Economic Impact of major sports infrastructure

par Bridget ROSEWELL

25 janvier 2012 - Londres

We have talked a little bit about the difficulty of translating our title “Looking for Legacy: for a sustainable impact of major sports infrastructure” into French.  I am not sure about how easy it is to translate it into English. 

By this, I mean that when we think about legacy, what do we mean by legacy?  What do we mean by sustainable?  What kind of impact are we looking for?  How are we actually going to define these words?  Maybe if we can think about how to define the words in English, we might be able to find some suitable French translations for them as well.
I want to talk to you about the challenge of looking to define that sustainable impact.  We are looking to define the issues that we need to cut that up into.  There are the various aspects of major sports infrastructure that we might need to consider.  There are different roles that each individual element of that story might play.  Indeed, if you bring it all together, we need to consider whether the whole is greater than the sum of the parts, or whether we need to think about it element by element.   
I suppose that there are elements.  I can think about what the elements are in a major sports infrastructure investment.  Some part of that is about the land that you are going to use and remediation.  Is it going to be reusing brownfield sites within the city, enabling you to clean up those sites?  That is certainly the case for the Olympics; that was certainly the case in Barcelona, for example.  However, it is not always the case.
There is an element around transport and access infrastructure.  Again, in Barcelona, there was a huge tunnel put through to increase access to the new part of the city; it was not going to happen otherwise.  Are you enabling different kinds of access and transport infrastructure, which would not otherwise be the case?  Or indeed, are you able to exploit transport infrastructure more effectively than you might otherwise?  We have got that sort of underlying piece. 
Then you have got an event element to this. Here we have got the shortterm in some cases. A major sports infrastructure might be built for continuing use in the first place, such as a stadium, for example, to be used on a regular basis by a football team.  Or it might be built for the case study that is in front of us, for the Olympic Games.  The original plan is for that fairly short period, probably about six weeks in total by the time you have done the Olympics and Paralympic Games.  There is the event use that you are going to put this to.
Of course, in different kinds of events, there may be more or less infrastructure being created.  Again, it may be a question of using infrastructure that you already have more effectively.  That is the case for football and the case for the Olympic events.  This is rather than building something which is bespoke for that particular event.  What are you going to use the specifically sportsrelated element of this infrastructure for?  What is its purpose?
Then the fourth element that I want to consider is around the branding part of this.  How much of what you are achieving with a new investment of this nature is about bringing more people through?  This is so that they see things which they would not otherwise come and see.  Many people have said that one of the points regarding bidding for a major piece of sports infrastructure is that it puts you on the map.  People know afterwards where you are. 
I am not sure that this applies to London; I thought everyone knew where London was, as indeed would have been the case for Paris.  Nonetheless, for Barcelona or Sydney, there was no doubt that they thought that that was one of the elements.  With individual sports events or infrastructure, that might still be very relevant.  For the Commonwealth Games in Manchester, for example, it was very much one of the items that they had in mind.
I have got these four themes that we need to be thinking about, potentially individually.  Potentially, the branding element of this is whether the whole is going to be greater than the sum of the parts.  I thought it would be worthwhile to talk about more than just to Olympics, which you have already seen and are going to hear some more about as well. 
I am going to talk a little bit more about some of the elements and some of the other examples of this kind of infrastructure and how you might think about it.  Indeed, there are some things that I have been involved in.  There are some different scales of investment that you might be talking about.  This is part of this and was the major word that I was worrying about.  Let me start with an example of something I did quite a bit of work on a couple of years ago.  In fact, we have not managed to get it through, for reasons actually connected to transport; I will come back to that in a minute.  This was an idea to put an arena into Croydon.  It is a small, 12,000seat arena. 
This is a part of South London which was invested in very heavily in the 1960s, as a backoffice location, with new office blocks.  This was a time when everybody put roads into places.  It has good connections down to Gatwick Airport.  This was supposed to be a majorly successful place for the 20th century.  It never really managed to take off.  It does still have quite a lot of offices in it.  Many of those offices are full of Government civil servants; they cannot think of anywhere else to put them.  There is very little privatesector success.
The idea that we came up with for Croydon was this arena.  It has got good connections, including train connections that are quite good.  The idea of the arena is that it would have a sports element to it, particularly around hockey and tennis and those sorts of activities.  It would also be a way of creating an attractor for Croydon, which would enable people to come and see this place.  They would hopefully conclude that it was not as bad as they had thought it was. 
