Business Page August 22, 2004

 The cricket stadium: a financial adventure

Introduction

I apologise to readers of this column which failed to appear last weekend. I was caught in transit to Orlando which found itself in the path of Hurricane Charley - among the worst ever in terms of the value of damage done and lives lost - to have hit Florida, the Sunshine State.

Meanwhile the Olympics - the world's greatest sports event has returned to its home in Greece, which has spent billions of real dollars on the various stadia where the events are being held. Despite the euphoria among Greeks about this 'homecoming,' many seats in the stadia are empty.

Empty seats

The empty seats may be explained by the threat of terrorism, the prevention of which is costing the organizers over one billion dollars, and perhaps also by the earlier uncertainty about whether the facilities would in fact be ready at the commencement of the Games. With international tourists generally planning their travels at least one year in advance, the Games might not have found themselves on the itinerary. Other reasons advanced by the organisers for the empty seats are the widely reported cases of price gouging by Greek entrepreneurs and the high cost of tickets for admission in one of the poorest countries in Europe.

The best cricket stadium in the region

So what has all of this got to do with Guyana, which will probably have more officials than athletes in Athens? Well our government has become directly involved in the construction and ownership of what one minister is boasting will be the best cricket stadium in the Caribbean - most of it financed with borrowed funds and with its financial benefits still to be assessed.

Do we know that twenty-eight years (no, not that twenty-eight years) after the Montreal Olympics, that city is yet to pay off all the debts incurred in connection with the event, a fate that is already being contemplated by the fateful Greeks?

The Guyana Cricket Stadium (for want of an official name) is being built to accommodate the Super Eight leg of the 2007 ICC World Cup Cricket which has been awarded to Guyana. President Jagdeo, responded to the emotional demands of the public which seemed to suggest that financial considerations in one of the region's poorest cricketing countries were somehow subordinate to the national pride of participating in hosting the World Cup. In fact, if public comments are anything to go by, Guyana did not have a future if it did not have World Cup Cricket!

Some weeks ago, following a Stabroek News report that the IMF had included among its conditionalities that Guyana should do a feasibility study on the stadium, Guyanese were told that the feasibility and the construction would be done simultaneously! Any reasonable person would tell you that a feasibility study is usually done to inform the decision about whether the project is feasible, and its findings considered prior to execution. Yet the IMF office in Guyana found itself defending this inconsistency and even engaging in some comments on the private media which must be a lesson to UNDP Head Jan Sorenson as to the type of comments and interference that are acceptable and those which are not.

Getting our priorities right

This column is not opposed to Guyana having World Cup or a stadium, but it is concerned about the country's priorities when we have to borrow money to fix light bulbs, cannot afford to maintain law and order, provide security for citizens or even finance national elections. In his 2004 Budget Speech the Minister of Finance announced that over $6B was being borrowed from the ever-willing IDB to bring accountability to the country's accounting and financial reporting systems, and more recently we have read of announcements of borrowings of further billions to enhance the capacity of the Guyana Revenue Authority (GRA), not too long ago touted as the solution to so many of our financial problems. Measured by revenue earned (tax collected) per dollar spent, we find the performance and effectiveness of the GRA extremely disappointing and would hardly have passed the test of a feasibility study. Yet just this week, the Information Liaison to the President actually boasted as an achievement of the government the amount of unspent loans, a measure at least in part of our incapacity to absorb further loans.

The elite eight

Guyana has been identified as the venue to host six of the quarter final games featuring eight of the sixteen teams which advance from the preliminary stages. And here the on-field problems begin. West Indies which is facing a whitewash at the hands of England for the first time since the two teams began playing each other over seventy-five years ago, can be expected to struggle for a place in the elite eight. At this stage the future of West Indies cricket is in considerable confusion with increasing calls for the resignation of Brian Lara without any credible replacement for him as captain. Sarwan is justifiably reluctant to step up while Chanderpaul's ability as a tactician at the highest level is yet to be proven. As the West Indies plan for the World Cup cricket, is the elimination at the preliminary round of the competition considered a possibility? How many in the current squad can be considered World Cup material three years hence? What impact would the elimination of the West Indies at the preliminary stages have on attendance at subsequent matches, particularly if those matches are televised? Just ask the Greeks.

