMARY AND 4.4 POSSIBLE DELIVERY Figure 5: Types of Infrastructure Project Structures

High Low

CONCLUSIONS OPTIONS
The major stadium is unlikely to generate sufficient operating Infrastructure project delivery structures can range from total G overnment department provis ion

surpluses (after lifecycle asset maintenance costs) to fund any government delivery to total private sector delivery. The G overnment owned c orporation or s pec ial
significant levels of debt let alone provide sufficient returns following diagram illustrates different infrastructure project purpos e vehic le

to attract private equity. Accordingly, the vast majority of the structures and the associated level of government involvement Level of Government
S ervic e c ontrac ting/outs ourc ing
Government Transfer
funding for the stadium will need to be provided by the WA and risk transfer. Involvement of Risk
Management contracting (eg DB M, DB OM)
Government, either by way of direct grant funding or by way
of guarantee and cash support for any debt/equity raised to It should be noted that the trade off between Government C onc es s ion (eg DB F O M)
fund the development. Additional potential sources of funding involvement and risk focuses primarily on risks to Government
include: as an owner of infrastructure. Other risks to Government, P rivate E ntrepreneurs hip

such as the loss of flexibility in planning, are clearly reduced by

• Proceeds from the sale of surplus lands, the quantum of Government ownership of infrastructure.
which will depend on site selection, final masterplans and
gaining appropriate planning consent; The possible structures differ mainly in regard to the allocation Low High

of responsibility for project elements (Design, Construction,

• Contributions from the Federal Government which has Maintenance, Operation and Financing) and the related risks
Table 52: Common Structures used for Infrastructure Projects
previously contributed funding towards stadium projects, between the public and private sectors. Common structures
the most recent of which being a contribution towards used for infrastructure projects and the allocation of roles Ownership/ Building/
Structure Financing Design Construction Operation Maintenance
the redevelopment of the South Australia Cricket Ground between the public and private sector are shown Table 52. (O/F) (D) (B/C) (O) (M)
reported to be in the order of $25m; A D & C Contract Govt Private Private Govt Govt
As discussed previously the Stadium(ia) project is unlikely to
• Contributions from major sporting tenants such as the support private sector debt/equity funding whereby option
AFL and ARU. In their submission for the redevelopment E & F are unrealistic for this project unless supported by B DB&M / DC&M Govt Private Private Govt Private
of Subiaco, the WAFC has indicated that the AFL would some form of Government guarantee/service fee which Contract

consider making a capital contribution (by way of a loan could include a profit element reflecting the risk associated
C DB&O Contract Govt Private Private Private Govt
not a grant) towards the funding of the stadium, but these with the delivery, maintenance and operations of the asset.
funds would need to be repaid by surpluses generated by These delivery models are often used in instances where the
the venue; and Government has inadequate reserves to fund the project and/ D DBO&M Govt Private Private Private Private
or is looking at some form of balance sheet funding. Given the Contract
• Proceeds from the introduction of a development levy financial position of the Western Australian Government, the
charged on all tickets for events staged at the venue. community nature of the stadium asset and local sensitivities E DBF&M Private Private Private Govt Private
Based on “an average year” forecast attendance of 1.6m (Concession)
amongst key sporting code stakeholders regarding the new
at the major 60,000 seat stadium, and a levy of $2 / ownership and governance these delivery/funding options are F DBFO&M1 Private Private Private Private Private
ticket (2007 $) annual revenues (gross of collection and not considered realistic options for the stadium. Accordingly, (Concession)
administration charges) of approximately $3.2m could Options A – D are the only options available to Government for
potentially be raised in this manner ($16m over 5 years). the Delivery of this project. Source: Perth Stadium Consulting Team

These structures are usually used where government
ownership of the infrastructure is important or where the
infrastructure does not generate sufficient cash flow to service
1
A Build Operate Transfer (BOT) scheme is a form of DBO and Build Own Operate (BOO), and Build
Own Operate Transfer (BOOT) schemes are forms of DBFO&M structures.

