Cape Town: Can rugby save Cape Town Stadium's finances?

source: IOL.co.za

Cape Town: Can rugby save Cape Town Stadium's finances? Authorities of Cape Town have announced a 50-year partnership with Western Province Rugby, who would become the anchor tenants at Cape Town Stadium, starting in 2021. But that doesn't mean stable revenue just yet.

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Ever since Cape Town Stadium opened in early 2010, it's only been a burden. Of course it brought the World Cup and a number of other events to the city but economically it created a drain on public finances.

Today there are two major tenants, local football clubs Ajax and City. However, even combined, their attendances wouldn't fill the stadium in half on a regular basis. Studies commissioned by the city showed football not to be a viable base of stadium operations, suggesting rugby as the preferred use.

Cape Town Stadium© Calflier001

Negotiations with Western Province Rugby were launched 3 years ago and finally in early November their fruit was revealed: a preliminary agreement that would see Western Province become anchor tenant from 2021 onwards. The deal would last 50 years with option of extension to 99 years.

It remains to be seen how beneficial the deal would be to taxpayers. Annual rental fee has already raised some eyebrows, set at just R100 ($7). The city argues it's for legal reasons: because the stadium is ran by a subsidiary, asking for higher rental fees would require the subsidiary to pay higher fees back to the city, which would then require the city to subsidise the stadium company further.

If not from rental fees, how can the public benefit? That will depend on detailed contract between the city and Western Rugby. What is clear already it that capital expenses, repairs and upgrades at the stadium will be carried out by the city. First, WP have asked for expansion of hospitality areas, which should bring the biggest share of matchday revenue.

Relocation of Western Province to Cape Town Stadium means they would no longer use Newlands, the country's oldest rugby field (and second oldest globally). It's speculated that the team would sell its stadium for a residential development, and idea which raised quite some criticism not just from rugby fans but even local community around Newlands.

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