Ukraine's leading English-language newspaper since 1995

The Oct. 29 opening ceremony of the new Lviv Arena. ukraine2012.gov.ua When the final whistle blows on July 1 in the last match of the Euro 2012 soccer championship, many will question whether it was worth Ukraine co-hosting the mega-sporting event together with Poland.

Ukraine has spent billions of dollars in public and private money to overhaul its creaking Soviet infrastructure, intercity transportation links and match venues. In return, the service and accommodation sector expects a temporary boost along with soaring national pride.

The principal issue is whether the nation’s costly multibillion-dollar steps toward modernity will be justified. Can the four stadiums become profit centers and still fulfill a social function after hosting just 16 matches over three weeks? Or will they become white elephants?

While new or refurbished roads and rail links bring long-term economic benefits, the focus is on Ukraine’s match venues, namely in Lviv, Kyiv and Kharkiv where some $1 billion in taxpayer’s money was spent to meet Europe’s top soccer governing body’s stringent requirements.

Yet many haven’t been seduced by the optimistic view of large economic spillovers. Critics say money could have been used to improve higher education, encourage small business formation or improve healthcare. Instead, Lviv had a new stadium built while Kyiv and Kharkiv undertook expensive makeovers – while Donetsk’s ultramodern Donbass Arena was already built with private money.

“I don’t think the [$96 million] spent on the Metalist Stadium (in Kharkiv) will ever be recovered,” said Oleksandr Yaroslavsky, president of Kharkiv’s Metalist football club, who covered 30 percent, or $29 million, of the venue’s renovation, the rest of which came from taxpayers. “Yet without the upgrades there wouldn’t be (Euro 2012) soccer here.”

Yaroslavsky told the Kyiv Post in emailed comments that the Union of European Football Associations will lease the Metalist Stadium for three matches during Euro 2012 for some $260,000. He said the venue’s yearly operation and maintenance costs are $2 million, while it makes an average of $40,000 during the team’s 19 home games in the premier league.

Yaroslavsky is lucky in comparison to other Ukrainian Premier League team owners. Metalist enjoys an average home attendance of 25,000 to 30,000 in a stadium of 38,600 seats, according to Premier League data. That’s second only to Shakhtar Donetsk’s average of 35,000 who attend home games in a stadium of 51,500 seats.

Stadium operation and maintenance costs essentially remain unchanged regardless of attendance and usage.

Dynamo Kyiv, which in December signed a five-year contract to return to the 70,000-capacity Olympic Stadium, averages 10,000 fans a home game, as does Lviv Karpaty which also agreed to move to the new 33,400-capacity Lviv Arena.

Together the four clubs – when counting Dynamo’s and Karpaty’s recent stadium moves – face filling only 10 percent of the stadiums if current attendance trends remain constant.

According to Premier League data, the average crowd at a top-level soccer game is 10,000, 8 percent higher than the 2010-2011 soccer season, attesting to the sport’s growing popularity.

But despite the stadiums’ limited uses, Alex Weigelt, a partner at Noerr Kyiv law firm said that, if managed wisely, they could earn substantial money, although they’re unlikely to compensate for overall costs.

The German lawyer, who has advised stadium general contractors and sub-contractors in Ukraine, said Kyiv has the best chance of being a money maker.

“What investors look at first is population and purchasing power,” Weigelt said of the nation’s most populous and wealthy city.

Despite the country having a climate that doesn’t allow for year-round usage, Ukraine’s stadiums can earn extra money from improving the overall level of competitive soccer. If carefully combined to avoid exclusivity requirements, a variety of revenue sources can add to their core money stream from having regular soccer games held, Weigelt added.

They include hosting large events such as concerts, giving naming rights to a corporation or an established brand name – Lviv’s new stadium is a perfect candidate – offering beverage and food sponsorship, business suites with corporate branding, merchandizing, electronic payment systems and product advertisement on information and scoreboards.

To a large extent, Ukraine’s four host city match venues take advantage of these revenue sources. American rock band Red Hot Chili Peppers is booked at Olympic Stadium for July 25. Given the venue’s central location, New Year parties were held there, and business networking events are becoming a permanent fixture.

Deputy Prime Minister Borys Kolesnikov, the government’s point man for Euro 2012, said the Olympic Stadium expects to make nearly $14 million this year, just 10 percent less than forecasted expenses. He added that Lviv’s stadium expects similar minimal losses for this year.
Donetsk’s Donbas Arena boasts a fitness center, a permanent souvenir shop and museum and throws DJ parties, holds wedding receptions and has 45 business suites.

Both the Donbas Arena and Olympic Stadium use electronic payment systems, which according to Weigelt can bring in an additional $1 million yearly from unused currency from the cards during match days.

And although Lviv’s stadium was built specifically for soccer, the area around the venue can hold more than 120,000 people for entertainment shows, festivals, and concerts.

Kolesnikov said a state-owned concern called Sports Arenas of Ukraine will soon be formed to manage the stadiums in Kyiv and Lviv.
Race tracks are in place in Kharkiv and Kyiv allowing for additional sporting events to be held there.

Still, “all possible revenue sources should be attracted and explored,” said Weigelt. He added that at the same time, costs need to be optimized.

When asked if he is a philanthropist for funding the Metalist Stadium despite the complicated challenge of making money, Yaroslavsky told the Kyiv Post that “there’s no need to rely solely on money. … There are in fact residents of Kharkiv who are now watching great (soccer) matches at an excellent arena.”

Yaroslavsky did admit the upgrades made to Metalist Stadium wouldn’t have been so extensive if Ukraine wasn’t co-hosting the Euro 2012. That’s precisely what critics have in mind.

Kyiv Post staff writer Mark Rachkevych can be reached at rachkevych@kyivpost.com.