The Sports Hub could cost as much as $1 billion to build

The Sports Hub could cost as much as $1 billion to build, some $200 million more than the higher end of the original estimates, it was suggested yesterday.

The new costings emerged as the three bidders presented their proposals to build the nation’s mega-sports complex through a public-private partnership - said to be a world first.

To ensure its financial sustainability and funding of non-profitable community events, the contenders revealed funding plans which would result in ploughing back significant amounts of revenue and profits into the 25-year project. These range from initial seed money (SingaporeGold) to a percentage of commercial revenue (Singapore Sports Hub).

Sources told BT the construction cost of the Sports Hub would be around $1 billion. But Singapore Sports Council spokesman Alvin Hang yesterday said the initial cost estimate of $650 million to $800 million remains.

All three groups said the building cost would be met through bank loans, with the shareholders retaining a typical 10 per cent equity, which is how such projects are generally structured. Returns expected by the shareholders and investors for infrastructural projects would be between the high single digits and the mid-teens.

Lynn Tho, HSBC director of project and export finance, said the project met with enthusiastic response from banks when they were sounded out on financing the project. ‘We had a funding competition and received over 200 per cent funding commitment for our costs,’ she said.

HSBC Infrastructure Fund Management is the main shareholder of the Singapore Sports Hub Consortium, with 90 per cent equity. Dragages (Singapore) and United Premas each have 5 per cent.

Although this is said to be the world’s first public-private partnership sports complex, members of the consortiums were confident of financing support. Babcock & Brown Securities director Marc-Antoine Thiriez said: ‘A certain proportion of revenue will come from sports events which are volatile but our pool of banks have a level of tolerance for this.’

Much of the revenue model centres on retail and events.

The 50-50 Macquarie and John Laing Infrastructure-led SingaporeGold Consortium’s Sports Quay concept boasts 2.6 km of waterfront promenade. It says it is teaming up with the strong retail credentials of Australia’s Lend Lease, and the events management pedigree of IMG puts it in a good position.

The Alpine consortium, meanwhile, has a radical plan for a 7,000 sq metre lifestyle/sports hypermarket. This will be similar to the Rebel chain of stores in Australia, said Stephen McMillan, managing director of Citta, a unit of major equity partner Babcock & Brown, which is in charge of the retail component.

The equity partners are Alpine (46 per cent), Babcock & Brown (48 per cent) and Woh Hup (6 per cent).

Singapore Sports Hub has Frasers Centrepoint as its retail partner. They will allocate about one-third of their 41,000 sq m gross floor area to food and beverage outlets and say they expect daily retail traffic of about 20,000. The consortium is counting on World Sport Group’s ability to bring in international cricket and Asian-level football as an advantage.

Alpine is partnering US-headquartered SMG.

Source : Business Times - 7 Nov 2007