Will we save 45 Million without a tender?

Published in SME daily

The construction of the National Football Stadium without a project tender is not an ideal solution. However, under the latest plan, the state is expected to pay a maximum of 27 million euros—significantly less than the proposal under the first Fico government.

Sometime around 2005, the then leadership of the Slovak Football Association (SFZ), along with the then-owner of Slovan Bratislava, came to the Ministry of Finance to present a project for the National Football Stadium (NFŠ) at Tehelné pole in Bratislava. They brought along a printed brochure with the stadium plans. One small thing was missing: a few billion crowns (still in use at the time) from the state. Without a tender. Because there was nowhere to play. Because even the national theatre was paid for by all of us. And so on. The state didn't pay. In response to this initiative, the Ministries of Education and Finance came up with the first concept of how to build the stadium in an economically sensible way. A public-private partnership (PPP) project was proposed, but it was not implemented—the government fell.

NFŠ is in the public interest

The construction of the NFŠ is like a never-ending story. It is in the public interest that Slovakia’s national team can play home matches on Slovak territory in a stadium that meets FIFA and UEFA standards. Since 2005, every government has declared its intention to help the football community build a representative stadium at the European level. The proposal during the first Fico government failed, then came the economic crisis. The proposal developed under the Radičová government also failed, the government fell again.

Even the stadium construction at Tehelné pole, which made headlines last week, has not yet been formally approved by the government. No one has seen any memorandum with the investor. The only thing the government has approved is the option to allow a third party to receive part of the subsidy that the SFZ receives from the state for the construction of football stadiums. No extra funds for the Tehelné pole project have yet been allocated in the budget.

Should the state be the investor?

The delay of the NFŠ is due to different understandings of how public interest in sport should be fulfilled by various governments. While the second Dzurinda government and the Radičová government saw the state's role as merely supportive, both Fico governments saw the state more as the stadium’s investor.

Even within this investor role, there has been a significant shift between Fico’s first and second governments. Whereas his first government firmly allocated 70 million euros to a private owner—covering the entire cost of construction (similar to the hockey arena in Bratislava), now the discussion is about a 25 million euro state contribution. This means the private partner will take on the burden of investment and operations. This type of model was proposed by the co-authors of this article in government-approved documents under Dzurinda and Radičová. The only difference is the form of procurement through a competitive process.

According to the 2011 proposal, the single-round competition was supposed to have two criteria. The main one was price (90%), with architectural design of the NFŠ also considered (10%). The location also had to meet FIFA and UEFA requirements to qualify for hosting major events (international airport access, hotel capacity, parking spaces, etc.). Given its readiness and the presence of a home club, Tehelné pole would likely have been a strong, if not the only, candidate.

Missing a tender

The recent proposal does not include a tender—neither an architectural competition nor a competition for location. This means taxpayers have no way of knowing whether a tender could have delivered a better price. On the other hand, 27 million is significantly less than the 70 million requested four or eight years ago. One thing is certain: by adopting its own concept based on former minister Jurzyca’s proposal, the government saved the country several million euros. The 2013 solution is not ideal, but from a taxpayer’s perspective, the stadium project could have turned out much worse. Still, there are too many unanswered questions around the final cost and the nature of the public-private partnership to make any qualified conclusions.

Two more observations. The state has yet to develop a procurement concept for infrastructure of national importance. The government-approved national sports policy from last December includes no plan on how to proceed—just reactions.

The absence of tenders seems to bother no one in Slovak sport. The hockey arena in Bratislava was built without a tender. If there had been one, how much might the state and the city of Bratislava have saved? Last week, football representatives at an extraordinary SFZ conference divided up 45 million euros for regional stadiums, as promised by the government. Again, without a tender. Only one dissenting vote was heard because the algorithm used to calculate the amounts for each city was not convincingly explained. The SFZ will soon have to decide who receives what share of the NFŠ subsidy. It’s now clear that the money will go to Tehelné pole in Bratislava, and that the amount will be far smaller than in the two previous attempts. Are the millions saved enough justification for not holding a tender? We will never know.

Ján Marušinec
Jozef Tokos

(The authors are an economist and a lawyer. They are members of the think tank CENSAP – Center for Sports Analyses and Projects, and participated in drafting two NFŠ procurement proposals in 2005–2006 and 2011.)