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Wednesday, 23 October 2013

“We strive after a mixture of sports and events” Ernst’s Economy in an exclusive interview with Folkert Buiter of Icedôme Almere (pt 3)

This is the third and final part of the interview between Ernst Labruyère of Ernst’s Economy for You and Folkert Buiter, initiator of Icedôme Almere:

Folkert: There are also private financiers, who are willing to finance €1 - 3 million. However, that is not in our interest momentarily. Even the public has basically no need to know, who will be the financiers: they don’t come to us to bring investment money and they are definitely not on the hook for the financial risks.

However, the public can discuss about the question what facilities should be available in Icedôme Almere. We want to finish everything with the big parties and then we will look for sub-possibilities, on the condition that the operators, owners and financiers are willing to do so.

Ernst: In how many years the complex will be written off? We are talking about €200-odd million in investments.

Folkert: A multiple year maintenance and replacement plan is fully incorporated in the operations plan.

Ernst: But the lifecycle of the building should last for 20 to 30 years?

Folkert: The building will last much longer, as it is built using durable techniques. Everything is arranged in such a way that it can be changed throughout the next 30 – 50 years. We now assume a lifecycle of 30 years, including multi-year maintenance, replacement and further innovation (present in the business case).

Ernst: Will the complex be fully earned back within 30 years?

Folkert: In the real estate model, the financiers presume that they lease the building for 30 years and subsequently sell it for the residual value. The residual value has been calculated by multiple parties; the resulting calculations only slightly differed between those parties. This is about the building, not about the installations.

Ernst: The Thialf speedskating track in Heerenveen, which was modernized and covered in 1986, is now actually a totally obsolete speedskating track after 27 years of operation. How can you manage to keep the Icedôme up to date after such a time?

Folkert: I don’t say anything about Thialf, as I know too little about that. Our multi-year maintenance plan and the replacement strategy have been fully embedded in the operations budget. This removed a future problem.

The construction companies and the suppliers for the technical installation enter into a maintenance contract. This doesn’t mean, however, that they receive a blank check, allowing them to ask what they want for maintenance. We calculate with normal, marked-to-market prices in order to warrant the quality of the maintenance.

In the same way as the AFC Ajax Amsterdam football club, we train our own people to warrant the quality of the installations and especially the skating ice. When you don’t remain investing in your building and your personnel, the whole venue will age. No consequent renewals and no maintenance, carried out well, is killing for the operation in the long run. Then the complex will age too much, eventually.

Ernst: If I estimate the aggregated maintenance costs to roughly €50 million, the amount to earn back in 30 years is approximately €250 million. This brings the annual earnings amount to minimally €8-9 million, which the Icedôme should yield to earn back the expenses alone.

Artist impression of the Icedôme Almere
Picture courtesy of: Folkert Buiter, Icedôme Almere
Click to enlarge
Folkert: I’m not allowed to make statements about that. However, if you look at things logically, based on the lease model, you have to make €13-14 million in revenues to break even. With €15 million, you make a decent 10% in profits. That is true.

When considering the data that I know now, also compared with other speedskating tracks, we are much further on the way and we have sufficient explicit support for an improved business case. During the bidding procedure, we had only 2.5 months available. In the meantime, we have moved six months ahead.

There will be 600 to 800 professional sporters and talents present per day, but not all at the same time. A professional sporter is not present on the ice for more than 2 hours per day. It won’t be all Dutch professionals, but also foreigners: the interest is really overwhelming currently.

These are professionals in speedskating, short-track, inline skating, gymnastics, figure skating and ballroom dancing. Added together, these are considerable numbers. We offer all mentioned sports facilities and besides that, medical attention, housing, fitness and education. That is a very attractive proposition for professional sporters: this has been confirmed by various famous athletes.

Ernst: Is the KNSB, the Dutch skating union, a reliable partner for the future?

Folkert: We never questioned the KNSB and the Dutch olympic committee NOC/NSF. We don’t lose time in ponderings about what people would and would not have said during the past period (look for the KNSB chapter in this article). 

These are both important, professional organisations, whom we appreciate very much and with whom we can cooperate extremely well.

Ernst: Aren’t you afraid, that the KNSB – under the influence of the Frisian lobby for the 'historic' Thialf speedskating track– might try to abolish the contract after all?

Folkert: No, that is such a nonsense. Some people might want that, maybe, but I don’t believe that. These are professionals, with an enormous drive for the sports. You must respect that.