PERTH STADIUM
C-50
Figure 6: Government Ownership, Contracted Venue Management and D&C Contract the required funding (debt and/or equity) but where the government
can gain efficiency and expertise through private sector design,
construction, maintenance and operation.
In determining the appropriate project structure and the amount of
private sector involvement in an infrastructure project, the following
key factors need to be considered:
• Technical capability of government or a government owned entity
to perform each project element. If a government does not have
the technical expertise to deliver or operate a project, or any
element of a project, it may be more efficient and cost effective
to seek private sector involvement than to develop the required
expertise in-house;
• Level of risk that can be transferred to the private sector. The
theory of optimal risk allocation suggests that project costs are
minimised when project risks are allocated to the party in the
best position to manage them. The reduction in cost occurs
because the party in the best position to manage a particular risk
should be able to do so at the lowest price;
• Flexibility of the structure to deal with changes. Long-term
contractual arrangements between the public and private sectors
pose complications for later change;
• Whole of life design (i.e. minimise whole of life costs). Ensuring
that whole of life costs are minimised requires that ongoing
maintenance requirements are considered in the design and
construction stages;
• Funding costs (cost of government versus private sector funding);
and
• Importance of the project being off balance sheet for the
government. If a government has balance sheet constraints, it
may not wish to borrow for a specific infrastructure project. In
such situations, the government can utilise the private sector to
finance and deliver the project, however this will be dependent
upon the asset being developed to have the capacity to fund
the private sector investment (both debt and equity). As noted
earlier, this is unlikely to be the case with the stadium(ia) project.
SECTION C
As detailed previously in Section C1, Governance and Venue
Management, the consultants recommend that the WA Government
establish a government owned entity (Trust, Statutory Authority,
GOC) to oversight the governance and management of the
stadium(ia). Further, it is recommended that the ownership entity
appoint a suitably experienced, independent professional venue
manager to deal with the day-to-day operations of the venue. Given
the highly sensitive nature of matters relating to venue governance
and management, we do not consider it appropriate to bundle the
appointment of a venue manager into a D & C consortium. The
decision on the appointment of the venue manager needs to rest
with the government appointed ownership entity.
With respect to the delivery options which incorporate a maintenance
function, we make the following comments:
• Incorporation of lifecycle maintenance within costs and delivery
with a D C & M contract is most frequently used in the provision
of office buildings and transport infrastructure (roads, rails etc)
where maintenance is more predictable and cyclical in nature;
• Depending on the terms of the agreement a D C & M contract
may provide an incentive to the contractor to incur high levels of
maintenance; and
• A major stadium is a specialised public building and the
maintenance activities (particularly turf maintenance) are
an integral part of the venue operations. Accordingly, the
consultant’s recommend that maintenance activities be co-
ordinated by the venue manager and should not form part of the
delivery model.
In summary, the delivery options which the consultants consider to
be most appropriate for the major stadium project is a Novated D & C
contract, the structure of which is outlined in Figure 6.
C-51
4.5 CONTRACTUAL OPTIONS
There are a range of contractual arrangements that complement
delivery options. As part of this study the following contractual
options have been reviewed:
• Novated Design & Construct Contract;
• Traditional Lump Sum Contract;
• Provisional Lump Sum Contract;
• Integrated Contract;
• Negotiated Contract;
• Project Management / Design – Construct (Turnkey);
• Construction Management Contract; and
• Design & Construct Contract (with guaranteed maximum price
and fixed time).
It is recommended that the WA Government utilise a Novated Design
& Construct Contract as the preferred means of delivery details of
which are outlined in the following paragraphs. An overview and
description of other contractual options that have been considered is
provided in Appendix B.
Novated Design & Construct Contract (NDC)
Background
The novated design and construct procurement system is now a
common contract delivery strategy on many of the major works
contracts entered into by Government and public instrumentalities, as
well as private developers in the past 10 years including Stadia.
The MCG Redevelopment was completed under this delivery system
as is the proposed Melbourne Rectangular Stadium currently out to
tender.
The design team is originally selected by the Principal and the
project’s functional and design brief are developed in the traditional
form at the outset and through the design development phase to a
greater or lesser extent.
C-52
The Principal subsequently transfers his Consultancy Agreements
with the design team members across to the Contractor who
subsequently takes responsibility for the management and
performance of the design team ensuring completion of design to
his construction requirement and in conformity with the performance
brief and contracted obligations.
Key Considerations
• Novation allows the design documentation risks to be transferred
to the Contractor normally under a competitive lump sum tender
process to minimize the risk premium in the price for design and
construction documentation.
• The terms of the consultant’s agreements after novation are pre-
determined by the Principal.
• The design team performance risks in delivering the construction
documentation is transferred to the Contractor to enable him to
conform to the construction programme obligations.
• The timing of transfer of the contract between the design team
and Principal to the Contractor will vary subject to the individual
project fundamentals relating to time, quality and control risk
profile priorities.
• Time constraints and the imperative for an early construction
start to enable earlier completion will dictate the limitations on
the availability of design time before tender.
• The more complete the design development the more influence
the Principal has over the built form, function and performance
ideally. Scope, quality and design resolution of key elements of
the design should be resolved and well documented for NDC to
have the best chance of a successful outcome.
Advantages
• Continuity of design including obtaining statutory approvals;
• Aids a fast tracking delivery system;
• Transfer risks of design to the Contractor including limiting
opportunity for time extension claims, consultant performance,
etc;
• Client still selects their preferred design team;
PERTH STADIUM
 • Contractor may introduce design efficiencies particularly build
ability and material selection through value management of the
unresolved design which may translate into improved tender
price competition; and
• Members of the novated design team can provide expert reports
to the Principal confirming conformance during the construction
process by agreement with the Contractor.
Disadvantages
• The Client contracts out of direct access and control of the
design team after the contract is executed;
• Client loses control of design team and tenders the work before
design is fully defined;
4.6 RECOMMENDED DELIVERY
STRUCTURE AND OPTIONS
It is recommended that the WA Government establish a Government
owned entity (i.e. statutory authority, Government owned
corporation) to oversight the development of the preferred stadium(ia)
options. The role of this entity could be extended after the
completion of the new stadium to fulfil the role of the Government’s
(owner) representative to oversight the ongoing governance and
management of the venue (refer Section C1). The Government
should appoint the Board of this entity on the basis of relevant skills
and experience required to effectively oversight the delivery and
ongoing governance of a major stadium(ia) project.

• This risk can be mitigated by ensuring functional brief is detailed
and comprehensive in setting down performance requirements;
• The Contractor and design team may be disadvantaged by having
to enter into pre-determined terms; and
• The compatibility of the Contractor and nominated design team
may be less than desired.
Further it is recommended that the WA Government utilise a Novated
D & C Contract as the preferred means of delivery, which will allow
the Government to have a role in the appointment of the design team
and in the development of the projects functional design brief before
going to tender.

Outcome
A successful novated design and construct project achieves the
right balance between design control and transfer of design risk to
the Contractor with sufficient safeguards to maximize the match
between Principal’s expectations and Contractor’s obligations.

In recent times Telstra Dome, the Millennium Stadium, Wembley

Stadium and the recent MCG redevelopment have been delivered
using this option. An alliance contract arrangement with a preferred
contractor secured under agreed selection criteria would be a
possible variation to a traditional novated design and construct
contract.

SECTION C
C-53
 PERTH STADIUM
C-54
5.0
RISK MATRIX

SECTION C
C-55
During the development of the financial feasibilities and masterplan
concepts for the various sites for the Stage 2 study for the major
stadia facilities in Perth it has been necessary to make some key
assumptions based on the level of information, time and funding
available.

The key areas of risk associated with the project have been identified
as follows:

• Governance and management;

• Users / sport code agreements;

• Community and local neighbourhood support;

• Transport and traffic management;

• Funding;

• Agreeing acceptable terms for the land sale and purchase

agreements where required;

• Project procurement;

• Obtaining acceptable development approval and conditions on

selected site;

• Design, quality and cost; and

• Programme.

The following table lists the key project risks identified during the
masterplan and concept feasibility stage. The risks vary from site
to site and will be dependent on the ability to agree governance and
final site selection and availability. It should be noted that these
risks relate to the delivery phase of the project and will need to be
continuously monitored and managed throughout the development
of the project. Appropriate action plans need to be developed
to minimise their effects on the delivery of the project. Further
investigation and consultation will be required to mitigate or reduce
the impact of these risks on the project.

PERTH STADIUM
C-56
 ID Risk Impact Actions & Recommendations
Governance and Management

1 Lack of agreement on governance structure with sporting codes. High WA Government to revoke management order and terminate the WAFC’s lease
over Subiaco Oval.

2 Lack of agreement with WAFC on venue management structure for proposed High Refer above.
stadia.

3 Lack of client body able to make effective decisions. Moderate WA Government to establish an appropriate ownership entity to act as client
body.

4 Lack of agreement with venue hirers. High Heads of Agreement to be negotiated with all codes.

5 Allia Holdings Pty Ltd do not agree to surrender Members Equity Stadium Low To be resolved by Town of Vincent prior to Government commitment to any
operational rights. funding for MES.

6 WAFC do not agree to surrender lease and management rights over Subiaco Oval. High No Government commitment to develop a new oval stadium.

7 WACA do not agree to vacate. Moderate No Government funding for any ongoing capital improvements at the WACA.
Design Issues

8 Brief requirements not met. Moderate Workshops held with users and sports bodies have alleviated risk. Obtain sign
off from each user to brief requirements before design work proceeds.

