Stadium development in Russia: KPMG’s view
Stadium development in Russia: KPMG’s view
The new survey reviews current supply on the Russian stadia market and forecast supply until 2018 and also analyzes pricing, the profitability and cost of stadium construction in Russia.
In 2014 Russia hosted one of the most important and largest sports events – the 2014 Winter Olympics, where were held in Sochi, and in four years time our country can look forward to hosting another significant sports event – the 2018 FIFA World Cup.
Foreign experience shows that a significant number of countries have experienced difficulties with the subsequent operation of sports infrastructure built specifically to stage an event. Russia also has to resolve a number of additional issues related to the recoupment of the cost of sports facilities.
The key to the recoupment of costs and the profitability of the facilities, which is required by investors before they decide to build the sports facilities, lies in the multi purpose nature of stadia, and the provision of recreational functions for different age groups and related services (shops, food, etc.).
Review of existing supply
At present Russia has more than 10,000 stadia - approximately 120 have the capacity to hold more than 5,000 people (the total capacity of these 120 stadia exceeds 1.5 million people). Only 17 stadia can hold more than 20,000 people.
A significant number of large stadia and sports facilities were built in Russia in the period running from 2000 to 2009 – 28 stadia with the capacity to hold in total 270,000 people. The number of stadia and sports facilities commissioned over the past 13 years with the capacity to hold more than 5,000 people has practically doubled. It is worth noting here that the main period of growth occurred in 2007, when six stadia and sports facilities were opened in the country, with the ability to cater in aggregate for more than 50,000 people.
Review of future supply
At present 20 stadia and sports facilities with capacity for 650,000 people are at the planning and construction stage, with most of the construction concentrated in Moscow, St. Petersburg and Sochi. In addition, 10 stadia for 508,000 people are planned for the 2018 FIFA World Cup. All the football stadia being built and designed at present have the capacity to hold more than 25,000 people, with average capacity of 46,000 people.
The record level of commissioning of stadia for Russia is scheduled for 2015-2017 – it is attributable to the hosting of the 2018 FIFA World Cup. It is anticipated that the total construction cost of all the declared stadia will reach approximately USD 8.24 billion.
Most of the stadia being built for the FIFA 2018 World Cup have been designed as universal facilities (in other words, other sports and entertainment events can be held there in addition to football matches), and their share of the total segmentation by 2018 will be significant – up to 28% of the capacity of all the country’s stadia.
Review of demand
In the 2012/2013 season approximately 1,000 matches were held in the Russian football, hockey and basketball championships, including 240 Premier League football matches, 760 matches of the continental hockey league and 90 matches as part of the Russian basketball championship.
The percentage of the population attending football matches is the lowest globally – on average one round of the Premier League is attended by no more than 0.14% of the country’s population, whereas at the leading country in this indicator – The Netherlands – 1.8% of the country’s residents go to football stadia daily. At the same time, approximately 13,000-15,000 people attend the football matches of the Russian football championship – and this is only in the Premier League (eighth best in Europe), and approximately 6,000 people attend hockey matches (fourth best in Europe and sixth best globally).
Krasnodar and Grozny are the biggest “football” cities in Russia based on the results of 2012/2013 season: average attendance figures of home matches of the teams here are the highest for Russia - 20,000 - 21,000 people. At the same time, Spartak and Zenit attracted on aggregate the maximum number of spectators for home and away matches for the 2012/2013 season. Despite lower attendance figures, the utilization rate at the Petrovsky Stadium in Zenit reaches 97%.
Stadium pricing and incomes
Stadia in Russia generate approximately 5% of a club’s total revenues. Russia heads the rating of countries with the cheapest football tickets. However, in terms of affordability (ratio of average ticket price to GDP per capita), Russia is outperformed by the Netherlands, France and Japan – among the countries with some of the highest levels of GDP per capita globally.
Ticket prices for football Premier League matches in Russia fluctuate from RUB 50 to RUB 5,000. The Zenit football club sells the most expensive tickets for home matches (average ticket price – RUB 890), which is attributable to demand and limited stadium capacity. The ticket prices for matches for different types of sport fluctuate materially by Russian region – in the European and southern part of Russia football is traditionally the most popular type of sport, while hockey is more popular in the Urals and Siberian part of Russia. The average price of a football ticket in Moscow ranges from RUB 500-1,000, whereas it costs RUB 250 in Russian regions.
At the same time ticket prices for sports events in Russia have been stable since 2009.
Stadia construction costs in Russia
The average construction cost of the stadia where the 2018 FIFA World Cup will be held (in accordance with FIFA requirements) comes to approximately USD 10,000-11,000 per seat. In general, the cost of building stadia in Russia is significantly higher than in Europe – the lowest cost in Russia does not fall below USD 7,000 per seat, whereas stadium construction costs in Europe average approximately USD 4,000-6,000 per seat.
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