The Big Read: The Sports Hub nightmare – what did insiders say went wrong, and can the government handle it better?
However, Mr Poh said it was unrealistic to have the government sit on SHPL’s board as it was also a key customer.
“The reason why the board is not made up of government is also due to the structure of the contract. In this public-private partnership, the government is the client of the contract and the SHPL is on the other side of the contract. In the contract, there are KPIs and deliverables and there are penalties if SHPL does not deliver.
“So you can’t have a situation where the government is also a member of the board, then the government is on both sides of the deal,” Poh said.
The need to work with different private partners was another sticking point raised by former staff members such as Sharon and Michael.
This had led to occasions where partners had developed business plans to bolster their own profit margins, but not for the good of the Sports Hub as a whole.
For example, Timothy recalled a time when a partner planned to charge customers for a service that was not conventionally billable.
“There was a huge outcry about it… this particular partnership was made so that the (product) could be provided free of charge in the stadium.
“That was just one example of misalignment,” said Timothy, who noted that the product was ultimately offered for free.
Agreeing, Michael said such negotiations take place for almost every event that takes place at the Sports Hub.
“After each event, or before the next event, we need to align KPIs and operational details (between all partners involved) in such a way that everyone is happy,” he said.
“The model probably has too many partners, and if they bring it back and consolidate it into one entity, that’s much better from an operational standpoint.”
However, Mr Poh felt that it was necessary to have many partners as each brought with them the necessary expertise in the early stages of the project, as the banks would need to assess the capacity and expertise of the consortium to carry out the project.
“When the contract is awarded to the consortium, we start a S$200 million business overnight… You don’t have time to grow a business, you start a big business overnight.
“So the consortium had to be like this because you needed all the expertise from day one,” he said.
FUNDING FOR COMMUNITY PROJECTS LESS PROFITABLE NEVER SEEN
In addition to the deep-rooted issues that were raised by former staff members, another contentious point that was raised was the lack of grants and funding for less profitable, community-focused events.
Apart from Singapore Athletics’ failed bid to host the Asian Masters Athletics Championships at the Sports Hub due to high costs, plans to host the Merlion Cup, an invitational football tournament, did not go through. is not materialized either.
The 2015 talks broke down after disagreements over a force majeure clause in the contract, which meant organizers would have to bear any third-party costs incurred if the tournament could not start due to unforeseen circumstances.
Former Sports Hub staff told TODAY that a fund was initially set up to fund less profitable projects, such as those that were more accessible to the community.
This fund, named “Premiere Park Foundation”, was first mentioned publicly more than ten years ago by Vivian Balakrishnan, then Minister of Community Development, Youth and Sports.
Dr Balakrishnan said in a 2008 speech announcing the award of the Sports Hub tender that the foundation was proposed to receive a “significant portion of the revenue from the facilities and that these funds would be funneled back into the financing of events, activities and other facilities”.
It was expected that this would set up “a virtuous circle in which the more activities, the more income, the more income available to invest in attracting and bringing in other events and activities”.
However, former SHPL members interviewed said the money originally set aside for the fund quickly “evaporated”.
A former senior executive at one of SHPL’s partners said there were a “number of miscalculations” that cemented the fund’s fate.
“There were certain trade deals that the consortium felt they had access to that were later turned down,” he said.
For example, he said a multi-million commercial deal was in the works to secure the naming rights for the Sports Hub and the Singapore Indoor Stadium, but that deal ultimately fell through.
There were also many unforeseen costs due to maintenance issues, such as the estimated seven-figure sum to replace the grass on the football pitch.
“In our calculations, revenue would be made available, (but) those expectations were reduced, and that created a lack of ability to fund certain aspects, the foundation being one of them,” he said. declared. “Foundation funding has effectively evaporated.”
HOW WORLD-CLASS SPORTS FACILITIES ARE MANAGED ABROAD
From China to the UK, several stadiums around the world have been funded through PPPs or similar arrangements, with mixed results, sports experts tell TODAY.
The 18,000-seat Mercedes Benz Arena in Shanghai is a shining example of how a private company has managed to win the trust of the local government to operate the venue, said Mr. James Walton, Head of Business Group Deloitte Sports for Southeast Asia.
While most sports venues in China are considered state-owned assets, the Mercedes Benz Arena operates differently. It is co-owned by Anschutz Entertainment Group, a private overseas sports and entertainment company, and PAC-Shanghai Oriental Pearl (Group), a state-owned media group.
This led to “a clear division of responsibilities and mutual understanding and use of relationship-building methods,” Walton said.
For example, the private company was a leader in professional venue management and “focuses on day-to-day management, sponsorship sales and event programming”.
Meanwhile, the state-owned media group, being one of Shanghai’s most influential state-owned enterprises, has been effective in “supporting government relations and local community engagement,” Mr. Walton.