Croydon does not have a good reputation.  Indeed, there are many jokes about Croydon.  I am not sure they would translate very well.  Maybe the best one is the Croydon facelift, which involves just tying your hair back very tight, so that it pulls the skin up tighter on your face.  In other words, it is cheap and does not work very well.  Trying to change that branding is very much what that piece of sports infrastructure was intended to be about.
It would not just be about sport; it would also be about entertainment, it would be about music and it would be about other kinds of events as well.  There is the idea that you could have a team in a number of different sports.  Ice hockey would certainly be one of them, but potentially also baseball or basketball.  Basketball is a growing sport in the UK.  It would be a grounding, a weight, that would create an alternative reason for people to come to Croydon.
The intention was to exploit existing transport infrastructure and to achieve a rebranding of a location.  It also aimed to increase the amount of sports and other leisure activities, which were able to attract an audience in that location.  It was not an event, but a whole series of continuing events.  I did a lot of work around the viability of that investment.  Essentially, that was certainly financeable as a private investment.  The revenues that you could have generated from that investment would certainly have paid for it. 
We can look at the experience of O2, which is in the Millennium Dome.  The Millennium Dome has itself had huge overruns, but we can now look at the kinds of revenues being generated by the Dome.  This is in its incarnation as a sporting, music and entertainment event.  That is the most successful venue in Europe.  That is another element.  We suggested that a rather smaller one, down the road and attracting a different catchment, could have been a very successful investment.   In terms of viability and profitability, it had a lot going for it and would have created that rebranding.  It went to a planning enquiry, where some of the architectural argument and some of the transport argument did not succeed in getting permission for the thing.  However, I hasten to add that I won the economic argument as to a) the viability and b) the benefits to this location. 
That is one way of thinking about this.  Another way of thinking about this is in the context of the Arsenal stadium, which again involved private sector investment made by a company which is actually quoted.  It was financed by the football club concerned to move its stadium to a more effective location.  It exploited existing transport connections more effectively than it had been able to do before.  It exploited the capital value of the site which they were leaving.  This was in the centre of a residential location and could then be exploited for residential purposes. 
This is certainly a major stadium, for a major football club.  That is a major sports infrastructure, which is essentially about exploiting the way that the economy has moved on.  It is also about the different ways in which people are able to access or wish to access a piece of infrastructure of that kind.  You can think about when that stadium was originally planned; this was the old stadium.  It was in a world where everybody walked.  The whole catchment would have been local and walked to their local football club. 
In the modern world, it is not like that.  A major club will draw an audience from a much bigger catchment, arriving in a much bigger variety of ways.  Being able to move that investment on was possible.  It contributed to the regeneration of both the area where the houses replaced the stadium and the area where the stadium is currently located.  That was done as a privatesector project, done on time and on budget. 
However, there are many major sportsinfrastructure investments, particularly around an event which is going to be for a limited amount of time.  This includes the Olympic Games, the Commonwealth Games and other sorts of events like the football World Cup.  It is unlikely to be possible to finance them simply on a private sector basis.  After all, these are public events.  The question then comes as to why you are doing this with public money and with taxpayer money.  How do you think about the benefits of that? 
It is certainly the case that when the Olympic bid was first thought of for London, the proposition was that it would not really cost any money.  It would not even cost much in the way of cash upfront.  Certainly by the time we got to the other end of it, all of these would be assets which could be sold on and would make a profit.  If I recall correctly, the number was about GBP2 billion.  This was even the amount of cash that it was going to cost upfront.  That was going to be paid for partly by Londoners and partly by Central Government. 
In fact, I was actually in the hairdresser’s when the announcement was made that we had won the competition to host the Olympics.  I pointed it out.  Everybody was saying, ‘That is terrific’ and ‘That is good.’  I am an economist after all, so I always rain on everybody’s parade.  I pointed out to the assembled people in the hairdresser’s that this meant that all their taxes would be going up to pay for this.  It was not as much as we subsequently found they were going to go up, but they were still going to go up.  Their local residents’ rate bills would be going up to pay for this. 
This created a pause while everybody thought about this and then somebody said, ‘Well, it is worth it to beat the French.’  You will be glad to know that some of the old relationships stand unchanged.  The competition between our two nations remains in place.  I thought it was very funny.  I am not sure whether they still think it is worth it to beat the French, but they certainly did at that point.  Apart from the value of spending money in order to see off Paris as a location for the Olympics, what else is going on here?  Why is it worth that public money and how do we think about that?  There is actually quite a big sum of money being spent to answer these questions, none of which we have answers to as yet and will not do until after the whole thing has happened. 