9 WACA do not agree to ICC minimum oval size. Low Major Stadium and cricket / rugby option to accommodate WACA sized oval
based on a drop in wicket block.

10 WAFL oval size and orientation not met. Low Major Stadium design to adopt Subiaco Oval size and orientation.

11 ARU and Western Force do not agree to field size and orientation. Low Rugby field dimensions to meet ARU requirements. Rugby WA has indicated
acceptance of east west orientation for major multi-use stadium. If and when
a dedicated rectangular stadium is developed the field is to have a north south
orientation.

12 Maintaining agreed minimum capacity, standard of service and revenue streams Moderate Develop detailed staging plan and construction programme during early
during construction (Subicao and Kitchener Park only). stages of design to ensure capacity and service expectations are met.

13 Identification of requirements of all users including media, police, emergency
services, operations, VIP’s, sponsors, waste management etc.
Neighbours and Community Consultation
Moderate Retain appropriate design and operational expertise to continue brief
development during design stages of the project. Ensure that client body
is authorised to make decisions and allow for stadium operational and
management input throughout the design and brief process.

14 Banks Community object to stadia at East Perth. Moderate Establish an effective community consultation process.

15 Mueller Park Community object to stadia at Subiaco and Kitchener Park. Moderate Establish an effective community consultation process.

16 Community concerns over funding requirements and priorities. Moderate Establish and communicate clear vision for the new stadium and political
leadership.

17 WAFC and Government lack of agreement on ownership played out in media and High WA Government to resolve governance arrangements committing to the
gains negative community reaction and support. new stadium projects. No Government funding for piecemeal repairs and
improvements to existing stadia.

SECTION C
C-57
ID Risk Impact Actions & Recommendations
Transport and Traffic

18 Public expectation of PT strategy is negative and impacts use. Moderate Integrated ticketing and detailed TMP developed, establish communication /
education strategy, infrastructure to be completed at the time of opening of
the venue.

19 Infrastructure costs excessive and cannot be supported. Moderate Site selection takes account of total project costs and Government
commitment to funded and co-ordinated delivery.

20 Lack of co-operation of Government agencies and public transport service Low Whole-of-Government approach and empowerment of owner’s representative
providers. body.

21 Clash of event times and rush hour places severe strain on public transport system Moderate Detailed TMP established and agreed.
and road network.

22 Inability to define infrastructure costs. Low Independent expert advisers retained.

23 Transport Centre (Shuttle Bus Station) is not incorporated into design. Low Refer to feasibility concept and site selection takes account of total project
costs and Government commitment to total funding and co-ordinated delivery.

24 Pedestrian Infrastructure upgrades not incorporated into design. Low Refer to feasibility concept and site selection takes account of total project
costs and Government commitment to total funding and co-ordinated delivery.

25 Rail upgrades (track and stations) not incorporated into design. Low Refer to feasibility concept and site selection takes account of total project
costs and Government commitment to total funding and co-ordinated delivery.
Scope of the Project

26 Scope creep. High Appointment and empowerment of owner’s representative and PMT body to
oversight the delivery of the agreed Vision. Retain appropriate professional
adviser and select an appropriate delivery model.

27 Third party interference increases size and scope of project. High Strong political leadership and empowerment of owner’s representative.
Funding

28 Funding budget not defined. High Government should define the budget it is willing to expend on the project and
ensure that a competent ownership entity and consultant team can deliver the
project within the budget.

29 Cannot afford what users have identified. Moderate Ensure that the design brief reflects funding constraints and is signed off by
users prior to commencement of final stages of design and documentation.

30 Design and brief does not meet funding budget. High Ensure that a detailed costed project brief is given to design team at outset
of design process, and that expert operational advice is incorporated in the
planning and design. Ensure that procurement methodology mitigates design
risk and avoids unnecessary design embellishments or architect’s design
statements. Avoid design competitions as method of procurement as this will
significantly increase the cost risk and delay the project.

31 Cash flow differs from delivery programme. Moderate Ensure that project cash flow is defined at start of project and the owner body
has sufficient access to key funding to start the design process.

32 Funding for external infrastructure works i.e. transport etc is not provided. Moderate Plan for staged and co-ordinated development of works outside the main
stadium and infrastructure in Masterplan area.

33 Funding of infrastructure requirements delayed or not given. Moderate Ensure that total project costs are understood and met as part of the funding
arrangement. Government commitment to the total project.

34 Delays in decision or funding of project. High Government leadership and commitment to a timeframe for delivery.

PERTH STADIUM
C-58
 ID Risk Impact Actions & Recommendations

35 Government not committed to funding package. High Project does not proceed.

36 Actual revenue less than business plan forecast. Moderate User heads of agreement to be negotiated and financial forecasts revised
accordingly.

37 State Government changes / alters governance and funding. Moderate Re-assess business case for the project particularly support from all sporting
codes.
Costs

38 Funding lags project cash flow requirements. Moderate Comprehensive project cash flow agreed and funded by Government.

39 WACA relocation costs. Low WACA to fund relocation from proceeds of sale of existing site.

40 WAFC compensation costs. High WA Government support Taskforce’s recommendation as to “no worse off” i.e.
no compensation payable.

41 Allia Holdings Pty Ltd compensation costs. Low WA Government capital funding of MES upgrade dependent upon Town of
Vincent resolution of governance issues.

42 Refurbished Subiaco costs less than new stadium. High Facility does not meet brief criteria and is not future proofed to match
benchmark stadia. Ensure that deficiencies of Subiaco proposal are
understood and that project costs are total project costs including escalation,
contingency and infrastructure. The adoption of the Subiaco proposal will also
trigger the need for development of a dedicated 35,000 seat rugby stadium
funded by Government.

43 Inflation differs from allowances included in budget. Moderate Allow for total project costs to be based on DHW escalation indices for
Perth. Ensure project costs are in escalated costs for variety of development
timeframes.

44 Exchange rates vary on imported materials. Low Cost impact at this stage of the project is low.

45 Compliance issues with new building regulations. Moderate Impact of global warming on building regulations could be severe and impact
on construction and design development. Ensure that design accommodates
best ESD and access principles to mitigate future effects of amendments to
BCA.

46 Life cycle costs impact on Capex. Moderate Review during design development the LCC costs against Opex, Capex and
ESD objectives. Financial forecasts incorporate lifecycle cost funding.

47 Design competition held for consultant appointment. High Design competitions are notorious for delivery of projects above initial Capex
projections. Develop a detailed brief and compare design against cost to
manage project budget and expectations.

48 Contingency management plan loosely managed. Moderate Appoint an experienced Stadium Project Manager to the project at an early
stage to manage process and issues.

49 Expectations of standard of finishes out of line with regards to budget. Low Agree and give examples of the stadia benchmarks at outset and base cost
plan on these standards.

50 Insufficient detail in documentation to give accurate cost at this stage. Low Obtain peer review of WT Partnership cost plan by other stadia experienced
QS firm (Davis Langdon, Ryders or Rawlinsons).

