Cape Town Stadium struggles to generate revenue
Cape Town - Cape Town Stadium is struggling to make its revenue targets and the City, in its June income statement reported that there is an under-recovery of R132million in rental revenue from sport and recreation.
“The under-recovery is mainly due to the lower demand for sport and recreation facilities, and the lower-than-planned lease rental received from tenants occupying council-owned units,” said the City's Financial Monitoring Report for June.
It also painted a bleak picture of the entity struggling to acquire revenue.
It stated that there had been a variance due to delays in the sign-off process of a potential sponsor for the advertising and naming rights for the stadium.
The Parking Fees Tender, according to the report, is still in the process of being awarded.
Chief executive of the Cape Town Stadium Lesley de Reuck said: “Other revenue - an amount of R4.6m - was budgeted for, which included stadium tours, a portion of naming rights and income through parking.
"On the issue of naming rights, it must be understood that it is a complicated and protracted process that involves local, as well as multinational companies.
"After a comprehensive process, an agency was appointed (a JV of three agencies offering best practice in their field).
“With regard to the intended income to be generated through the appointment of a parking operator, it was envisaged that this tender would have been implemented.
“But extensive research, in commercial models and best practice, was initiated to ensure that when the tender does go out to the market, the best potential return on investment could be realised.
“The drafting of this tender is now nearing completion and will be offered to the market shortly.” The stadium has a budgeted expenditure of R91m against its budgeted revenue of R22m.
“The budgeted amount for rental of facilities and equipment was R14m,” De Reuck said. “The stadium has hosted more bowl events than predicted (eg, the Marvel Superhero Sunday, an additional Ed Sheeran concert, increased number of church events, and the Monster Jam, to mention a few).
“This has, therefore, realised a much higher income than the budgeted figure.”
Mayco Member for Safety and Security JP Smith said: “We are aware that events provide enormous benefit to the local economy and play a pivotal role in generating visitor expenditure, jobs across a wide spectrum of service industries and local communities.
“We are also acutely aware of the need to spread events across the city and have looked at offering incentives in this regard. However when doing so, notwithstanding the incentives, event organisers remind us of the reason that Cape Town Stadium was situated there in the first place (aesthetics, mountain, sea, stadium surrounds, etc) and that historically, large segments of our community were precluded from enjoying the amenities in the area and they wish to exercise their rights in this regard.”