by Yuanxi Zhang
Vacant Olympic facilities have long been headaches for host cities once the Olympic glow faded. The stadiums and gymnasiums are very expensive to build, and, if not demolished after the Olympics, their exorbitant maintenance and interest costs become heavy burdens that haunt the local government day after day. In Sydney, the vacant sports facilities cost taxpayers $32 million each year. Likewise, every year, the Athens government has to pay more than 100 million Euro for the maintenance of underutilized sports facilities.
However, the Beijing government is not among the host cities that suffer post-Olympic financial hardship. Instead, several Olympic venues have found ways to balance their income statements. In addition to holding sports and entertainment events, some of them become location-based resorts during different seasons. The National Stadium, or the Bird Nest, becomes a snow theme park in the winter; the National Aquatics Center, or the Water Cube, renovates part of it into a water park and operates all year round; Chaoyang Park, which held the beach volleyball games during the Olympics, transforms itself into a beach theme park during the summer time. All of them have shown cheerful operational results.
The National Stadium becomes a snow theme park in the winter, when it is impossible to hold large-scale sports events. The theme park is open from mid-December to mid-February. The staffs are recruited from a renowned ski resort in suburban Beijing. Thanks to the cooperation with the local television station, the theme park receives substantial publicity to attract local customers. During the two-month period, the stadium welcomes a total of more than 220,000 visitors who contribute more than ￥30 million ($4.6 million) of revenue to the stadium. Together with revenues from daily visitors, sports events, and concerts, the stadium records annual revenue of some ￥275 million ($42.5 million) in recent two years. With the operating cost, interest expense, taxes, and depreciation totaling about￥260 million ($40.2 million), the stadium has been earning a slim profit each year.
Similarly, the National Aquatic Center operates a water park all year round. Prior to the renovation in 2009, the Aquatic Center has already recorded an annual revenue of ￥170 million ($26.3 million) from performance, swimming pool operation, and sports events, largely exceeding the maintenance, interest and tax cost of less than￥70 million ($10.8 million). Some of the unique features of the newly-built water park include live DJ shows, eleven extremely exciting rides appealing to teenagers, and interactive games. Since the renovation, the Aquatic Center has seen more promising results. After 270 days of operation, the Water Cube water park, the largest indoor water park in Asia, has served a total of 380,000 visitors that have brought more than￥60 million in revenue ($9.3 million). If we annualize the revenue from the water park, the payback period for the ￥350 million ($54 million) renovation cost is only 4.5 years.
Finally, when we look at Chaoyang Park, the venue for the Olympic Games beach volleyball matches, the picture is more inspiring. It cost the park ￥17 million ($2.6 million) to build the whole venue in early 2008. In August 2009, the Beijing Television Station spent ￥8 million ($1.2 million) to renovate and run the venue. The selling points of the park are the Olympic-standard sand that is perfect for recreational beach volleyball and beach football games as well as the Olympic-standard swimming pool. During the one-month period in 2009, the TV station produces live programs within the park every single day. The park ended up attracting more than 300,000 visitors in one month, leaving the station with ￥16 million ($2.5 million) gross profit in 2009. This cooperation proved to be a win-win situation for both the park and the TV station. The two parties agreed to extend the operation period from one month to three months in the subsequent two years. As a result, the park is expecting a payback period of its initial investment to be around 4 years with a stable ￥4 million ($0.6 million) cash flow coming from location rent each year.
Furthermore, compared with international-branded theme parks, these ex-Olympic venues actually prove to be more attractive. The monthly attendance per square feet of ex-Olympic facilities is 0.175 versus 0.168 for foreign-branded theme parks. This figure is three times more than local-branded theme parks, proving the extraordinary popularity of this special type of theme parks.
In conclusion, the successful stories from Beijing have shown us the promising prospect of transforming the Olympic facilities into theme parks. The next host of the Olympic Games, London, may learn from Beijing’s experience and seek business opportunities in its Olympics facilities.