SportSG will take over ownership of Singapore Sports Hub to make it more accessible to the community
The government agency will terminate the partnership with current operator SportsHub Pte Ltd and take over on Dec 9.
SINGAPORE: Government agency Sport Singapore (SportSG) will take over the ownership and management of the Singapore Sports Hub in Kallang from Dec 9, with plans to make it more accessible to the broader community in Singapore.
Announcing this on Friday (Jun 10), SportSG said it has reached a mutual agreement with current operator SportsHub Pte Ltd (SHPL) to terminate their public-private partnership.
Sports Hub has been in operation for eight years since it was completed in 2014.
"The aspirations and needs of Singapore, as well as the wider operating environment for sports and entertainment, have changed considerably since then," SportSG and SHPL said in a joint media release.
"Ownership and direct management of the Sports Hub will thus enable SportSG to have greater control and flexibility over the Sports Hub.
"With this move, SportSG will drive stronger social, sporting and economic outcomes through the Sports Hub, maximise its potential and also take advantage of the synergies with the Kallang Alive precinct development."
At a media conference, SportSG chairman Kon Yin Tong noted that there is also greater competition in the region with new sports facilities being developed.
“We have made the decision after careful consideration,” he added. “We need to maximise the value of the Sports Hub … with a view to ensuring that it keeps up with the times and competitive landscape, as well as the new needs of the nation."
SportSG will set up a new corporate entity to run the sporting arena and work with private sector partners “in a more flexible arrangement” for particular programmes or events, said its chief executive officer Lim Teck Yin.
The 35-hectare Singapore Sports Hub was built at a cost of S$1.33 billion. Apart from the 55,000-capacity National Stadium, it also includes an indoor aquatics arena, the multi-purpose OCBC Arena, a water sports centre, the Singapore Indoor Stadium and Kallang Wave Mall.
The project is a public-private partnership between the Government and SHPL, a consortium made up of four companies namely Infrared Capital Partners, Dragages Singapore, Cushman & Wakefield Facilities & Engineering and Global Spectrum Asia.
SHPL was engaged in 2010 and has a 25-year contract to design, build, finance and operate the Sports Hub.
Under the arrangement, the Government makes annual payments of S$193.7 million to SHPL, which started in 2014, to run the Sports Hub.
The terms of the project agreement allowed SportSG to decide if and when the project should be terminated and for it to take over the ownership and management of the Sports Hub.
“There is no penalty for the termination, which can be done at any time SportSG chooses,” stated the media release.
Upon termination, SportSG will pay SHPL a sum that “substantially” comprises outstanding loans taken by SHPL for the construction of the Sports Hub and a “fair open market value” of the Sports Hub.
The former, according to the agency, is an expenditure that would have been incurred by the Government had it financed the Sports Hub from the start without the public-private partnership.
Overall, the cost of terminating the arrangement with SHPL and taking over the operations of the Sports Hub is “estimated to be comparable” to the cost of continuing with the public-private partnership arrangement until 2035, SportSG said.
Based on the annual fees of S$193.7 million, this works out to be about S$2.4 billion if the agreement is continued until 2035.
“That funding would now be directed to the repayment of the outstanding loan, the payment of the open market value that we have negotiated, and consequently also future operating costs undertaken by the special purpose vehicle that SportSG will incorporate,” said Mr Lim.
Future operating costs are projected based on current operating assumptions and costs under the current agreement, including lifecycle replacement and maintenance costs.
“We do expect naturally that the variable costs around operations will depend very much on the level of activity that is generated and what is to be expected. But we also expect to reach and be able to reap greater cost synergies and commercial opportunities across the entire precinct,” he added, stressing that the agency has done its “financial due diligence" in arriving at this decision.
Both parties will engage SHPL employees individually to discuss employment opportunities.
“We intend to retain the expertise and experience of SHPL employees, who will be given the opportunity to transit to the new corporate entity,” said SportSG and SHPL.
Moving forward, both parties said they are committed to working closely together to ensure a smooth handover that will not affect the day-to-day operations and programming of the Sports Hub.
GREATER ACCESS TO SPORTS HUB
With this move, SportSG said it intends to make the Sports Hub more accessible to the community in terms of sports, lifestyle, entertainment and social uses, while maintaining its commercial sustainability.
“We will strengthen Singapore’s affinity with the Sports Hub through programmes, participation, and accessibility,” it added.
SportSG also noted that with increasing regional competition from other world-class venues, there is a need to strengthen the Sports Hub’s position in the context of the larger Kallang Alive precinct.
Facilities in the upcoming Kallang Alive precinct include the Kallang Football Hub, Kallang Tennis Centre and Youth Hub.
Asked why the future vision for Sports Hub cannot be achieved under the current partnership with SHPL, Mr Lim said the existing structure has “some contractual limitations" that make it difficult for further synergy to be built on the commercial and operational fronts.
“So you will understand that the Sports Hub has its own commercial sponsors and its own arrangements. I think when we think about the larger precinct, we find that there will be far greater opportunities that we could look at across the board for all our facilities.
“And I think that trickles down to operations and logistics as well ... I think this approach that we are taking would actually unlock all of those limitations.”
Since Sports Hub opened its doors in 2014, it has gone through a series of highs and lows such as pitch problems at the National Stadium and complaints about the sound system during some major concerts. It has also seen a series of leadership changes, with its current chief executive officer Lionel Yeo being the fourth man to helm the Sports Hub.
SHPL was also previously fined over unmet standards, Ministry of Culture, Community and Youth's Senior Parliamentary Secretary Baey Yam Keng said in March 2020.
On whether this was an important consideration for the Government’s decision to terminate the partnership with SHPL, Mr Lim said “teething issues” that emerged at the start of the partnership have been resolved.
Therefore, it is “not correct to say that historical experience is what drove this decision”, he added, stressing that the Government’s move to take back the running of the Sports Hub “has been centred around an analysis of the current structure and future needs”.
Mr Lim noted that SHPL was chosen in 2010 because of its comprehensive proposal, in particular its focus on community and grassroots sports.
The public-private partnership model allowed the Government to benefit from private sector financing and expertise. This approach also freed up fiscal resources that could be allocated to other urgent needs amid the 2008 global financial crisis, while allowing construction and operating risks to be shared with the private sector, he added.
Responding to a reporter's question, Mr Lim said it is not correct to conclude that the public-private partnership model has failed.
“While at the time the decision was made the considerations were valid and sound, I think the context has evolved … and therefore, it is the right time to do this."