In what looked like a victory for common sense, the NSW government last month dropped plans to demolish two of Sydney’s most high-profile sports arenas and build new facilities at a cost of over $2 billion.
Instead of razing the Olympic stadium at Homebush (Stadium Australia) and replacing it with a “Colosseum-inspired” venue, the government said it would refurbish 46,000 seats of the 80,000-seat stadium and create a rectangular field better suited to soccer and the two rugby codes.
Plans for knock-down/rebuild of the 30-year-old Sydney Football Stadium (SFS) at Moore Park would still proceed, since renovating the venue could cost more than razing and rebuilding.
Announcing the change of plan, premier Gladys Berejiklian said: “We are a government that does its homework and listens to the public… Our thorough homework means we can deliver a world-class rectangular stadium at Sydney Olympic Park without knocking down ANZ Stadium [Stadium Australia], save $500 million, and complete the rebuild two years earlier than previously scheduled.”
The premier’s attempts to put the best possible spin on a revised decision to invest around $1.5 billion of public money is understandable, but the government cannot disguise the fact that the process for planning and investment in Sydney’s major sporting stadia infrastructure has fallen short of the tenets of good public policy.
- Setting out clear program objectives and defined project outcomes
- Addressing strategic plan priorities and spatial planning outcomes at regional and local scale
- Considering valid alternative options (including non-infrastructure options)
- Presenting transparent business cases upfront
Although less costly, the revised Stadium Australia and SFS plan still involves public investment of over $1.5 billion in two projectsthat will make a substantial loss in economic terms relative to maintaining the status quo.
Stadium strategy background
Proposals for reconstruction of Sydney’s major stadia began to take shape in the NSW Stadia Strategy 2012 document prepared by the Office of Sport. This set out a program for the construction or refurbishment of:
- Stadium Australia – as a rectangular stadium (Sydney Olympic Park)
- Sydney Football Stadium (Moore Park)
- Western Sydney Football Stadium (Parramatta – under construction)
- Other indoor arenas and Tier 2 stadiums
The 2012 strategy was prepared to resolve competing sporting stadium investment proposals. It is not clear that it was derived to achieve specific economic, social or city planning outcomes.
The 2012 strategy highlighted negative stakeholder feedback on the game day experience – some of it attributable to existing Sydney stadiums and other feedback relating to the way events are hosted and the way the stadiums relate to the surrounding areas.
The strategy benchmarks the supply of stadiums across Australia and sets a course towards recommendations for the investments outlined in the $1.6 billion Rebuilding the Major Stadia Network(2015). The ensuing November 2017 cabinet decision and announcements propose reconstruction of Sydney’s two largest stadiums at an even greater cost of around $2.7 billion, in order to “attract premium events… drive growth in the visitor economy” and “realise the benefits of a strong cultural and sporting sector and support liveability for the people of NSW”.
Public investment at this scale should have a strategic basis derived from state priorities and achieving the spatial outcomes of Greater Sydney’s Regional Plan.
Although major sport, entertainment,cultural and tourism facilities are distinct in serving as a destination for the entire city and its international visitors, their justification and location should respond to a spatial plan and any decision to invest should be based on a transparent strategic justification, option assessment and project development process. This means preparing a “business case” upfront to enable fair comparison of competing capital demands on the NSW budget.
Infrastructure NSW’s State Infrastructure Strategy 2018-2038 (SIS) referenced the stadium reconstruction program as “recent progress” – noting that the government adopted INSW recommendations to this effect in the SIS update of 2014. But no business cases were prepared at this time.
The Planning Institute of Australia has adopted a general position on ‘‘Infrastructure and its Funding’’, which stresses:
- Infrastructure project objectives must be consistent with the adopted strategic planning outcomes sought for places
- Achieving these outcomes should inform the prioritisation of infrastructure to be funded
- Infrastructure appraisal approaches should recognise the spatial context and respond to the wider economic, environmental and social costs and benefits over the long-term term planning horizon and whole-of-life of an asset
- All available options (eg, non-infrastructure) that meet the project objectives should be considered
These principles are useful in responding to the stadium reconstruction program and informing the business case appraisal that is now belatedly available in summary.
Strategic planning justification and location
The Greater Sydney Region Plan (2018) sets out a vision for the growth of Sydney as three cities: Eastern (Harbour), Central (River) and Western (Parkland). Each city has relevant objectives:
- Harbour City is stronger and more competitive – so develop and implement land use and infrastructure plans that strengthen the international competitiveness and grow its vibrancy
- Strengthen Parramatta’s position as the dual CBD for Metropolitan Sydney – and make the Western Economic Corridor / Greater Parramatta Olympic Park (GPOP) Corridor better connected and effective
- The Western City will be established on the strength of the new international Western Sydney Airport / Aerotropolis. It will be a polycentric city capitalising on the established centres of Liverpool, Greater Penrith and Campbelltown-Macarthur
At a macro-scale the locations of each of the major stadia align with the spatial outcomes sought for Sydney.
- The location of stadia in Parramatta and GPOP and the potential to connect them with light rail and/or the proposed West Metro is consistent with the three cities approach.
- The Moore Park location also strengthens the Harbour city and will soon be better connected with the CBD via the South East Light Rail.
