The Big Read in short: Where did it all go wrong with the Sports Hub?
Each week, TODAY’s long-running Big Read series delves into the trends and issues that matter. This week, we examine where it all went wrong with the running of the Singapore Sports Hub, which led to the termination of the public-private partnership. This is a shortened version of the full feature, which can be found here.
- Sport Singapore (SportSG) announced on June 10 that it will be taking over full ownership of the Sports Hub from its private partner, Sports Hub Private Limited (SHPL)
- Former staff of SHPL largely agree with this decision, saying that the partnership between the Government and private sector was flawed from the start
- Several of them say that the partnership was akin to a vendor-client relationship, and that the Government had given the private sector too much leeway to call the shots
- SHPL had also found it challenging to manage its various private partners, who were all jostling to make their own profits out of the venture
- Moving forward, the Government will have to strike a balance between maintaining the prestige of a world-class venue, and making the Sports Hub accessible to the community
SINGAPORE — When he first heard the news last week that the Government was taking over the full running of the Singapore Sports Hub, Mr Poh Yu Khing, 49, was glad that it can finally be used for the purposes as intended by the authorities.
After all, the misaligned goals of various parties in the public-private partnership (PPP) had not only doomed the project from the start according to some insiders, they also made the lives of those working on the project a living nightmare.
As the first chief operating officer and director of strategic marketing and partnerships at Sports Hub Pte Ltd (SHPL), Mr Poh — who spent 13 years of his life on the project, the bulk of it as project director at Sport Singapore (SportSG) — knew better than most what it took to get the massive undertaking up and running.
In fact, the stress of the job brought about many sleepless nights for Mr Poh, even causing him to sink into depression.
“I will tell you honestly, a lot of us went through difficult times because we were trying so hard to make it work. And so I don’t think it was for a lack of trying. I just think that structurally there is something wrong,” he told TODAY.
Mr Poh left SHPL in December 2015 — just 18 months after the Sports Hub opened its doors to the public.
Apart from Mr Poh, six other former SHPL employees — including senior executives — across various job functions also spoke about the immense pressures and difficulties they had faced in sustaining the mega project.
In separate interviews with TODAY, they spoke about deep lying issues that plagued the project from the get-go. But everything boiled down to this: A disconnect between the interests of the Government and the private firms, and a partnership only in name that was pulled in multiple directions by a long list of stakeholders with different objectives.
Most of these former staff spoke on condition of anonymity.
SHPL is a consortium comprising InfraRed Capital Partners, Cushman & Wakefield and Spectra. There are also at least six major subcontractors involved in the day-to-day operations. Following the termination agreement, the Government will take over the ownership and management of the Singapore Sports Hub from Dec 9.
One ex-senior staff member, who wanted to be known only as Michael, said that each of SHPL's partners were persistently striving for their own key performance indicators (KPIs), which made working together difficult and time consuming as there was no one clear objective.
The structure of the PPP between the Government and SHPL meant that under the contract, the Government would give the consortium a list of KPIs to fulfil, and SHPL would then have to work with different private subcontractors to achieve them.
The subcontractors — which include members of the consortium itself — worked with SHPL on the day-to-day operations of the venue. They included engineering and construction firm Dragages Singapore, international private equity fund manager InfraRed Capital Partners, venue operating contractor Global Spectrum Pico, and real estate services company DTZ Facilities and Engineering, among others.
“It took its toll on everybody… imagine if you spend 50 per cent of your time doing alignment across 100 events a year, versus if it were just one operating entity.An ex-senior SHPL executive, who wanted to be known only as Michael”
““(The different partners) were only thinking about how their decisions affect them and their profit and losses, versus how the profit and losses of SHPL would be affected.Sharon (not her real name), another former senior SHPL staff member”
“With too many different operating partners on the table, oftentimes, the time was spent on alignment,” said Michael.
With every new project came time-consuming discussions between the different partners, so that everyone would be on the same page, he said.
“It took its toll on everybody… imagine if you spend 50 per cent of your time doing alignment across 100 events a year, versus if it were just one operating entity,” he added.
Another former senior staff member, Sharon (not her real name), described the SHPL as operating like a “puppet” under the PPP — in the way it has to manage the interests of all stakeholders without having a final say.
She said that instead of working together with SHPL to meet common objectives and meet the overall KPIs, the subcontractors were “behaving like vendors”.