SECTION C
C-59
ID Risk Impact Actions & Recommendations
Programme

51 No definition of timing allows project to be undefined. Moderate Delays will have exponential effect on cost. Ensure that cost plan allows for
escalation under various scenarios and start date for project.

52 Introduction of time critical timeframes (event based). Moderate Avoid time critical event objections.

53 Allow for handover time. Moderate Ensure that construction program allows for handover and commissioning
using test events and soft openings to test building, systems and operational
requirements prior to first official event.

54 WA region continues building boom. High Limitation of resources and state of construction economy in WA could affect
program and costs. Allow for elongated programme to take into consideration
state of the construction market and resources in WA.

55 Other large Government projects running in parallel soak up available resources. Moderate Ensure that Government agencies coordinate release of infrastructure
projects to avoid over-stretching market.

56 Election cycle places unrealistic timeframe on project. Moderate Co-ordinate project delivery with political objectives.

57 Restrictions on construction due to neighbourhood and planning constraints. Low Construction programme cognisant of site neighbourhood constraints.
Procurement

58 Consultant’s procurement process leads to inexperienced consultants being High Ensure the procurement process for consultants places heavy weighting on
appointed. experience in building type and ability to deliver project on time and budget.
Develop a detailed brief and exhibited design that is costed prior to calling
consultant tenders.

59 Lack of early engagement with contractors. High Recommend procurement methodology that establishes a two stage novated
D & C contract.

60 Government seeks private sector capital funding and delivery. High Adopt consultant’s recommendation as to funding and delivery models.

61 Lack of competitive contractors. High Seek early expressions of interest from major national contractors to gauge
contract interest. Adopt novated D & C delivery recommendation.
Consents

62 Significant environmental site issues identified (e.g. site contamination at Moderate Undertake a comprehensive EIS as part of the planning process
Burswood or East Perth)

63 Compliance with planning requirements. Moderate Define DA approval process of preferred site as part of procurement strategy.

64 Restructure existing operational consents i.e. noise, light, spill, number of events. High Critically analyse during assessment phase and negotiate appropriate
amendments to consents to enable business plan to be delivered.

65 Problems occur due to multiple consents processing across different Local Low Use an appropriate redevelopment authority..
Government and State Government agencies.

PERTH STADIUM
C-60
6.0
STAKEHOLDER
AND COMMUNITY
CONSULTATIONS

6.1 Consulted Stakeholders C-62

6.2 Community Consultations C-62
6.3 Stadium Website C-63
6.4 Survey C-63

SECTION C
C-61
6.1 CONSULTED STAKEHOLDERS Table 53: List of Consulted Stakeholders

Local Governments and Associations • City of Cockburn
• City of Perth
The Taskforce and the consultants have engaged a wide range of • City of Stirling
stakeholder groups in both stages of the study. The consultations • City of Subiaco
included major sports codes to identify / consider their design • Town of Cambridge
requirements for a new stadium and their view on the potential • Town of Claremont
future governance and management of a major stadium. As part of • Town of Victoria Park
the consultation process the WAFC, Rugby WA and the WA Rugby • Town of Vincent
League made presentations to the Taskforce during stage 1 of the
State Government Agencies • Department of Premier and Cabinet
study. Further, presentations were made by the City of Subiaco, the
• Department of Housing and Works
Town of Vincent, the City of Cockburn, as well as EPRA.
• Department of Planning and Infrastructure
• Department of Treasury and Finance
Generally all sports codes, community groups and the majority of • Main Roads Western Australia
local Governments have been consulted on a face-to-face basis, while • Public Transport Authority
national sports bodies (e.g. venues in other jurisdictions) have been • East Perth Redevelopment Authority
engaged in the project by either telephone communication or written • State Solicitor’s Office
correspondence. • Valuer General’s Office
• The Government Architect
Further, with the commencement of the second stage of the study, • Fire and Emergency Services
DSR engaged Professional Public Relations (PPR) to assist DSR and
National Sports Codes • Australian Football League
the Taskforce to manage public relations throughout the study.
• Australian Rugby Union
A list of the consulted stakeholders is provided in Table 53. • Cricket Australia
• Football Federation Australia
• National Rugby League
Local Sports Association / Clubs / Teams
National Sport Venues / Association
Community Groups
• Allia Holdings Pty Ltd
• Football West
• Fremantle Football Club
• Perth Glory
• Royal Agricultural Society
• Rugby WA
• West Coast Eagles
• Western Australian Cricket Association
• Western Australian Football Commission
• Western Australian Rugby League
• Western Australian Trotting Association
• West Australian Turf Club
• AAMI Stadium
• Aussie Stadium
• Brisbane Cricket Ground (The Gabba)
• Major Sports Facilities Authority
• Melbourne Cricket Ground
• Member’s Equity Stadium
• Subiaco Oval (WAFC)
• Sydney Cricket Ground
• Telstra Dome
• Telstra Stadium
• WACA
• Banks Precinct Community Group
• Mueller Park Action Group

6.2 COMMUNITY
CONSULTATIONS
As previously outlined, the Taskforce and consultants had ongoing
communication with community groups and local governments in
Subiaco and East Perth during both stages of this study.

The key goal of the community consultation process was to inform

local residents about the work of the Taskforce and allow the
members of the community to provide input about the proposed
solutions to allow the Taskforce and the consultants to integrate the
views of the community into the final options to be presented to the
State Government.

PERTH STADIUM
C-62
A further key message of the consultation process was to highlight
that the Taskforce is not a proponent of a particular stadium option
or site and is not the decision maker in that regard. The aim was
to communicate to the public that the Taskforce’s role is to provide
the best advice to the State Government about the advantages and
disadvantages of the different stadium options / sites. The Taskforce
and the consultants perceived that local community feedback was an
important part of this process.
The Banks Precinct Community Group and the Mueller Park Action
Group were identified as two community groups whose interests
could be affected by the proposed options. The following outlines the
process applied by the consultants to engage these groups during
Stage 2 of the Taskforce’s site investigation process:
Banks Precinct Community Group
An initial consultation meeting was held in October 2006 with the
aim of opening lines of ongoing communication. At this meeting the
Group requested that the Taskforce make a future presentation to its
monthly meeting. In December, Taskforce members presented to a
meeting attended by about 60 residents at which a presentation was
given by a representative of HOK Architects and detailed discussions
held as to specific questions and issues raised during the meeting.
A survey form was distributed at the meeting to enable residents
to give further direct feedback to the Taskforce. Responses were
considered as part of the Taskforce’s detailed considerations on
issues related to this site.
In March 2007 a further meeting was held with Banks Precinct Group
representatives at which up-to-date information on site planning
and traffic management options for this site was presented for
discussion.
Mueller Park Action Group
An initial consultation meeting was held in October 2006 in order
to open lines of ongoing communication. At this meeting the
Group requested the MST provide further information in a future
presentation once site option concepts at Subiaco reached an
advanced stage.
SECTION C
In January 2007 a further meeting was held between MST personnel
and Action Group members at which a presentation on aspects of
Subiaco sites under consideration was made and detailed discussion
held.
At this meeting Action Group members were directly advised that the
Taskforce had decided its brief for a future site in Subiaco would not
involve disturbance to nearby Mueller Park, a specific request of the
Action Group. The Taskforce subsequently issued a media statement
advising of this decision.
6.3 STADIUM WEBSITE
During stage 2 of the study, the Taskforce also introduced a website
(www.majorstadiataskforce.com.au) outlining the progress made to
date and providing links to the Interim Report, consultant reports and
stakeholder presentations.
The website aims at ensuring a high level of transparency in relation
to the progress and recommendations made during the study. The
website outlines why WA needs a new major stadium and provides
an overview / links to other major stadia in Australia and across the
world. Most importantly, the website provides the public with the
opportunity to comment on the major stadium proposal.
6.4 SURVEY
To further enhance the level of community engagement DSR’s media
advisors developed a survey that was advertised in the Sunday Times
on February 25 2007 and the West Australian on February 24 2007.
The advertisements promoted a free-call 1800 number that people
could phone to receive a hard copy of the survey in the mail. A reply-
paid envelope was sent with the questionnaire. The survey was also
made available in electronic format on the Major Stadia Taskforce
website.
There were almost 500 respondents to the comprehensive survey
conducted by the Major Stadia Taskforce during March. The survey
sought feedback on the amenities and design features that the WA
public would like to see in any future Perth stadium.
The survey responses demonstrated categorically that Perth people
are unhappy with their existing stadia facilities. They feel short-
changed compared with other Australian States and they want a new
facility to properly reflect Western Australia’s status within the nation
and internationally – and they want it sooner rather than later.
By far the most overwhelming responses cited dissatisfaction with
the cost and poor variety of food and beverages at Perth’s existing
stadia, the length of queues for refreshments, inadequate and
badly maintained public conveniences and uncomfortable, outdated
seating.
Many people complained that public transport was inadequate and
overcrowded and that entry and egress to Perth’s existing stadia was
difficult.
A large number of respondents referred to a need for Perth to have
an “iconic” stadium development, with the MCG and Telstra Dome
frequently mentioned as stadia in Australia with desirable features.
A regularly expressed criticism in the feedback was directed at
the technology at Perth’s existing facilities, with a large number of
respondents expressing a desire for more video/television screens,
improved public address systems and the ability to be able to see the
on-field action while waiting for food or beverages.
Respondents also expressed a desire for a stadium located within
a hospitality precinct, with bars and restaurants and featuring more
meeting space outside the ground and more undercover seating.
Most respondents in the free text section of the survey raised the
issue of seating numbers, with every one calling for a new multi-
purpose stadium to provide greater capacity than that which is
available in Perth’s existing facilities.
The survey was a valuable exercise that gave Perth people a means
of communicating their views. It reinforced that the Perth community
is sophisticated and parochial and demonstrated an expectation that
the city feature public amenities that properly reflect its status.
A copy of the survey questions and the quantitative and qualitative
survey results are provided in Appendix B.
C-63
 PERTH STADIUM
C-64
7.0
MAJOR EVENTS
AND THEIR
IMPACTS

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

Perth is strategically located within the Indo-Pacific region and has the opportunity to promote itself as a major hub of all leisure and sports
activities for this area.

SECTION C
C-65
7.1 POTENTIAL MAJOR EVENTS
A number of events are held in Perth on an annual basis, including
annual international rugby and cricket test matches, and these events
are included in the financial models for the stadium. Further, there is
the opportunity to host additional major events, and the development
of an international standard stadium will enable Perth to more
effectively compete for events internationally and within Australia.
In addition to the potential revenue stream for the stadium, major
events are also a high priority for State Governments in Australia for
the economic impact that can be generated.
Major events targeted would be for sports which can be
accommodated in the proposed facilities including:
• Oval sports, particularly cricket, as the opportunity for
international AFL events is limited; and
• Rectangular sports, such as soccer/football, rugby union, and
rugby league.
Depending on the configuration of the stadium and the opportunities
for reconfiguration, it may also be possible to accommodate
athletics, enabling the venue to be the centrepiece of a bid for other
events, such as the Commonwealth Games or IAAF World Athletics
Championships, although this may only be feasible on a site with a
larger footprint, such as the Burswood site.
On this basis the major events that could be envisaged for the 60,000
seat major stadium, over and above the base case events, would be:
• Bledisloe Cup – over the last three or four years there has been
much more flexibility in the location of this high profile Rugby
Union event between Australia and New Zealand, with its
move from its home base of Sydney to Brisbane in 2006 and
Melbourne in 2007 and the increase in the number of events.
The development of the stadium will better position Perth to
successfully bid for this event.
• World Cup events for Cricket, Football, Rugby Union or Rugby
League – these events are all major bid events and would be
generally subject to Australia wide bids. An international stadium
would ensure that Perth does not miss out on its fair share of
C-66
these events, if it participates as part of an Australian-wide bid for
the event. For these major world cup events, it is likely that the
finals would be staged in Sydney or Melbourne, but Perth should
actively bid for its ‘fair share’ of pool and quarter and semi final
events. It should be noted that Australia has secured the co-
hosting rights for the 2015 ICC Cricket World Cup and assuming
the Stadium is completed, will position WA to improve its share
of events of major pool events as well as potentially securing
quarter or semi finals.
• Regional sporting events – WA can bid for these events in its own
right and may include Asia Cup football events, football friendlies,
age or national titles (Soccer Under 17’s World Championships,
Women’s Soccer, Women’s Cricket etc.) Securing these events
will require the successful bid by the EventsCorp. This is not
the typical the role of the actual venue manager, who will assist
where possible with the bidding process.
• Major events such as the Commonwealth Games – should WA
take the decision to bid for a Commonwealth Games with the
next bid option being for 2018, the stadium could provide the
centrepiece for the bid, depending on the final location and
configuration of the stadium. The requirements for these events
go well beyond that of the stadium, and at such time it will
require the overlay of the Games over a range of Perth facilities to
provide a compelling bid for the proposed event.
• Other sporting and cultural events that the WA Government may
wish to bid for with the stadium as the centrepiece venue could
include the following:
- Masters Games;
- Student Games/ Universaide;
- Entertainment events such as the Edinburgh Military Tattoo;
- Rugby 7’s (currently held in Adelaide);
- International Rules Football; and
- NFL Pre Season Games (The NFL will be playing exhibition
games in Beijing in 2008).
Bidding for events is increasingly competitive. International standard
PERTH STADIUM
 facilities are now the norm expected for any international event and
with the emergence of Asian destinations, including China and the
7.2 REQUIREMENTS OF MAJOR
Middle East in the event bidding mix, not only is it becoming more
costly to secure events but also more unpredictable. The historical
EVENTS
expectation that there is an official (or even unofficial) rotation is Major Events invariably impose an additional level of physical
breaking down. Event bids will need to be carefully targeted and and operational requirements on a facility well above the level of
well funded to be successful in the current climate and will require provision that is required for normal domestic or international sporting
working closely with the other states in any bid where Perth may get competitions or entertainment.
events as part of a major event. Establishing Perth as a world class
event destination, with international facilities, will be fundamental in The term usually employed for describing this additional layer of fitout
securing these events on an on-going basis. is major event overlay, and its ability to be incorporated into a facility
is usually judged by the particular event organising committee during
In addition, it should be recognised that even the international the bidding stage for the major event.
tests held now for cricket and rugby union cannot be guaranteed
into the future. The quality of the events and indeed the continued It is therefore important to recognise the particular requirements for
presentation of an annual event may be subject to competitive bids the potential major events and make provision for the event overlay to
from emerging markets such as Dubai, Singapore or Japan, and be easily installed (and later removed if required) into a facility.
the national associations may not be able to prevent this occurring.
Major event overlay external to a facility may include:
It will be imperative that the EventsCorp works closely with the
stadium owner and venue manager to ensure that Perth remains a • Expanded boundaries for the ticketing / security perimeter;
competitive option for these events.
• Media / broadcast centre or media sub-centre;
These events are important for WA. It is well recognised that major
events deliver economic impact. Events attract visitors to the city, • Stand by power generators;
who in turn spend money by staying in hotels, shopping, dining,
• Additional security requirements including bag searches,
and visiting other surrounding attractions. In addition, the city is
magnetometers;
showcased in the event advertising overseas, on event promotions
on television prior to the event and for the televising of the actual • Vehicle checking stations;
event. Major events can assist the corporate market in Western
Australia, particularly the resources sector in creating and enhancing • Hospitality areas;
brand awareness in overseas markets such as India and China.
• Live sights / fan zones;
Further, holding an event also provides the opportunity to develop
associated business opportunities, by hosting specific business • Accreditation facilities;
forums over the event period and by using the event to leverage
conference bookings. This strategy was particularly successful for • Crowd management provisions;
Sydney during the Sydney 2000 Olympic Games.
• VIP and sponsors drop off and parking areas;
An important justification for events can be the legacy factors – the
• Staging and assembly areas for ceremonies; and
development of the necessary infrastructure to host the event can
provide community facilities for the longer term. • Warm-up areas for sporting participants (for example, an athletics
warm-up track).

