In whose yard is the ball? - How to solve problem of construction of non-profitable sports facilities in Serbia

After hearing a news that the Belgrade Arena, which has recently got the green light to start seeking a commercial sponsor, operates without an operating permit and has been experiencing financial problems for years now, one can't help but ask oneself whether it makes sense to build sports facilities that are incapable of generating enough money to cover their own maintenance costs.

According to the words of former Sports Secretary Jovan Surbatovic, the capital city's authorities spent enough money on the completion of the Belgrade Arena in 2004 to finance the construction of a multifunctional arena with 6,000 to 8,000 seats in each of 16 boroughs in Belgrade. This information is even more worrying given that the Belgrade Arena now costs the City of Belgrade few tens of thousands of euros every month.

Although the completion of Arena was a condition for Serbia to apply for the organization of large sports events, the fact is that the City was unable to finish that project as it should have (missing equipment, problems with subterranean waters, no permanent tenants, etc.), thus giving everybody a headache every step of the way.

In the 21st century people around the world invest in sports and sports infrastructure not to make losses, but to earn a big money. What should we do then to make our sports arenas, stadiums and centers profitable?

In order for stadiums and other large sports facilities to become cost-effective, they primarily have to be multifunctional. The Belgrade Arena itself is designed that way, but it has failed to meet its purpose, which is why it looks like an unsuccessful investment.

It is not enough any more to build a grandiose football stadium. What is necessary is to build a complex that can be used for various sports events and that comprises entertainment and commercial facilities. Since the state is not much of a businessman, the Law on Public-Private Partnership (PPP), which was adopted in late November 2011, could greatly benefit the development of sports infrastructure. Private investors would provide required funds because the construction, equipping and maintenance of sports giants cost a lot of money.

It is important how something is built

The first multifunctional facility in Europe was the Amsterdam Arena, which now serves as a model for similar facilities in most countries. And what about Serbia?

- There is certain progress in the construction of football infrastructure, but it is not made in an appropriate way. What is currently under construction in Serbia is completely out of date. We are building stadiums by a principle from the 1950s, and I am sure that they will be neglected as early as ten years from now because they are not self-sustainable - says Jovan Surbatovic.

- Unlike us, Romania has already built few tens of multifunctional facilities, the same as Croatia, which is already constructing sports facilities by the principle of public-private partnership - he adds.

A simple proof that multifunctional centers function well is the House of Football in Stara Pazova, which turned a profit already in the first year of operations.

- Aside from national teams, this complex is also used by numerous clubs across all sports, as well as by companies to organize seminars, business events, etc. The plan is also to offer these capacities to foreign countries, primarily to Russia and China, because our aim is to bring their clubs to practise here - says Zoran Lakovic, secretary of the Football Association of Serbia, explaining that it would be more than useful to build a similar center in Belgrade as well.

In his opinion, PPP is a good model for the construction of facilities that would help the development of sports and make profits instead of losses.

- It is impossible to develop sports through the state and local self-government. The state must create an investment framework and implement control, while everything else depends on private capital. Our clubs should know that because, for example, how they can provide EUR 25 million to enter the Champions League if they don't have a self-sustainable multifunctional facility - Lakovic explains.

He stresses that this is the reason why he fully supports the promulgation of the Law on PPP, which he sees as the only way to attract big investments.

A big plus for our clubs is the fact that they have very attractive locations in their possession. Therefore, new modern facilities could be built in excellent locations, which would definitely attract foreign investors.

- However, it is very important that the Football Association of Serbia does not allow the purpose of these locations to be changed because, aside from making profit, we must also take care of sports – says Lakovic.

(the House of Football in Stara Pazova)

From words to actions

- The aim of the Law on Public-Private Partnership is to improve investments by private investors in various fields, including sports infrastructure. In order to achieve that, it is necessary to create PPP projects and not only to talk about them - says Nenad Ilic, adviser to the Minister of Economy and Regional Development.

The public sector has no obligation to conclude agreements with private partners. Investments are possible when competent bodies, such as ministries, provincial secretariats and municipalities, recognize the need for implementation of a project in association with a private investor.

Director of the Belgrade Arena Dejan Petricevic believes that the PPP model can be useful in resolving the problems of funding for the Arena and in preparing certain parts of it for a commercial use.

Walking the line

Despite all good sides of the construction of sports facilities through a public-private partnership, we must have in mind that this model must be implemented as carefully as when walking on a thin ice because of the current social, economic and political situation in Serbia.

PPP can be a very precious source of investments, but it can also be a chance for the takeover of a substantial portion of the economy by tycoons. If we manage to resist numerous challenges and introduce PPP in the right way, it can be the means of rescuing certain fields of economy from the very edge of collapse.

Otherwise, it will only be a way to kick the ball into someone else's yard.

Milica Stevuljevic