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Portugal Debates Razing Soccer Stadiums to Cut Public Costs

Posted by on Jan. 18, 2010 at 1:49 PM
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Portugal Debates Razing Soccer Stadiums to Cut Public Costs

By Alex Duff

Jan. 18 (Bloomberg) -- Portuguese cities are under pressure to demolish stadiums built for the 2004 European soccer championships as the government prepares to rein in a widening deficit.

Portugal plans to announce a budget this week requiring extra cost-saving by towns, former economy minister Augusto Mateus said. The cities of Aveiro and Leiria want to cut monthly maintenance payments for public sports arenas of as much as 1.2 million euros ($1.7 million), officials said. Mateus, a former Socialist party minister, and Aveiro’s Social Democrat deputy Ulisses Pereira say they must consider demolition.

The debate comes as Poland and Ukraine spend billions to build stadiums, roads and other infrastructure for the 2012 soccer championship. Portugal, which used 600 million euros to build or fix several arenas, now finds them as much as three- quarters empty for league games. They are a symbol of wasteful spending, said Joao Cesar das Neves, an economics professor at Lisbon’s Catholic University.

Municipalities “should be open to demolishing” stadia to make way for a shopping mall or business center, Mateus said. “It’s very difficult to service debt on something that doesn’t create wealth or represent a public good.”

Second-division Beira Mar can’t afford the upkeep of a 30,000-seat, $94 million municipal stadium in Aveiro, while first-tier Uniao de Leiria doesn’t have enough revenue to maintain the city’s $120 million arena. On the south coast, lower-league teams Farense and Louletano rely on taxpayers’ money to bankroll the $61 million stadium they share.

Negative Rating

Portugal’s 2009 deficit overshot a government forecast of 5.9 percent of gross domestic product, according to Finance Minister Fernando Teixeira dos Santos. On Dec. 7, its credit- rating outlook was cut to negative from stable by Standard & