COA: Maintenance cost of New Clark City sports facilities exceeded rent income by P11M

State-run corporation Bases Conversion and Development Authority (BCDA) has been spending at least P51 million for annual maintenance of the New Clark City (NCC) sports facilities in Capas, Tarlac, an amount that exceeds the yearly revenue generated by the NCC sports facilities by P11 million, the Commission on Audit (COA) said.

In its annual audit report on BCDA for 2022, state auditors noted that while the NCC sports facilities’ annual rent income is at P48.76 million, such rent income figure is adjusted to P39.8 since P8.95 million accounts for food expenses.

The NCC sports facilities include: NCC Athletics Stadium, NCC Aquatic Center, NCC Athletics Track Oval, Athletes' Village and National River Park Corridor.

“Hence, revenue from the current operations of the facilities is not sufficient to cover the cost to preserve the [NCC] sports complex, let alone the recovery of the construction  cost of the project. If this continues, the government is burdened to shoulder the cost of maintenance of the facilities which could have been used for other programs and projects of the government,” COA said.

COA then recommended that the BCDA management prepare/submit a marketing plan and budget for the sports complex and conduct a study to determine the expected recoupment period of the investment property.

In response to COA’s findings, BCDA said that it already started to actively market and promote the NCC sports facilities to a diverse range of clients, apart from the sporting community, to ensure that the former Southeast Asia Games (SEA  Games) venue remains sustainable and utilized for its purpose.

These steps include:

• offering early bird discounts;
• conduct of photo and video shoots for TV and online commercials as well as for personal use;
• hosting of team building activities, company events, training and workshops;
• including the NCC sports facilities in BCDA’s investment pitches locally and abroad; and
• conducting various investment promotions and marketing activities to complement the on ground events happening in NCC

“As a marketing strategy, we have seen the demand for sports-related activities slowly but significantly increasing, resulting in higher foot traffic, greater awareness from sports organizers and clubs, and higher media value. The benefits of a growing network are exponential and not easily quantifiable,” the BCDA said.

“Hosting numerous events in 2022 is a game-changer for NCC, as it proves that the facility is thriving and counters the perception that it’s a “white elephant,” as was suggested after the hosting of the 2019 Southeast Asian Games,” the BCDA added.

Due to these efforts, the BCDA said it already received several intents to either locate and expand their businesses in the area, including a proposal from Australia-based company Pico Play which is part of Pico Group specializing in end-to-end delivery  of tourist attractions including waterparks, theme parks, nature parks, surf parks  and family entertainment centers.

Pico Group and Pico Play, BCDA said, have demonstrable success across venue management (operation and maintenance), aquatic recreational facility development and event creation and management and the proponent have strongly expressed its interest in the following areas with regard to the NCC sports facilities:

• operations and maintenance of the sports and associated facilities;
• operations and maintenance of river park;
• expansion of the sports facilities and aquatic facilities within the sports precinct; and
• development of commercial and residential projects to allow for the viability of the sports precinct

“BCDA has signed a non-disclosure agreement with Pico Play to move forward this potential partnership for NCC sports facilities,” BCDA said.

It, however, admitted that maintaining a huge sports complex was a big reality check for the agency and there is still a lot of work to be done to address the problem.

“It has also been a realization that operating and maintaining a sports complex entails significant expense as it involves facility and equipment upkeep, manpower salaries, utilities, and insurances, among others. However, as the owner of these sports facilities, it is also the sole responsibility of BCDA to ensure that these are really well maintained and most importantly, utilized,” the BCDA said.

The BCDA said it has also participated in SportNXT event in Melbourne, Australia, as well as visited the Queen Elizabeth Olympic Park in London last November 2022, to get a deeper understanding on how these foreign governments sustain their sports facilities after being constructed and utilized for hosting of international sporting events such as the Olympics.

“The management of both facilities revealed that the sports complexes are not self sustaining properties. Rather, the hosting of other types of activities and events such as concerts, conferences, workshops, among others as well as development of other support facilities within the area such as residential houses, commercial and mixed use buildings are the keys to help in the upkeep expenses,” the BCDA said.

“This has been a marketing strategy of BCDA since it opened its doors to hosting public events in 2022,” it added.

Other initiatives that the BCDA is considering for its marketing plan include:

• advertising placements within the NCC sports complex (e.g. installation of lamp posts to be leased out to interested parties, placements of banners at the bleachers and high-traffic locations within the Athletics Stadium and Aquatics Center and installation of ad structures at the Athletes’ Village);
• membership for exclusive use the sports facilities for training;
• brand partnerships; and
• long term naming rights for the Athletic Stadium, Aquatics Center and Athletes’Village (e.g. Smart Araneta Coliseum, Schaefer Stadium, among others)

State auditors took note of such efforts and vowed to monitor BCDA’s submission of the marketing plan and budget, as well as the study on the expected recoupment period of the investment property for further evaluation. — RSJ, GMA Integrated News