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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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