“(They) were only thinking about how their decisions affect them and their profit and losses, versus how the profit and losses of SHPL would be affected,” she added.
This was because SHPL, while leading the Sports Hub on paper, was ultimately “at the mercy” of the KPIs set by the Government, and as a result, was caught in the middle rather than seen as truly leading the project, Sharon said.
“(SHPL) was a figurehead but the army did not belong to (it), so how (was it) to get the army to move and charge?” she questioned.
Ultimately, it was this lack of direction in how the Sports Hub was run which led to Sharon stepping down from her role at SHPL in 2016.
FINANCES WERE HEALTHY, ACCORDING TO EX-STAFF
The concerns laid out by the former employees offered a glimpse into the turbulent eight years in which SHPL had led the project in partnership with the Government.
However, those with the knowledge of SHPL's finances made clear that money was not a problem and the finances were healthy throughout the eight years of operation, even during the depths of the Covid-19 crisis. They said that this was in large part thanks to the Government's annual payments of S$193.7m to SHPL.
Prior to the termination of the PPP, the annual payments were to be made over a period of 25 years, until 2035.
“A former SHPL senior executive estimated that between 2014 and 2016, for example, Sports Hub was pulling in a profit margin of about 7 to 13 per cent. Other ex-SHPL senior executives confirmed that it had been making healthy profits.”
A former SHPL senior executive estimated that between 2014 and 2016, for example, Sports Hub was pulling in a profit margin of about 7 to 13 per cent.
“Though SHPL had to absorb some costs that it didn’t expect, the profit generated was more than enough,” he said.
Several other ex-senior executives at SHPL confirmed that it had been making healthy profits, but they were unable to provide any figures.
While there were no financial issues, the Sports Hub had to deal with what the ex-employees described as teething problems.
These included several infrastructural and maintenance-related fiascos, most notably the state of the football pitch during the Japan-Brazil football friendly match held at the Sports Hub in 2014.
Some event organisers here were also put off by the cost of staging sporting events at the venue.
The Sports Hub has also been hit by a slew of high-profile resignations, including at top management level. Over the past eight years since Sports Hub opened its doors, it has had four different CEOs.
Former Sports Hub chief executive officer Oon Jin Teik had previously told TODAY that the tricky part of running the sports and leisure venue seamlessly under the PPP model was trying to balance profit-making with providing a public service.
Former SHPL staff whom TODAY spoke to broadly agreed that the private sector's objective to generate profit often conflicted with the Government's aims to make the Sports Hub accessible to the public.
However, they said that the issue was not a simple matter of ideological differences. They noted that the relationship between the Government and SHPL had started off on the wrong footing, which made an already difficult task almost impossible to carry out.
“In the PPP, the ‘P’ which was ‘Partnership’ was completely missing,” said another former senior staff member, Timothy (not his real name).
FUNDING FOR LESS PROFITABLE COMMUNITY PROJECTS NEVER MATERIALISED
Other than the deep rooted issues that were raised by former staff, another contentious point that was brought up was the lack of subsidies and funding for less-profitable, community-centric events.
Other than the Singapore Athletics’ failed bid to host the Asia Masters Athletics Championships at the Sports Hub due to high costs, plans to host the Merlion Cup, an invitational football tournament, also did not materialise.
Talks in 2015 broke down after there had been disagreements over a force majeure clause in the contract, which meant that the organisers would have to bear the third-party costs incurred if the tournament were unable to kick off due to unforeseen circumstances.
Former Sports Hub staff told TODAY that there was a fund that had initially been set up with the intention of financing less-profitable projects, such as those that were more accessible to the community.
This fund, named the “Premiere Park Foundation”, was first mentioned publicly over a decade ago by then Minister for Community Development, Youth and Sports Vivian Balakrishnan.
Dr Balakrishnan said in a 2008 speech announcing the Sports Hub tender award that the foundation was proposed to receive a “significant portion of the revenues accruing from the facilities and these funds would be pumped back into funding events, activities and other facilities”.
It was envisaged that this would set up “a virtuous cycle in which the more activities there are, the more revenue that flows, the more revenue is then also available to invest in attracting and bringing other events and activities”.
However, the former SHPL staff interviewed said that the money initially set aside for the fund had quickly “evaporated”.