SECTION C
C-67
Major event overlay within a facility may include:
• Temporary building works to provide internal spaces and seating
areas for the organising committee and associated organisations,
event management, VIP’s and sponsors, corporate patrons,
media, officials, venue and volunteer staff;
• Athletes check-in, changing, holding areas, medical and recovery
areas, seating areas;
• Officials and technical personnel check-in, changing, meal areas;
• Media tribune areas within the spectator seating;
• Media sub-centre, conference and interview rooms, mixed zone;
• Temporary broadcast, power and data cabling reticulation to
overlay areas;
• Camera platforms in seating areas and possibly camera positions
in roof;
• Stand-by power generators;
• Installation of event specific competition requirements, for
example, athletics track and field;
• Timing and photo finish equipment;
• Additional scoreboards or video screens;
• Event theming and event signage;
• Sponsors signage;
• Flags;
• Preferred major sponsors equipment changeover i.e., beer, soft
drink, credit card facilities, including merchandise;
• Opening and closing ceremonies staging, production equipment,
performer’s backstage facilities; and
• Trophy / medal presentation staging.
Special events such as the Rugby World Cup, Cricket World Cup,
Football World Cup, Athletics World Cup or Commonwealth Games
invariably have major ceremonies and associated entertainment is an
C-68
integral part of the event, and require an overlay of sound, lighting,
projection or flying capability well in excess of what would normally
be provided for the base building.
Due to the creative aspects of such shows or ceremonies and
the desire to do something that has never been done before it
is impossible to anticipate each show designers’ requirements,
therefore it is important to look historically at other major events and
provide an adequate base building infrastructure for the Perth Major
Stadium that will allow the acceptance of the ceremonies overlay
with minimum effort and disruption to the normal operation of the
venue.
Structural rigging points should be provided in the roof structure for
mounting of imported supplementary lighting and sound systems,
and the underside of the roof shall have a comprehensive catwalk
system that enables access to lighting, rigging points and for
general maintenance. Electric winches should be provided at several
locations on the gantries for the hoisting of heavy equipment (such
as amplifiers or cameras) that cannot be taken up manually. Gantries
or catwalks need to be of sufficient structural integrity to support
additional applied loads from amplifier racks, distribution boxes,
projectors, cameras and the like.
In addition there may also be a requirement for the temporary rigging
of flags or banners, where access and rating of attachment points
needs to be considered.
In the design of the roof structure, mounting locations for permanent
fixtures such as the sports floodlights, house PA speakers and other
equipment needs to be considered in conjunction with the possible
locations for imported equipment so that for example, the sports
floodlights are not obstructed by flags or banners, or the speakers are
not obstructed by imported lighting trusses.
Major world-class stadium concerts generally have very large stages
and a myriad of production equipment comprising sound and lighting,
hoisting equipment, video screens, etc. As these major acts are
usually on a tight touring schedule the bump-in and bump-out times
are kept to a minimum, and require a large labour force and a high
level of cooperation by venue management within a short period of
time.
PERTH STADIUM
 The main stage and delay towers (“the steel”) requires a staging area
(the “bone yard”) usually external to the facility where the containers
are unloaded, sorted and the components trucked into the arena
assisted by forklifts. Once the staging is completed the production
equipment is unloaded into an internal loading area close to the
arena, and forklifted out to the stage for installation. Electrical power
may be either provided by the venue or supplied by generators, which
are usually arranged by the promoter.
The performers, promoter, production personnel and crew require
backstage facilities such as dressing rooms, offices and catering
areas. These are usually accommodated in the sports change rooms
and media areas provided they are initially designed with this purpose
in mind so that they are suitable for multi-purpose use.
It should be noted that event overlay requirements for a venue that
is designated as the main stadium for a major sporting competition
will be significantly different to those where the stadium is only used
as one of the venues as part of the overall competition played over a
period of time.
SECTION C
7.3 ECONOMIC IMPACTS OF
MAJOR EVENTS
As previously outlined, State Governments generally are keen to
attract major events to their state due to the economic benefits that
such events have on the host city. The support of events has become
a major plank of the tourism program of all states in Australia. They
are perceived as providing the following forms of benefit:
• Short term tourism impact – the impact of tourist expenditures;
• Longer term benefits for tourism through state and location
promotion by raising awareness and consideration levels;
• Benefits for business in terms of incremental growth in business
activity as a result of visits to Australia and the state by business
executives;
• A broader range of activities for local residents – discouraging
outbound tourism, and enhancing value through increased
options and regional pride; and
• Benefits through external funding of improved recreational
infrastructure.
In a local context, EventsCorp, the events division of Tourism WA, is
the key agency responsible for attracting major international events
to Perth. EventsCorp acknowledges that major events are subject
to significant competition between Australian and international cities
and often result in event owners seeking funding from Government
event agencies. EventsCorp analyses funding requests by event
organisers against certain criteria (Source: EventsCorp):
1 Estimated economic impact of an event;
2 Media impact and extent of television broadcasting coverage, i.e.
the degree to which the event can / will promote WA as a tourist
destination interstate and abroad;
3 Event frequency;
4 Private sector investment, i.e. the share of event budget provided
by the private sector;
C-69
5 Perth’s tourism activity for proposed event date, i.e. events that
are held in quiet tourism periods (e.g. July) receive favourable
consideration;
6 The development approach – these are events that do not
fully meet EventsCorp’s criteria but provide significant growth
opportunities and as such are considered worthy of supporting;
7 Other criteria which can include the effect of the event on the
corporate sector or the level to which the event enhances the
State’s profile and status;
8 The funding available to EventsCorp at any given time, i.e. no
funding is provided to events that match the remaining criteria
should available funds be exhausted for a certain year;
Commonwealth Games
The Commonwealth Games, originally known as the British Empire
Games, was designed on the model of the Olympic Games and
are held every four years with the most recent event held in
Melbourne in 2006. KPMG was engaged by the Victorian Office
of Commonwealth Games Coordination to undertake an economic
impact study of the Melbourne 2006 Commonwealth Games. The
report estimated that the 2006 Games resulted in an increase of
the Victorian Gross State Product by $1.6bn over a 20-year period
with around half of the impact projected to occur in the year of the
Games.
Figure 7: Melbourne Commonwealth Games 2006 New Tourism Spend by Type

