The 2023 Women’s Football World Cup, shared between Australia and New Zealand, has seen attendance records broken for Women’s sport. A total of 1,977,824 fans went to the 64 games in total. Four games at Sydney’s Stadium Australia sold out with a restricted attendance of 75,784 at each game, which represents the third largest crowd in Women’s World Cup history.1 As a result of the huge crowds, this event is also reported to have generated the most revenue in tournament history.
The Australian national team, the Matildas, has found a place in Australia’s collective psyche. Their semi-final loss to England became the most watched television event¾sport or otherwise ¾ since 2001, with a peak of 11.15 million Australians watching2 (from a population of 26.6 million). While Australia rides a wave of celebrating what will be its highest ever finish in a Women’s world cup, the Matildas captain, Sam Kerr has called for more funding for grassroots soccer in Australia. Such funding would seek to improve facilities, achieve gender parity and increase participation in women’s football.
In light of the renewed focus on facilities that support the growth of sport within the community, it felt appropriate to look at a couple of past and upcoming transactions for major stadiums in Australia, namely the new Tasmanian stadium and the Perth Stadium.
A giant leap forward for Tassie sport
Australia has always been known as a sporting nation, and nearly every major city in Australia has multiple stadiums which help the Australian population to get close to the sporting action. The most watched professional league in Australia, the Australian Football League (“AFL“) or ‘Aussie Rules’, effectively operates for the growth of the game, rather than off the back of private investors. Other Australian sporting codes operate on a similar basis, and for that reason, Government funding is crucial in developing stadiums to support Australia’s obsession with sport.
In May 2023, the AFL announced the grant of a license for a Tasmanian team to become the 19th team in the league.3 Aussie Rules has long been the dominant football code in Tasmania, and the need for a professional team in that State has been publicly discussed for decades. However, with a limited population, the business case for the Tasmanian team was heavily State-sponsored. A key condition of the AFL in awarding the license to the recently named ‘Tasmania Devils’ was the need for a purpose-built stadium. The solution is the proposed 23,000 seat, roofed, water-front stadium at Macquarie Point, estimated at the time to cost $715 million. The stadium is proposed to be funded by $375 million from the Tasmanian government, $240 million pledged by the Federal government, $15 million from the AFL and $85 million from other State government borrowings.4
Since the announcement, the Macquarie Point stadium has been the subject of controversy and was a divisive issue in the recent Tasmanian state election. As the proponent of the Macquarie Point stadium, the incumbent liberal party support the development of a mixed-use precinct for sporting, arts, events and entertainment. The local community has questioned whether a stadium is the best use of funds when the State has a range of other pressing budgetary challenges, particularly with respect to housing availability and affordability. The opposition initially opposed the stadium but failed to outline a clear alternative plan that would provide a home in support of the Tasmania Devils.5
To complicate the issue, a private development consortium, Stadia Precinct, has proposed a competing stadium, known as Mac Point 2.0. The proposal is located near the Macquarie Point site, but utilizes reclaimed land from the Derwent River, with a retractable roof that can cater for large scale entertainment shows and meets the AFL minimum requirements. However, Mac Point 2.0 also includes an ambitious range of additional features, such as a convention center, private hospital, hotel(s), social and affordable housing, and 5,000 parking spots. Importantly, the proposal claims to be structured so as to limit government investment and thereby avoid Tasmanian taxpayers bearing the potential cost overruns. It does this by utilizing income streams from co-located commercial developments to provide private funding for the stadium.6
Perth Stadium as a successful model for stadium delivery?
As a useful case study, the A$1.2 billion, 60,000 seat stadium in Perth, Western Australia which was completed in late 2017 might give a perspective of how the Tasmanian stadium could be procured.
While the majority of stadiums in Australian are direct procurements by State governments, the Perth stadium was procured under an availability based public private partnership (“PPP“) procurement model. The PPP model will be familiar to many, although there are various permutations of the model depending on the specific jurisdiction.
At its highest level, PPPs are a model for procuring projects which allow Governments to utilize private capital to spread the large capital cost of infrastructure over its usable life. A private consortium funds the construction of the infrastructure from a combination of private equity and limited recourse project-financed debt.
