Public-private partnerships opportunities in sport, leisure and infrastructure by Jože Jenšterle

1Final Review Meeting

Public-private partnerships opportunities in sport,

leisure and infrastructureJože Jenšterle

General manager of IASLIM

Active Voice Conference Ljubljana, 15 November 2016

MovePlaySportIndustry ©


• What is PPP?• Definitions• System • Motives• Impacts• Main characteristics, objectives and

advantages• Best practices?

Public-private partnerships


Public-private partnerships is a long-term, contractually regulated cooperation between the public and private sector for the efficient fulfilment of public tasks in combining the necessary resources (e.g. knowhow, organizational, program, human, technological or financial sources, operational funds, capital, personnel) of the partners and distributing existing project risks appropriately according to the risk management competence of the project partners. (BMVBW, 2003)

What is PPP?


• Great variety of definitions for PPP worldwide. • The contents and objectives may vary according

to the country specific background and the specific interests of the individual author.

• The definitions of PPP are very ambiguous. • In some cases, the term public-private

partnership describes a wide range of arrangements whereby government responsibilities are outsourced to commercial partners, and risks aer shared between the public and private sectors to bring about desired outcomes in areas associated with public policy.

Definitions


• Development of infrastructure projects with private capital through Public Private Partnership (PPP) route has become one of the commonly adopted procurement strategies in developed and developing countries.

• All over the world where PPP procurement has been used in one form or another.

• PPPs is important system in the delivery of public infrastructure and services across the world.

World


• There is no standard method of PPP implementation.

• Each country has its own system as appropriate for its own culture, economy, political climate and legal system.

• Partners must have a common understanding of the principles, processes and structures of PPP and an appreciation of the key issues from the standpoints of the private as well as the public sectors.

System


The major motives for PPPs are macroeconomic or budgetary, especially in Germany, France, Slovenia and Austria, but also microeconomic or improving the efficiency of public service delivery, especially in the UK, The Netherlands and Switzerland.

Motives


• Does PPPs genuine and sustainable increases efficiency and effectiveness compared to the alternatives?

• Will PPPs have a positive impact on future public resource availability?

• Will PPPs provide short-term financial and political benefits, but at the cost of constraining future decision makers and placing greater pressures on public finances in the longer-term?

Impacts of PPP in the future


• Efficiency gains through appropriate sharing of risks and responsibilities; the public sector retains mainly sovereign tasks and the private bears those for implementation.

• Lifecycle and private investment as crucial elements of PPP’s incentive structures.

• Long term contractual relationship.• Innovation, in particular through output

specification, service levels and payment mechanisms, as a new way of describing the services to be supplied..

Main characteristics


One of the major objectives of PPP is to transfer tasks and responsibility for the provision of infrastructure to the private sector, in order to gain efficiency, cost reliability and financial security.

Main objective


• to remove the responsibility of funding the investment from the government’s balance sheet,

• to introduce competition,• to adopt managerial practices and

experience of the private sector,• to restructure public sector service by

embracing private sector capital and practices,• to achieve greater efficiency than traditional

methods of providing public services.

Advantages


?Something is missing!?


Profit and other interests … of the private sector, corporations, entrepreneurs, investors and … others !

What are the interests of the private subjects?

How are they included in PPPs?

Private interests



• Project objective - State level• Project partners - State and corporative investors• Investment US$ 428 million• BOT project funding (concession, project funding,

prices set by a state, revenues in local currancy)• Financial sources (shareholders, financial

arrangements)• Motives (Olympics)• Impact (Sport, events, tourism)

The National Stadium in Beijing


• Program from 2008 - 2015 (8 years): 15 sport events and 4 concerts

• Tourist visit per day: 20.000 visitors at the price 50 yuan.

• Tourism revenues per year (?) US$ 2 million • Costs of operations and management per year US$

11 million• Investment US$ 428 million and yearly costs of US$ 11

million in eight years is total US$ 516 million.• negative long-term economic benefit

Program - Revenues - Costs



• Project objective - Regional level• Project partners - Local communities and Kuwait

investors • Investment 7 million Euros, • Financial sources (local and foreign investors,

financial arrangements)• Motives (Sport Tourism)• Impact (Local and Regional Development)

The Shooting Center Gaj Pragersko


• Program from 2008 - 2015 (8 years): 25 international and national sport events

• Sport(wo)men and tourist groups per year: 10.000 visitors

• Revenues per year (?) 150.000 Euros• Costs of operations and management per year:

200.000 eur• Investment and yearly costs in eight years: 8,6 million

Euros• negative long-term economic benefit




• Project objective - Local level• Project partners - Municipality Nova Gorica and

private investor Proaktiv Šport d.o.o.• Investment 250.000 Euros, • Financial sources (Municipality Nova Gorica, local

investor)• Motives (School physical education, Recreation,

Tourism)• Impact (Local Development)

Soča Fun Park


• Program from 2014 - 2015 (2 years): adventure park, recreational and adrenaline activities, paintball games, catering, birthdays and fun events

• School, recreational and tourist groups per year: 7.200 visitors

• Revenues per year (?) 150.000 Euros• Costs of operations and management per year (?):

125.000 Euros• Investment and yearly costs in two years: 500.000

Euros• positive long-term economic benefit



Yes!?Public - private partnership

Sports

Public-private partnerships opportunities in sport, leisure and infrastructure by Jože Jenšterle