The City of Cape Town has invited interested and affected parties to comment (“input”, as if what the public says makes a difference to the fait accompli decision) on the “proposal to extend the functions of the Cape Town Stadium municipal entity”.
I’ve investigated the stadium and written about it. Its fundamental nature and purpose make it unsuitable for anything other than a venue for a once-off mega sports event that never lived up to its promise of economic benefit for South Africans and the city.
Even in football-mad Brazil, World Cup 2014 stadium(s) are unused, and a newly-built one is being used a parking garage, a proposal the city contemplated.
The stadium is a white elephant, a dodo, a “turkey that will never fly” (http://politicsweb.co.za/politics/the-cape-town-stadium-a-turkey-that-will-never-fly).
South Africans suffer from an especially virulent and pernicious form of the exceptionalism disease that imbues sufferers with delusions of grandeur on a grand scale (there’s no cure). Among the ailments, sufferers believe they can do what no others can, and have the power to bring the dying and dead back to life (like SAA, CTS, ANC etc).
I’m not going to repeat my criticisms of the municipal entity, except it does nothing to change the economic and financial realities: that the stadium is unused, unwanted and cannot ever be financially viable. It will continue to be a massive financial drain on Cape Town’s ratepayers, however it’s managed.
This is the DA-run city’s delusion: that massaging reality will change the outcome. It’sa shame as they believe they can do a better job of running the country than they do of the stadium.
For 2015/16, the stadium’s total income was R15million and reported (not actual) expenditure R41m, for a claimed net loss of R26m. But employee costs were not disclosed, which added another R20m.
Also undisclosed were other costs that, if included, take total expenditure to over R100m a year. I estimated the negative cash flow is closer to R200m. (Note the city’s press release states the municipal entity’s staff will increase by six to 44. At an annual average income per person of R300000, that’s another R1.8m for an entity that has current revenue of R15m.)
This exorbitant loss makes sense, and the only reason why, they’re undertaking such a costly and risky venture that shall see priceless public land being alienated to benefit private, profit-making companies with little to no real benefit for ratepayers.
They would not do it merely for a claimed annual loss of R26m, which is less than the infamous Cape Town Cup flop and a bit more than the mayor’s travel expenses.
They’re not spending money to make money; they’re spending money to lose more money, exactly like SAA.
The DA continuously complains about state enterprises and SAA (http://politicsweb.co.za/politics/saa-r2207bn-bailout-only-a-part-of-the-final-bailo). We’re led to believe they can do a better job of running it and the country - basically, it’s their election manifesto.
But the SAA situation and its never-ending bailouts exactly resemble the stadium: it’s a hugely expensive, unviable entity that’s almost irremediable.
Like SAA, changing the stadium’s management structure - board, executive and operating entity - will not overcome its innate, structural problems. Unlike the stadium, SAA, or at least parts of it, can be made viable under the right conditions. But the stadium can’t be broken up into salvageable and non-salvageable parts
Like SAA and Treasury looking for national assets to sell to pay for the recent R2.2billion bailouts, the city intends selling and/or leasing public assets and irrevocably commercialising a beautiful, historical recreational area bequeathed to the city’s people. For what, to save, they claim, R26m a year out of a city budget of R40bn?
By comparison, recreation & parks’ and libraries’ budgets are R141m and R50m, respectively.
Like most local government services (except profitable electricity), they are intrinsically loss-making public goods, and budgets. The stadium is only different if its costs and losses are in the region of
hundreds of millions a year.
I said the DA-run city is delusional about the stadium. Perhaps they’re not; perhaps they’re perpetrating a huge fraud on the public. Then they’re doing it with our complicity because, unlike the scandal surrounding “Gupta-leaks” shenanigans and ANC-initiated SAA, SABC, etc mismanagement and corruption, Cape Town’s citizens are too complacent, indifferent or credulous to challenge them.
We’re outraged about the R30m allegedly wasted, misused or stolen from a little-known Free State dairy farm, but we don’t question the DA about the stadium’s costs, which 10 years after its completion, must be approaching R1bn. The municipal entity won’t change that.
Just as SAA defines ANC mismanagement of state assets, so the Cape Town Stadium defines DA mismanagement and incompetence. DA for government in 2019? I don’t think so.
* Johnson is an armchair activist and urban economist