While it’s possible for certain PPP infrastructure to pay its own way (e.g., toll roads), more commonly the State repays the capital cost of social infrastructure by way of ‘availability payments’ over a term of 20-30 years. During the term of the concession, the consortium continues to maintain the asset, on the basis that deductions may be made from the availability payments for a failure to do so. This represents another key feature of the PPP model the ability for Governments to benefit from warranties regarding the condition of the asset over the entire concession term.
In the case of the Perth Stadium, the project was awarded to the Westadium consortium, comprised of John Laing Investments (Perth Stadium) B.V. and Aberdeen Infrastructure Investments (NPS) Limited at the equity level. The Westadium consortium engaged Brookfield entities to construct and subsequently maintain the stadium for the duration of the concession.
The substitution of Government debt with higher cost private debt is one of the criticisms of the PPP model, and the West Australian Government mitigated those costs by directly funding 60% of the construction costs.
Stadiums represent an interesting asset class for the PPP model. Most neatly, they fit into the category of social infrastructure, on the basis that the financial model will typically be built up based on an availability payment, rather than patronage forecasts. However, what makes stadiums attractive for PPP funding is the upside opportunity of using the Stadium for non-core purposes, as is proposed by the Stadia Precinct. In the case of Perth stadium, the State intended to recoup the maintenance and lifecycle components of the availability payments from Stadium Stadiums represent an interesting asset class for the PPP model. Most neatly, they fit into the category of social infrastructure, on the basis that the financial model will typically be built up based on an availability payment, rather than patronage forecasts. However, what makes stadiums attractive for PPP funding is the upside opportunity of using the Stadium for non-core purposes, as is proposed by the Stadia Precinct. In the case of Perth stadium, the State intended to recoup the maintenance and lifecycle components of the availability payments from Stadium revenues. In addition to Stadium revenues, the Westadium consortium is entitled to pursue other commercial opportunities, with some of those revenues banked in the financial model. Where commercial opportunities revenues exceed projections, the contract provided for those revenues to be shared with Government.
The Perth Stadium project has been widely accepted as a success. The Stadium is world class and has become a landmark within the city. Since its completion, the project debt has been successfully refinanced twice, more recently in late 2023, and John Laing sold its 50% equity interest to AMP Capital (now Dexus Group) in 2019. In 2024, Aberdeen sold its 50% interest in the Perth Stadium along with other Australian PPP interests, with a further refinancing of the expiring project debt also contemplated.
It is not yet clear whether the Macquarie Point stadium will proceed as announced by the Tasmanian government, with their proposal currently being assessed as a project of state significance by the Tasmanian Planning Commission. However, the Tasmanian Government might benefit from looking at the example set by the Perth Stadium. If they get the development of the stadium precinct right, alongside the long-awaited debut of the Tasmania Devils, the Matildas could, one day, attract record crowds to the Macquarie Point Stadium and the surrounding precinct, with the flow on benefits for the local community, sporting bodies, investors and the government alike.
1 https://www.sportingnews.com/au/football/news/womens-world-cup-attendance-tracker-2023-australia-new-zealand/cc1xymad2ikza8oepo7cnpv2
2 https://www.theguardian.com/football/2023/aug/17/matildas-re-write-history-books-as-semi-final-smashes-tv-ratings-records
3 https://www.afl.com.au/news/917878/full-statement-tasmania-awarded-19th-afl-licence
4 https://www.abc.net.au/news/2023-04-29/pm-announces-funding-for-tas-afl-stadium-at-macquarie-point/102209420
5 https://www.abc.net.au/news/2024-03-28/tasmanian-labor-will-new-leader-mean-afl-stadium-supported/10363820
6 https://www.stadiaprecinct.com
White & Case means the international legal practice comprising White & Case LLP, a New York State registered limited liability partnership, White & Case LLP, a limited liability partnership incorporated under English law and all other affiliated partnerships, companies and entities.
This article is prepared for the general information of interested persons. It is not, and does not attempt to be, comprehensive in nature. Due to the general nature of its content, it should not be regarded as legal advice.
© 2024 White & Case LLP