There are too many sports sta­di­ums, crick­et ovals and cul­tur­al venues in the Caribbean strug­gling to re­main fi­nan­cial­ly vi­able, as their small do­mes­tic mar­kets can­not gen­er­ate enough rev­enue to sus­tain op­er­a­tions, ac­cord­ing to for­mer Cen­tral Bank of Bar­ba­dos gov­er­nor Dr Delisle Wor­rell.

These venues share a sim­i­lar chal­lenge with ho­tels in the re­gion, said the promi­nent econ­o­mist in his May Eco­nom­ic Let­ter.

He ad­vised that, while ho­tels in the Caribbean may sup­ple­ment their an­nu­al rev­enues by of­fer­ing ac­com­mo­da­tion at af­ford­able rates to the lo­cal pop­u­la­tion for short stays, the con­tri­bu­tion stay­ca­tions make to their to­tal rev­enues is “very small.”

He said, “No ho­tel will re­main in busi­ness for very long if it re­lies on lo­cals for its main source of rev­enue; there are sim­ply not enough Ja­maicans, An­tiguans or Ba­hami­ans to pro­vide a steady stream of in­come, week af­ter week, all year long. For that the ho­tel re­lies on the for­eign mar­ket, which is large enough to fill every room, so long as pa­trons are sat­is­fied that they are get­ting good val­ue for the mon­ey they spend.

“A sim­i­lar log­ic ap­plies to sports and cul­tur­al fa­cil­i­ties. There are no do­mes­tic crick­et match­es that will at­tract an au­di­ence to fill any lo­cal oval to ca­pac­i­ty; if a ma­jor venue is to cov­er op­er­at­ing costs it must de­pend on host­ing a suf­fi­cient num­ber of match­es that will at­tract a large in­ter­na­tion­al au­di­ence.”

The for­mer tech­ni­cal ad­vis­er for the In­ter­na­tion­al Mon­e­tary Fund not­ed that, thanks to tele­vi­sion cov­er­age, live stream­ing and as­so­ci­at­ed ad­ver­tis­ing rev­enues, a suc­cess­ful event will yield in­come that is a mul­ti­ple of gate re­ceipts, so a venue may not need to at­tract an in­ter­na­tion­al au­di­ence every week of the year.

But, Dr Wor­rell ar­gued, “There are clear­ly too many crick­et ovals in the Caribbean com­pet­ing for the hand­ful of in­ter­na­tion­al match­es which are host­ed in the re­gion each year. Sup­ple­men­tal rev­enue from host­ing meet­ings, con­certs and oth­er events adds a mod­icum of rev­enue, but that comes at a cost, and its con­tri­bu­tion to to­tal re­ceipts is in­con­se­quen­tial.”

He added, “The rev­enue chal­lenges for foot­ball and ath­let­ics sta­di­ums, gym­na­si­ums, race tracks, con­fer­ence cen­tres and large per­for­mance venues are even greater than for crick­et, be­cause the in­ter­na­tion­al au­di­ences for these Caribbean venues are small­er, if they ex­ist at all. In every case, eco­nom­ic vi­a­bil­i­ty de­pends on ac­cess to a mar­ket that is far larg­er than the home coun­try can pro­vide, and op­por­tu­ni­ties to at­tract an au­di­ence from out­side the coun­try are few and far be­tween.”

Dr Wor­rell con­tend­ed that, more of­ten than not, main­te­nance be­comes a bur­den on the pub­lic purse, and the qual­i­ty of the fa­cil­i­ty de­te­ri­o­rates over time.

He sug­gest­ed that the rev­enue chal­lenge is the rea­son there are so few large-scale sports and cul­tur­al fa­cil­i­ties built by the pri­vate sec­tor in the Caribbean.

“The ex­pect­ed rev­enues are al­most nev­er judged to be ad­e­quate to meet op­er­at­ing costs and yield a com­pet­i­tive re­turn on in­vest­ment. Gov­ern­ments need to take this re­al­i­ty in­to ac­count in se­lect­ing which fa­cil­i­ties should be in­clud­ed in the pub­lic cap­i­tal ex­pen­di­ture pro­gramme. In ad­di­tion to the cost of con­struct­ing the fa­cil­i­ty, an es­ti­mate should be made of the an­nu­al sub­sidy that must be al­lo­cat­ed from cur­rent rev­enues to cov­er the deficit on op­er­at­ing the fa­cil­i­ty. That al­lo­ca­tion will com­pete with all oth­er gov­ern­ment pri­or­i­ties,” the se­nior econ­o­mist ex­plained.

The for­mer cen­tral banker sug­gest­ed that gov­ern­ment de­ci­sions to build sports or cul­tur­al fa­cil­i­ties have to be weighed against all oth­er na­tion­al pri­or­i­ties.

He said a pru­dent gov­ern­ment will pro­ceed with the project on­ly if it can do so with­out sac­ri­fic­ing pub­lic spend­ing which has high­er pri­or­i­ty, tak­ing in­to ac­count the gov­ern­ment’s fi­nan­cial re­sources.

Dr Wor­rell ad­vised, “In mak­ing that as­sess­ment, it is nec­es­sary to take ac­count of the re­cur­ring sub­sidy that will be re­quired to cov­er the op­er­at­ing and main­te­nance costs of the fa­cil­i­ty, as well as the costs of funds bor­rowed for its con­struc­tion. It is al­so good prac­tice to es­tab­lish an in­de­pen­dent non-prof­it trust to plan the project, su­per­vise the con­struc­tion and man­age the fa­cil­i­ty.”

The econ­o­mist of­fered no rec­om­men­da­tions for im­prov­ing the for­tunes of the ex­ist­ing sports sta­dia in the re­gion. (Bar­ba­dos To­day)