We talk with various sports associations: the KNGU (gymnastics), KNWU (cycling) and hopefully also the triathlon association, about the question how we can put the facilities near the Icedôme in service towards their sports. We can do this, for instance, by deploying a bike and swimming circuit for the Almere Triathlon very close to the venue.

Besides that, we offer around-the-clock fitness and sports-medical facilities. Also the professional sports hotel is always open. We will deploy acclimatization facilities and special facilities for mountain and time zone staging, which can be combined with trainings outside the normal 9 to 5 CET timeboxes. This offers sporters acclimatization possibilities for tournaments in the Far East or the United States and Canada.

You should also not underestimate the interest of food, beverage and hospitality for the Icedôme.

We offer gymnastics and ballroom dancing, but no tennis. Gymnastics and ballroom dancing are complementary with short-track and figure skating. Tennis isn’t. We won’t support all sports; that would be just impossible.

Ernst: So it won’t be an unmanageable Gordian knot?!

Folkert: No. You get professional sports management. We are cooperating everywhere with the professional sports organizations, but the dancefloor is for instance managed by a specialized operator.

Dance and skating clubs can also bring forward their wishes. When they can’t organize a tournament or arrange a tournament jury, we can arrange professional jurors and a track commission for them, who take care of anything, at a very decent fee.

Partially, Icedôme Almere is going to support the iceclubs  and others, at very decent prices. And by using timeslots, we can arrange the hours for dance clubs and gymnastics clubs. The Icedôme will be open at least 360 days per year, from 6 am until 12 pm: that is about 18 hours per day. We estimate with a full-continuous coverage of 50%. Some dance clubs already ran the gauntlet and called in. By the way, first we work together with the skating union and the Olympic Committee to look at the best arrangement of the hours.

It is important to have a stadium for the professionals and the recreational sporters. We have one available for the 400 meter tracks and one for the 30 x 60 meter tracks. 

Very important is a good usage of the business pavillions, by using an arrangement per industry. This will grow in five to six years. There is already much interest for it now. We can supply business pavillions at an unprecedented size and quantity for The Netherlands. Parties are very pleased about that. Various organizations want to participate in this. Our fees and tariffs are extremely competitive, when compared to other stadiums, and we can offer companies their own space for 24 hours per day, every day.

It is quintessential to offer better service for less money, creating a win-win situation for the customer and the company in the process: a full house is the best achievement for all parties.

If you want to be present full-continuously, as a company, you can use your smartphone or a corporate access badge. There are always people present in the building: day and night. We supply the catering: no problem. You can run your own bar, but the food and drinks are from the company: not against sales prices, but for a price that offers both parties a nice margin. This whole filosophy of hospitality and cooperation, makes all the difference.

An investigation disclosed that – from a recreational sporter to a professional or a guest visiting an event – the spendings vary from € 1 to € 30 per visit, with an average amount of €8 to €10 per visitor.

Just like in other stadiums in The Netherlands, people are not allowed to take their own food and drinks: this warrants such spendings. It might seem less hospitable to not allow visitors to take their own food, but in fact we save them from carrying everything in an uncomfortable backpack. People get a choice from a wide array of products, sold at fair prices.

Professional sporters, who are training with us, are of course allowed to take their own specialized food. On top of that, we can offer the pro-sports restaurant, with a special price policy for professionals.

Perfection is the name of the game. We understand that some people are sceptical, but we are on our way to offer the best-of-the-best for professional and recreational sports. A lot of people are going to benefit from that.

From a financial point of view, it is important that our partners can make money. That is easier when the venue is open around the clock. You can come for multiple reasons: for sports, a concert or a congress. Whatever is your reason, within five minutes after leaving the highway or the train station, you are inside the venue.

We strive after a mixture of sports and events with the focus definitely on sports. Organizations have shown a more than average interest for this concept. Now our bid is irrevocably accepted, a lot of serious organizations step in. When they really represent added value, we’ll talk with them.

Stadiums like Ziggodome and the Amsterdam Arena wanted to achieve the best. They managed to do so and that why so much is happening there. They are leaders by example on their markets; we want to be on our markets.

In this one and the other two articles, I printed the interview with Folkert Buiter almost integrally, without making remarks upon the contents. I wanted to achieve a clear separation between interview and opinion. In two days, I will print another article with my SWOT analysis for the Icedôme: as this is a bold, but risky mega project.

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