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Olympic venues seek sustainable business model

Updated: 2013-11-08 08:17
By Sun Xiaochen ( China Daily)

A successful bid for the 2022 Winter Olympics could give a second life to the major venues built for the 2008 Summer Games in Beijing. But creating a profitable business model remains a difficult puzzle for healthy venue operations, experts said at the recent China Summit Forum on International Sports Industry.

Existing Olympic facilities in the Chinese capital are a big selling point as Beijing seeks once more to host an Olympic Games. But the facilities need to be better operated in the meantime, venue owners and experts say.

"Beijing boasts a rich Olympic legacy with many cutting-edge sports facilities and infrastructure that can help land another Games. But the potential of those venues hasn't been fully realized yet," the founder and CEO of sports consulting company Key-Sports, Zhang Qing, told China Daily after the forum on Tuesday.

"Located far from the city's central business areas and shopping hubs, both the Bird's Nest and Water Cube (National Stadium and National Aquatics Center) serve more as landmarks representing the national image than as actual sporting event sites," Zhang said.

Since the end of the 2008 Games, Olympic Park, which includes the Bird's Nest and Water Cube, has been a hot destination for tourism and mass fitness events in Beijing, but its commercial success is held back by a shortage of high-profile sporting events.

According to Zhao Zhi-xiong, general manager of the Water Cube, about 10 million tourists had visited the venue by the end of 2012, with ticket sales accounting for as much as 60 percent of the total annual revenue.

Although the venue has staged about 500 events, including exhibitions, art shows and fitness activities since opening to the public in late 2008, the lack of consistent on-site sporting events has led to a heavy reliance on tourism, said Lin Xianpeng, sports industry professor at Beijing Sport University.

Zhao Xiaobing, president of Fortune Capital Culture and Sports Investment, echoed Lin.

"As the highest-level swimming center, the absence of regular aquatic sports competitions has been hampering the Water Cube's post-Olympics operation. Without consistent use as a venue for sporting events, the venue faces a tough challenge to stand on its own," Zhao said.

The Bird's Nest faces a similar dilemma. With Olympic passion fading, tourist numbers at the Bird's Nest have been declining year by year. Around 2.5 million visitors toured the venue in 2011 - half as many as in 2010.

Shrinking ticket sales have forced the operator to dig harder for non-tourism programs to balance the annual operating cost of 200 million yuan ($33 million).

"The business model based on Olympic tourism is sustainable for five years, and then the Olympic venues in Beijing should start to reinvent themselves," Lin said.

According to Xiang Jun, deputy general manager of the National Stadium, more than 100 major events such as the Italian Super Cup, the renowned opera Turandot and snow festivals have been staged and have produced decent profits for the Bird's Nest.

However, the vast capacity of 80,000 seats has been a concern for presenters of ordinary concerts and pop shows. It's hard to sell out such a giant stadium.

Luring a professional soccer team to settle down at the Bird's Nest may be one solution to draw consumers, restaurants and retailers, but the high rental cost and busy tourism schedule have dampened interest.

"It's unrealistic to move the Beijing Guo'an's (local soccer club in the Chinese Super League) home games into the Bird's Nest as it costs much more than the traditional Workers' Stadium," said Zhang.

Meanwhile, a ban on title sponsoring presents another hurdle.

"Most of the stadiums in foreign countries benefit from lucrative title sponsorships. But major stadiums in China cannot take the name of a sponsor because the venue represents the national image," said Chen Shaofeng, vice-president of the Institute of Cultural Industries at Peking University.

With the public's growing demand for sports entertainment, however, along with a growing fitness industry, the Olympic venues will continue to look for long-term solutions.

"We expect that income from related-business marketing and event-hosting could catch up and exceed the tourism earnings in the near future," said National Stadium's Xiang.

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