A stadium for Docklands? Thirty years on

In the early 90s, the Victorian Government determined that Victoria Dock, once a bustling centre of sea based trade, but now an industrial wasteland, should become a fully developed metro area of the city of Melbourne. The Kirner government appointed the Docklands Task Force in 1990 to develop a strategy for the zone and by 1992 the area was under the administration of the Docklands Authority “with a strong political imperative to get something started”.

Melbourne Docklands, 1996, 1998 and 2000 (Melbourne Docklands 2000)

A change of Government in 1993, led to change in process whereby the Authority was permitted to adopt a market based approach where private developers would apply for tenders to develop the seven precincts on crown land.

In 2012, The Age would report that the Kennett Government had been giving land in the Docklands away for a song. One of the first land deals orchestrated by the Kennett government in 1999 in an effort to kickstart the Docklands precinct saw the 136,970 square metre New Quay precinct, roughly five city blocks in size, sold to developers MAB Corporation for $3 million. The deal priced the land that came with harbour access at $22 per square metre. (A Brunswick workers’ cottage in 1999 cost $991 per square metre.).

While stating the Victorian Government would not contribute public funds, the new Kennet Government did provide infrastructure to encourage development. The Kennet Government also championed the idea of a stadium in the area.

The firs real notes about the stadium begin in 1994 when News Limited announced it wanted to place a rugby league side in Melbourne for the upcoming proposed Superleague, it also proposed building a 30,000 seat stadium.

Though the report proved incorrect – The Age reported that the stadium proposal report was false (Masters, 1994) – it proved the genesis for the basic idea that a retangular stadium in Melbourne might be required.

The Victorian Government was very keen. (Canberra Times, 14/11/1994)

Before the 1996 election, Kennet announced a desire to “develop three world-class sports venues – a velodrome, a football (soccer) and rugby stadium and the Sports and Aquatic Centre”. Not six months later, media reported that a stadium with a retractable roof was proposed as part of the Docklands development. It was estimated to cost $200 million.

In October 1996, local media reported that the Victorian Government had agreed to plans for a $200m, 52,000 seat stadium that would cater for Australian rules football, soccer, rugby league and entertainment. The stadium would be privately built on crown land. Government officials stated that while the stadium would not be publicly funded, the surrounding infrastructure – a new bridge and tram lines would be placed in support of the development.

Evidently, AFL board member, Graeme Samuel played a big part

At Docklands, Mr Graeme Samuel was the central figure. The former merchant banker had acquired a reputation as an eminence grise in Victorian public and business life as a member of government and cultural, as well as corporate, boards. Prominent in the Liberal Party, he was appointed by the Kennett government as a board member of the Docklands Authority and the governing body of the Olympic Park sports complex near the MCG. He was also on the boards of the AFL and the Australian Opera, where he was said to have masterminded the rationalisation of the Victorian State Opera into the larger company, which became Opera Australia . In the mid-1990s Graeme Samuel recommended that, instead of redeveloping Olympic Park as a major, if secondary, stadium for the Commonwealth Games and for other sports (rugby league and union, soccer) a Docklands stadium should be built

The project was a BOOT – Boot, Own, Operate and Transfer – project, originally slated to end up in Victorian Government hands at its conclusion. The Docklands Authority still needed to sell the idea to investors, and approached the Australian Football League, confirming their tenancy and guaranteeing event numbers.

The AFL declined to sign a contract until their future ownership was assured, the AFL was to pay $30m towards the build, and receive freehold ownership of the land in 2025. The AFL recieved scheduling priority – this upsetting both the ARL and Superleague who didnt want to be bullied scheduling wise by the AFL, and neither showed any real interest in proceeding.

According to the 1997 AFL Annual Report, the League said that it concluded negotiations with the Docklands Auithority for the freehold title to the land in March.

According to the 2015 Concise Annual AFL Report, The AFL paid an Option Fee of $30 million to the Docklands Authority in 2001. This gave them the option to take the freehold land title on the land for $30.00 anytime within 6 months of the end of the present lease arrangment. Essentially the AFL will pay $30,000,030.00 for the freehold title to Docklands.

Stadium precinct (Melbourne Docklands 2000)

Upon completion Channel 7 took control of the Stadium, before selling out for $330 million in 2006 to a consortium consisting of National Australia Bank Group’s staff super fund and industry funds such as Retail Employees Superannuation Trust, Western Australia’s Westscheme and South Australia’s Statewide, and managed by a joint entity of Mirvac/Leighton Holdings – Melbourne Stadiums Limited.

In the 4 years leading up to 2011, it reported $60 million in losses and paid no dividends to its owners.

In 2011, Etihad Stadium made a loss of $19.1 million, but had an operating profit of $630,000 on revenues of $69.9 million.

In 2012, Etihad Stadium recorded a $17.3 million loss in 2012, , but made an operating profit of close to $4 million. Revenue reached $72.5 million

The financial report of the stadium’s owner, Stadium Operations Limited, revealed net operating profit reached about $4.8 million in 2013, up from $3.9 million the year before. Total revenue rose by about 10 per cent to $79 million. However, the stadium’s net loss after about $21 million worth of interest expenses was $16.7 million, down slightly from the $17.3 million loss recorded in 2012. The Stadium Operations balance sheet showed its owners have a loan of about $199 million outstanding.

In February 2015, it was reported that the Stadiums owners still had 200 million worth of debt in the facility.

Buyout of the stadium

Several prominent AFL persons had suggested that the AFL buyout the remainder of its Docklands contract. The idea first surfaced in 2011 after the AFL signed a record broadcasting contract for 1.25 billion, but has seen a renewed push in recent times. The AFL resisted the early push as the stadiums current owners wantedt $250 million for the last 12 years of the contract.

In 2014, Fairfax reported that the league made an offer of about 250 million to the stadiums owners, who believed that the offer was about 20-30 million short. The article says Andrew Demetriou said the league was a long way off buying the stadium “at a fair price”.

In February 2015, the Financial Review reported that the stadiums owners and Melbourne Stadiums Limited were eager to sell in order to maximise returns ahead of a token sale in 2025.

The AFL believes it could make immediate savings at the stadium by taking over back-office functions such as marketing, ticketing, human resources and event management. The savings could then be used to sign improved deals for the tenant clubs to play at the stadium.

According to the Age in August, 2015 the AFL held a series of talks with tenant clubs, broadcast partners and sponsors with a view to transforming its Docklands home into a wider sporting and entertainment precinct.

On March 11, 2016, The Financial Review reported that the AFL was in due diligence to buy Etihad Stadium for a price of about $150 million. The league revealed it had purchased the venue and the operator for $270m in October 2016.

The AFL has owned the land and the venue since November 2016.

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