M e lb o u r n e C o m m o n w e a lth G a m e s 2 0 0 6
9 Degree of risk – EventsCorp’s risk analysis includes revenue
N e w T o u r is m S p e n d b y T y p e
generation, capacity to cover losses, management expertise, risk
for injury, cancellation of the event and terrorism; and O th e r
P a c k a ge s

E n te r ta in m e n t 2% G a m e s Tic k e ts
2%
10 Prestige, which EventsCorp measures based on the status 4% 4%

of competitors, sponsors, the media, the involvement of S h o p p in g A c c o m m o d a tio n

international sporting bodies and the anticipated number of 13 % 1 3%

patrons. F u el

3%

For a sporting event to be considered as a “Major Event” in Western O th e r T ra n s p o r t M e a ls , F o o d a n d D r in k

Australia is must be either (Source EventsCorp): 8% 1 6%

1 Funded by EventsCorp;
2 Attract a minimum of 10,000 spectators and align with Tourism
WA’s corporate objectives; or
3 Be considered as a significant arts / cultural event.
The following provides an overview of the economic benefit of those
sports events that have been identified in Section C7.1 as potential
sports events that could be hosted in a major stadium in Perth.
A irfa re s
3 5%
The Games have attracted approximately 166,513 visitors of which
34.2% were international visitors (excluding officials, media and
athletes). The estimated aggregate spend by visitors in Victoria
due to the 2006 Games has been estimated at $202.5m. Figure 7
provides an overview of the tourism spend by type of expenditure.

Further, the Games have attracted business expenditure of $197.7m

and resulted in an increase in employment of approximately 13,600
FTEs.

Whilst Perth could generally bid to host the Commonwealth Games

in the future it is likely to require additional investment in sports
facilities in and around Perth to cater for the breadth of events.

PERTH STADIUM
C-70
 Rugby World Cup
The Department of Industry, Tourism and Resources highlights the
RWC as the third-largest event in the World after the Olympic Games
and the Soccer World Cup. The event is held every four years with
the most recent event being held in Australia in 2003 which attracted
a television audience of over three billion viewers (Source: IRB).
To host the RWC the IRB requires the host nation / union to provide
“clean” stadia. Of the revenue generated from the RWC the ARU
only retains the revenues from ticket sales with the remaining
revenue streams flowing to the IRB including sponsorship, hospitality,
merchandise and broadcasting rights (Source: Horwath Asia Pacific
Limited).
The event creates significant economic benefits for the cities hosting
matches during the RWC. For example, Subiaco Oval hosted five
matches during the RWC in 2003. An economic impact study of
the RWC 2003 released by the Department of Tourism, Industry
and Resources in June 2004 outlines that combined these matches
attracted 18,386 visitors to Western Australia with an average length
of stay of 5.7 nights. 3,458 were estimated to be interstate visitors
compared to 14,928 international visitors which combined generated
an economic impact of $41.8m (excluding airfares).
New Zealand has been awarded the rights for the 2011 Rugby World
Cup. Auckland has a population of 1.24m which slightly lower than
the population of Perth (1.50m) and will host the greatest number
of games during the event. The event is projected to result in an
additional direct expenditure of $262m for the Auckland region
(Source: Horwath Asia Pacific Limited). The report further suggests
that the economic impact will be primarily generated through the
expenditure of international visitors.
Bledisloe Cup
The Bledisloe Cup is an annual contest between the Wallabies and All
Blacks rugby teams and is based on a three match series. As such,
the competition accounts for one to two event days in Australia per
year. The Australian host city is generally determined by the ARU.
Brisbane has recently signed an agreement with the ARU under
which 10 Wallaby Rugby Test Matches (including three Bledisloe Cup
SECTION C
matches) will be held at Suncorp Stadium over the next eight years.
The Brisbane City Council has reported that the economic benefit of
a Bledisloe Cup match to Brisbane is estimated $16.529m.
Further, the Queensland Premier, Peter Beattie, has announced that
the three Bledisloe Cup matches are expected to contribute $50m
(in 2006 $) to the Queensland economy with another $50m expected
to be contributed by the remaining seven Test matches (Source:
Queensland Department of the Premier and Cabinet).
In the official press release the Queensland Premier further added:
“If we hadn’t turned Suncorp Stadium into the state-of-the-art
venue it is today, we would not be attracting such high-class Rugby
blockbusters”.
Soccer World Cup
The Soccer World Cup is the second largest sports event in the World
and is held every four years. Detailed economic impact estimates
have been developed in support of South Africa hosting the next
event in 2010. The research (Source: Grant Thornton) suggests that:
• Direct and indirect spending before and during the event will
support 159,000 annual jobs;
• The event will result in a gross contribution to GDP of
approximately: $3.7bn (in 2010 $); and
• Will attract 190,000 overseas spectators.
Past events suggest that the Soccer World Cup has a positive impact
on the economy of the host country. Limited research however
appears available on the economic benefit of the event on individual
cities. While some data is available on the economic impact on
cities during the 1994 Soccer World Cup in the US most of these
cities are significantly larger than Perth and do not provide a suitable
benchmark.
Other soccer events such as the Asian Cup or World Cup Qualifier
matches present additional soccer events that could be held in Perth.
No research could be identified that quantifies the economic benefits
of such events, however anecdotal evidence suggests that the
economic impact will correlate strongly with the quality of the match
opponent.
C-71
Goodwill Games 7.4 IN CONCLUSION
The Goodwill Games are based on a similar concept to the
Commonwealth Games, however have only received limited
The bidding for major events is typically not the role of the actual
popularity and have been discontinued after the last event held
venue manager and would require a successful bid by EventsCorp,
in Brisbane in 2001. Media reports suggest that the Queensland
the events division of Tourism WA. The development of a 60,000 seat
Government anticipated the Brisbane Goodwill Games in 2001 to
major stadium would provide Perth with the third largest venue in
generate 2,000 jobs and inject approximately $170m into the State
Australia. Perth / WA would have the opportunity to more effectively
economy (Source: Goodwill Games Inc).
compete with the Eastern States and internationally for major events.
Major events would provide benefits for the stadium owner in the
Athletics World Championships form of additional revenues and would be likely to generate economic
benefits for the State.
The Athletics World Championships are held every two years and are
considered as the world’s most prestigious athletics event. The event
is held over nine days in a dedicated stadium, however to date has
not been held in Australia. Brisbane is currently in the running for the
hosting rights for the 2011 world championships with an outcome
expected shortly. The event attracts an estimated television audience
of four billion viewers worldwide.