There are also strategies in the Regional Plan promoting tourism as an industry sector – encouraging the development of a range of well-designed and located facilities, and to enhance the amenity, vibrancy and safety of centres and township precincts.
Unlike central Melbourne stadiums, neither of Sydney’s major stadiums are well integrated into their immediate urban precincts – the venues and their surrounds do not mutually improve amenity. However, there are opportunities for reshaping of the Olympic Precinct as a mixed-use centre and better integrating the SFS with Moore Park, Surry Hills and Darlinghurst, especially via light rail.
The District Plans as well as the government’s ‘’Better Placed’’ policy emphasise the placed-based approach to ensure that the place is designed to take into consideration its context, surroundings and also feasibility. The assessment of the major stadiums should consider these planning and design frameworks. The city cannot afford to not consider the place and design context – and deliver public benefits for the local area and region.
Infrastructure appraisal and alternative options
Any business case must be based on a project achieving defined objectives and outcomes. Vague and ambiguous statements such as ‘‘maintain NSW’s competitive position in the major events and tourism market’’ limit the effectiveness of a business case in developing and testing a sufficient range of options.
Major stadiums are unique and expensive fixed structures. Investment represents a major risk that demand will not be sustained into the long term. There are already indications of this with Stadium Australia, where average attendances in the 2017 NRL season were only 15,000. Although Sydney’s population is growing, there are other technological disruptions that could impact demand for large stadiums and the enjoyment of the experience they provide.
In developing robust project options, best practice involves testing demand assumptions and refining a long list of options that can address the strategic outcomes sought under likely demand conditions.
A business case should appraise non-infrastructure options as well as consider the performance of all options over the whole of the project’s life. It also needs to significantly ensure it is a public benefit. It is not clear that this has yet occurred.
The types of options that could be considered include investment in improving the integration of stadiums into their surrounding urban precincts, better connecting them to key centres and nodes, and improving the visitor experience by non-construction related means. Such options could partly address community feedback on the game day experience uncovered in the 2012 strategy.
A business case for a shortlist of project options would need to demonstrate:
- Strategic justification – the project meets the aims and outcomes sought
- Greater benefits in relation to the costs (construction / operation) – considered over the entire life of the project
- Appraisal of the sensitivity of the analysis to changing costs and demand for use – and factors impacting on the achievement of broader benefits (for example, transport links and urban design)
- that alternative (and lower scale) options do not deliver a superior result
- specific public and sporting/tourism benefits, which may even be at a cost to government
Stadia reconstruction business cases
INSW has recently released summaries of the businesses cases prepared for the Stadium Australia and Sydney Football Stadium reconstruction proposals (see tables below).
It appears that only major construction options have been progressed through the analysis. Alternatives such as non-infrastructure options, lower key regional / local sporting facilities and innovative measures to integrate stadiums and adjacent facilities to improve game day experience have not been published. It is assumed that these options do not meet the vague but grand objectives of attracting premium events and realising the tourism and other benefits outlined in the stadium strategy. This is a significant omission that should be explicitly justified prior to any public investment based on the business case.
Considering only the published reconstruction options, the business case shows that noneare economic. All would have costs greater than their benefits over the life of the stadiums – except under optimistic assumptions. The more expensive options divert the most money into poorly returning investments.
The government argues that it is justified in selecting the announced options because only these will bring in the types of events and offer the types of experiences that meet its broad project objectives. This claim should be closely re-examined given the poor economic indicators published in the business case and the high project cost.
|Sydney Football Stadium Redevelopment (Moore Park)|
|Options||Costs ($m)||Benefits ($m)||NPV||BCR|
|New stadium 45K seats||627||583||-43||0.93|
|New stadium 40K seats||597||552||-44||0.93|
|Refurb stadium 40K seats||599||374||-226||0.62|
|Stadium Australia Redevelopment (Homebush)|
|Options||Costs ($m)||Benefits ($m)||NPV||BCR|
|Refurb 70K seats||810||na||na||0.80-0.87|
|Rebuild 70K seats||1,292||na||na||0.91|
|Rebuild 75K seats||1,330||na||na||0.89|
Investment in major stadium infrastructure carries substantial risk. It’s by no means certain that benefits from use will continue well into the future – or that the projects will shape Sydney in a positive way. The poor economic results from the published business case summaries should have triggered a major rethink – not a backflip.
A clearer set of strategic aims as well as specific outcomes for the project are needed to re-frame and re-test alternatives – including non-infrastructure options. The resilience of a wider range of options should be reconsidered under potential demand and cost assumptions. It is not too late to include this approach in an expanded business case.
Major stadiums are city-shaping infrastructure and they should demonstrate consistency in their justification and, in Sydney, siting with the Sydney Region Plan by reinforcing the three-city structure in their siting and justification. Each of the stadiums are located in places that can support the future pattern of Sydney’s growth.
The benefits of major stadiums can best be achieved with a place-based approach and a design approach that integrates these facilities into the fabric of Sydney while drawing on and adding to the local amenity. Maximum value from state investment can be gained through collaboration with local government and the private sector.
Finally, it’s vital that district and local scale investments in sporting facilities and open space are not compromised by major stadium investment decisions. Should no good value stadium option be available – there are strong arguments for multiple lower key investments to support sport and recreation demands in growth precincts across Sydney.
John Brockhoff is Principal Policy Officer (NSW & National) for the Planning Institute of Australia.