One way of thinking about that is around the access and transport infrastructure.  There are two elements to that.  Certainly, I have done some work already around the Westfield Shopping Centre, which I am sure you went to see.  Westfield were already planning to do something along these lines, in that part of the world, before the Olympics idea came along.  Certainly, that shopping centre has opened earlier and on a slightly different scale than was originally planned.  It is 57 years in advance of where it would otherwise have been, given Westfield’s other commercial priorities.
I can look at the slice of infrastructure that was required to give them that access, because you have to cross all those railway lines in order to get into their site.  You can look at the spinoff benefit of bringing forward that investment to enable that to happen more quickly and to enable it to happen on a slightly bigger scale.  Then that has paid for that slice of investment.  This is in terms of the jobs being generated, incomes being generated, local jobs, taxes etc.  I have some financial numbers.  We can get a payoff on the roughly GBP0.5 billion that it cost to accelerate the infrastructure that they needed and to give it to them more effectively than would have otherwise been the case.  It certainly happened a lot more quickly.  There is an element of payoff.
The transport infrastructure that you might put in for access to a big event is rather different from the infrastructure that you might put in if you were going to develop it in some other way, for a different purpose.  If you thought about the whole thing simply as a residential area, say, you would put in slightly different infrastructure.  It remains to be seen whether the ways in which the people who come to occupy this site later want to use it and want to get in and out of it.  This is one of the things we will have to be looking at.  This will require some more flexibility in that infrastructure than has been provided simply for getting people in and getting people out.
However, land remediation is one of the big positives, which is otherwise very difficult to acquire.  This is one of the implications of major sports infrastructure, certainly in the system as it operates in this country.  I think France is very different, because your mechanisms for compulsory purchase are rather different and the compensation that you pay is very different.  One of the big things about the major project is the possibility for land assembly.  You can get a number of sites together, so that you can do a bigger and more effective development than you can do when everything is owned by large numbers of small proprietors. 
Only the public benefit, the idea that you are going to have the Games, actually provides you with the justification for doing that.  Otherwise, it is extremely difficult in practise to do those large land assemblies.  These allow you to have a park and allow you to get the sort of access structures that you might need for the Games or in the future, even if the demands actually change in the future.  I would not underestimate the importance of this thing, which enables you to bring together land owners, create land assembly and get compulsorypurchase systems in there. 
These are rather difficult to manage otherwise, at least in this country, unless you have got that Olympic Authority or other development corporation.  We do not do that sort of stuff very readily.  In France and in very many other countries on the continent, it is done rather differently.  That may be a particularly UK thing, but it is actually very important. 
The ability to create land assembly and the ability to generate that infrastructure is the important spinoff.  The question is whether you could have done that better or more effectively if you had done it without the sports part of this infrastructure.  What I am saying is that it is the sports part of the infrastructure that creates the motivation and the push. It gives the ability to create the institution, the Olympic Delivery Authority, which makes it possible for that to happen.  Without it, it would not have done.  That applies to a number of this eventdriven sports infrastructure rather than my other example, which is a piece of sports infrastructure that is in more continuous use.  Perhaps we then need to distinguish between those two things.
That brings me on to my final point, which is this question of branding and attention getting, which I suppose might be the other way of thinking about that.  This might be to do with putting your city on the map, in the case of some cities.   I refuse to believe we need to put London on the map; I think it has been there for some time.  Most people know where it is.  However, we might well want to put a part of London on the map. 
Again, there are a number of people who have now been through a part of London that they would never have been willing to visit in a million years otherwise.  I believe there are still some parts where they say, ‘Do not leave your car here.’  There is the  capacity for changing the way a part of London works and to generate the vision, the ability and the willingness to invest in that part of London.  This is both the most intangible and actually possibly the most important.
I am rather disappointed myself with the way in which the bigpicture legacy investors have been less enthusiastic about that than the way in which it is being cut up.  I had something to do with trying to think about some of this.  There is the Wellcome Institute, which wanted to make a general use of the whole site.  That is not going ahead; it is being more distributed across the site than that.  Nonetheless, there are ways in which any of these people have been willing to come along and say, ‘We can do something.  We can make an investment.  We can come along and do something which will not otherwise be done.’ 
Finally, economists tend to think that if there is a USD20 note down there, then it does not really exist, because if it did exist, somebody would already have picked it up.  We tend to think everything is going to happen anyway, for the best of all reasons.  That is just not true in the real world.  That attention getting may well be the real sustainable impact and the lasting legacy.