KPMG has recently been engaged to undertake a cost-benefit

analysis of hosting the 2011 World Championships for Queensland
Events. However, in a recent press release the Queensland Premier
cited that the Spanish city of Seville recorded direct economic
benefits of $380m from hosting the event in 1999 (Source:
Queensland Department of the Premier and Cabinet). Due to
Brisbane’s bid for the event still being under consideration KPMG
cannot release the estimated economic benefit for Queensland
resulting from hosting the event.

PERTH STADIUM
C-72
8.0
PROJECT
IMPLEMENTATION

8.1 Project Delivery C-74

8.2 Transitional Issues C-74
8.3 Implementation Process C-75

SECTION C
C-73
8.1 PROJECT DELIVERY
Figure 8 outlines a recommended approach to the delivery of the
Major Stadium Project. Key aspects of the suggested approach are
as follows:
• If the Government decides to proceed with the project then it is
critical to determine the issue of governance of the new venue
with all sports. Proposed governance arrangements should be
determined and resolved by Government before proceeding
with the development of a new major stadium or any alternative
developments at a rectangular stadium.
• The Government should look to establish a separate wholly
owned entity (Government Owned Corporation, Trust, Statutory
Authority) to oversee the delivery of the major stadium. This
entity could potentially fill the ongoing role of the Government’s
representative in terms of overseeing the governance and
operations of the venue in accordance with the Taskforce’s
governance recommendations.
• This entity should appoint an experienced Project Manager with
specific experience in the delivery of major stadia projects to
manage the overall delivery of the project.
C-74
8.2 TRANSITIONAL ISSUES
The final decision of Government as to the preferred stadium In addition to the above broad steps the following specific issues
capacity, its configuration and site will clearly have an impact on the would need to be addressed with each of the particular sites:
scope and impact of transitional issues involved. Further the selection
of a brownfield site (East Perth or Burswood Peninsula sites) will East Perth Power Station and Burswood
have less interruption on the conduct of major sporting events which • Demolish Subiaco Oval and potentially redevelop.
could continue to be staged at Subiaco Oval until the new stadium is
Kitchener Park
complete.
• Construct Stage 1 of development of Kitchener Park (40,000 seat
The following broad steps outline transitional issues associated with the
stand).
development of a new multi purpose 60,000 seat stadium.
• Government to establish Project Control Group for the • During construction of Stage 1 the eastern side of the existing
Subiaco Oval stadium will need to be demolished during the AFL
development and select appropriately qualified professional
off season to allow for the construction and installation of the
consultants for the delivery of the project;
pitch.
• confirm project brief and scope. Identify funding and cost
parameters; • Open Stage 1 of stadium (40,000 seats) for Super 14 / AFL
season.
• consolidation of site for the development and associated
infrastructure; • Commence Stage 2 construction (20,000 seats) of new west
stand.
• design and document proposed stadium and associated
infrastructure; • Develop new training and administration facilities for WCE at an
alternative venue.
• planning application and environmental impact assessment for
proposed design; WAFC Masterplan
• Commence staged construction documentation and site
• completion of documentation for Design and Construct tenders
activity. Capacity of ground not to fall below 39,000 seats during
and early works;
construction for the AFL season.
• call for Design and Construct tender;
• Handover occurs upon completion of each stage.
• selection of preferred delivery model and contractor;
• commence construction documentation and site activity;
• practical completion of major stadium;
• venue operator accepts venue and commences pre-opening set
up; and
• official opening and first major event.
PERTH STADIUM
 8.3 IMPLEMENTATION PROCESS
WACA Ground Figure 8 provides an overview of the suggested implementation
The future of the WACA ground will be determined by the WACA members. process for delivering the major stadium.
However to enable the major stadium to be developed the Taskforce
Figure 8: Implementation Process
consider that the following steps should be undertaken during the
development of the major stadium with the objective that all international
cricket games are hosted at the major stadium upon its completion.

• encourage WACA to sell Western Australian Cricket Ground for Government decision announced
(60,000 seat multi-purpose venue
highest and best use; and minor works to MES)

Yes
• WACA to fund development of domestic cricket venue from
Project not to
Determine governance issues
proceeds of sale; and proceed *
No

• WACA to be sold on long term settlement to enable development

Appoint “Owners” entity to
of domestic cricket venue. oversight delivery / governance

Members Equity Stadium

Engage expert advisers regarding
The design, documentation and construction of the minor works to MES design, operations and finances
can occur as required within its own time frame independent to that of the
major stadium.
Establish Heads of Agreement Progress concept development
(commercial terms with key tenants design and full functional brief
AFL, Rugby WA, WACA, ARU etc)

Update business plan and re-assess Appoint Stadium Operator

project viability

Appoint stadium project manager

Confirm project delivery method

Appoint design team to progress

the design development phase

Appoint D & C contractor and

novate design team

Implement and manage project

delivery

SECTION C
C-75
 PERTH STADIUM
C-76