Then there is the not insignificant matter of admission charges. Remember that this is not a West Indian thing but an ICC-sponsored affair from which it derives most of the revenue needed to promote cricket. The logistical costs of island-hopping are considerable, and it is unlikely that the ICC would make too many concessions to Guyana when it comes to admission charges. Recent experience has shown that even the West Indies Cricket Board has little time and room for emotion when it comes to addressing financial problems, as a result of which smaller territories like St Lucia and Grenada now host more international matches than Guyana. Hopefully tickets for the lower-priced seats would cost no more that twenty-five United States dollars, but that is $5,000 at today's exchange rates. How many Guyanese can afford that and for how many days?

Sustainability

The feasibility of the stadium would be determined not by the 2007 World Cup but how sustainable it would be afterwards. There is no cricket club attaching to the stadium and its maintenance would therefore fall on the state, which would hope that it would regularly attract an increasing number of sporting events. Again the cricketing signs are not good. There have been just five international matches played in Guyana over the past five years compared with Queens Park Oval, Trinidad and Tobago, fifteen; Jamaica, fourteen; St Lucia, six; Barbados, twelve; and Antigua and Barbuda, nine. Now that Grenada and St Kitts-Nevis have been added to the list of venues which can stage international matches, there is no guarantee that Guyana would be allotted more matches simply because it has a cricket stadium.

The IMF test of feasibility for the stadium is that it should not draw on the public purse, but what if there are not sufficient revenues accruing from events? Would the IMF just want to see the place fall into disrepair? Do the terms of reference for the feasibility study require that the stadium generate sufficient funds for operating and capital maintenance and to service the debt incurred? The IMF is aware of the concept of the fungibility of money and also the illegality of the use of Lotto funds without Parliamentary approval. Is the IMF afraid to raise these issues for fear of incurring the ire of the government, or do these form part of the overall study? Why was the IMF not more explicit in its formal statement and the comments of its representative to the press?

With any serious study - and this itself is a big hope - to be done after construction has begun, no one can tell us for sure how much this stadium will cost the country and taxpayers. Very preliminary estimates put the figure at US$25M, of which US$20M is being contributed by the Indian government - US$6M in the form of a grant most likely by way of Indian personnel and possibly materials, while the balance of US$14M is a soft loan. There is some uncertainty whether the figure of US$25M includes any contingencies, but it would be extremely rare for a project of this magnitude not to have significant cost-overruns. In better times, Guysuco which gave up land at Providence for the stadium might have played a role in the preliminary stages of construction, but with the recent EU decision on the sugar subsidy enjoyed by ACP countries including Guyana, there is no state agency which is in a financial position to help. Indeed, one can only speculate whether the government would be proceeding with the stadium had the EU decision been made one year ago.

It is also a matter of speculation why the considerably lower-cost proposal by the GCC was rejected, and the future of that club which has produced the majority of Guyanese to the West Indies including Sarwan and Chanderpaul must now be fraught with uncertainty. Is it the end of international cricket at the world-famous Bourda sward? Are there more serious long-term consequences to the stadium which no one wants to contemplate? Will those events which are now hosted by Thirst Park and the National Park be shifted, and with what implications?

One of the earlier hopes of the planners was that the Indians would use Guyana as their base for acclimatisation, but this is now unlikely to happen with India having been awarded Trinidad and Tobago for the preliminary rounds, inclusive of preparation time which is likely to be the most extended period. While Pakistan may be the next best substitute, the politics of Indo-Pakistan relationships are unlikely to have thawed to the point where India would be happy with Pakistan having first call on a stadium which but for them would not be possible.

Conclusion

It seems clear that the decision on the stadium was made without the benefit of objective analysis and clear-headed decision-making. That an economy that has been stagnant for the last seven years would be incurring further debts seems grossly irresponsible, but unfortunately not surprising. As a country, we are yet to formulate any guidelines on debt management and we exploit the insanity of the IDB's lending policies and the gullibility of the donor community and international financial institutions. Our main opposition party, the PNCR continues to demonstrate (no pun intended) its own incapacity to behave like an informed, intelligent and responsible opposition with the mandate and duty to highlight and prevent excesses by the government.

Even as President Jagdeo is praised for his successes in debt forgiveness, he continues to borrow at rates which the economy cannot sustain, and sums which future generations would be struggling to repay long after he has ceased to be President. While that may not be the kind of tragedy for which Greece is renowned, it and the stadium would be unworthy legacies of any presidency.

 

 

 

 

 

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