White elephants

When the last of the Olympic confetti is swept up in late August, Beijing will find its 12 new stadiums suddenly vacant and quiet. Some of the city’s infrastructure projects like its subway expansion will be in steady use for years after the games. However, the fates of venues such as the Bird’s Nest and Water Cube – as well as the investment return on the millions spent on them – are not clear.

Former hosts Sydney and Athens found themselves plagued by herds of “white elephants,” and serve as cautionary tales for Beijing. Athens in particular continues to struggle with many of its empty and run-down Olympic venues, which cost taxpayers as much as US$100 million a year to maintain.

Sponsors to the rescue

But Beijing’s lengthy list of sponsorship agreements – more than 40 foreign and domestic sponsors chipping in anywhere between US$2 million and US$100 million each to help offset construction costs – may put the city in a better financial position than its predecessors heading into the games. Sponsorship receipts have already reached US$1 billion, an Olympic record. By comparison, Athens accumulated just over half this total – US$536.7 million in 2004.

All these sponsorship dollars take much of the pressure off public coffers to fund the construction, renovation and maintenance of the city’s 31 Olympic sites. But building is the easy part – the real challenge for city planners is is figuring out what to do with these buildings once the games are over.

So far, officials have revealed few post-games plans for the venues, but Olympic Green may be turned into a residential area, according to a report by the games’ organizing body, BOCOG. Also included in the district will be a hotel, convention center, underground shopping mall and other amenities to keep the land in use. The arenas themselves will be scaled down and opened for public use and leisure activities like concerts and festivals, according to Stéphane Vernay, a partner at law firm Gide Loyrette Nouel, which offered legal advice to the Beijing National Stadium Consortium during its planning.

Yet, hosting occasional entertainment events may not be enough. Vernay says housing a professional sports team has historically been the only way venues of this size ever turn a profit.

“So far, none of the stadiums in the world have achieved profitability without a dedicated sports club in residence,” he said.

Vernay said Beijing Guoan soccer club, which plays in the Chinese Super League, might find a home at the Bird’s Nest, but so far nothing has been confirmed.

Nick Griffith, a consultant for sports marketing firm Octagon, agrees that housing a sports team is the best way for a stadium to remain profitable in its post-games life, but doesn’t believe it’s realistic for Beijing Guoan to play at the Bird’s Nest.

“The venue is too big for a team like that,” he said. “The league is not really developed enough to be able to have a team that would draw so many people that [the Bird’s Nest] would be appropriate.”

If the Beijing National Stadium is unable to attract a permanent tenant to help cover the estimated US$7 million needed for annual upkeep, another option would be selling its naming rights to a third party after the games.

In Sydney, for example, ANZ Bank recently took over the naming rights for Stadium Australia, formerly Telstra Stadium, in a deal worth US$4 million a year, the largest such deal signed in Australia’s history. Not insignificantly, Stadium Australia is currently home to four different National Rugby League teams.

Hoop dreams

Beijing has been proactive in ensuring the post-games use and profitability of at least one of its Olympic venues – the Wukesong Indoor Stadium, which will host the games’ basketball matches and came with a US$58 million price tag. In a deal that is reportedly still in the works, the NBA and leading sports presenter AEG will jointly operate, manage and book the stadium for the foreseeable future, bringing international expertise and the weight of an established sports league to Wukesong. An agreement would likely lead to more events like the wildly successful NBA China Games held in 2004 and 2007 in Shanghai and Macau, if not an NBA-managed basketball league.

“That’s a good sign,” Griffith said. “By doing things like that you can avoid having these venues become white elephants after the games.”

Although future plans for the Olympic venues have yet to be fully fleshed out, having a roster of large, modern stadiums will also enable Beijing to attract more high-profile sporting events like the soccer World Cup, the Asian Games and the World Athletics Championships.

But even without such international sporting events, Vernay says Beijing’s “extraordinary” population size bodes well for “the economic viability of the stadiums in future.” China, better than previous Olympic hosts, has the people to pack the stands.

“It remains difficult to reach any conclusion today,” Vernay said, “but if a break with recent tradition is possible, China is surely the country most likely to make it.”