A former senior executive at one of SHPL's partners said that there were a “number of miscalculations” that cemented the fate of the fund.
“There were certain commercial arrangements that the consortium felt that they had access to that were later denied,” he said.
For example, he said that a multi-million commercial deal was in the works to secure the naming rights of both the Sports Hub and the Singapore Indoor Stadium, but this deal eventually fell through.
There were also many unexpected costs that arose due to maintenance issues, such as the estimated seven-figure sum to replace the grass on the football pitch.
“In our calculations, the revenue would be made available, (but) those expectations were downsized, and that created the shortfall in the ability to fund certain aspects, the foundation being one of them,” he said. “The foundation funding effectively evaporated."
CAN A GOVT-MANAGED SPORTS HUB UP ITS GAME?
From China to the United Kingdom, several stadiums around the world have been financed through PPPs or similar arrangements, with mixed results, sports experts told TODAY.
The 18,000-seater Mercedes Benz Arena in Shanghai is one prominent example of how a private firm has successfully gained the trust of the local government in its operation of the venue, said Mr James Walton, sports business group leader of Deloitte Southeast Asia.
While most sports venues in China are considered state-owned assets, the Mercedes Benz Arena operates differently. It is co-owned by Anschutz Entertainment Group, a private overseas sport and entertainment company, and PAC-Shanghai Oriental Pearl (Group), a state-owned media group.
This led to a “ a clear division of responsibilities and mutual understanding and usage of relationship building methods”, said Mr Walton.
For instance, the private firm was a leader in professional venue management and “their focus is on the day-to-day management, sponsorship sales and event programming”.
Meanwhile, the state-owned media group, being one of the most influential state-owned enterprises in Shanghai, was effective in “assisting with government relations and local community engagement”, said Mr Walton.
Another example of a successfully run venue is England’s Wembley Stadium, said Mr Matt Rogan, a UK-based author and sports consultant.
The stadium is run by the Football Association (FA) in England and managed in a similar manner to a social enterprise, receiving both public and private funding.
However, unlike in SHPL’s case, where the Singapore Government sets its KPIs, it is the FA itself that leads the Wembley project.
With SportSG looking to operate Sports Hub for the “social good” by having more community-centric events, additional operating costs are unavoidable, business academics had told TODAY earlier.
However, there may be other costs to bear in terms of reputation and efficiency as well, said sports consultants.
Mr Marc Lim, a sports consultant and former journalist, said that he does not expect the stadium at the Sports Hub to be made as accessible to the public as the other stadiums in Singapore, “where everybody can go and run every day”.
Still, its reputation as a world-class venue may be impacted with more community events being held there, with wear and tear becoming a factor. “The last thing you want is for the stadium to be truly a community sports hall, because we have all those around the heartlands… it should still be a premium experience for the National Stadium," added Mr Lim, who believes that SportSG will set aside specific days for Sports Hub to be used by members of the public.
The reason why the National Stadium — the Sports Hub's centrepiece — has to engage in this delicate juggling act is due to its unique all-in-one function, he added.
“I don’t see other countries adopting this sense that their stadium needs to be a national focal point where people need to go and congregate and do community sports,” said Mr Lim.
Agreeing, Professor Simon Chadwick, sports consultant and global professor for sports at the Emlyon Business School in France, said that governments, being political bodies, may also have a more complex decision-making process compared to private entities. This may result in inefficiencies.
He said that “lean” and non-politicised governance of the Sports Hub will be key in ensuring that it will be a successful venture.
Nevertheless, Mr Walton believes that that SportSG is in a good position to helm this project.
“SportsSG does occupy a very strong position within our sport ecosystem in ways that we don’t see in the other countries right now,” he said.
However, the agency would also need to recognise that “they don’t have all the necessary capability at this point in time”, and that the plans to retain existing Sports Hub staff are a “step in the right direction”.
Mr Walton added that other than there being cheaper events provided with government subsidies, facilities within the National Stadium can also be upgraded “without it needing to be fully commercial, (and put) through the dollars and cents consideration as it had in the past”.
While it remains to be seen whether the Government can strike a better balance between the social and commercial objectives, some of the ex-SHPL staff are convinced that it will have a better shot at it than their former employer.
Adding that he had hoped the Government takeover would happen sooner, Alex said: “The non-alignment of objectives has been going on for quite a long time... and this has been plaguing SHPL staff for a long time.”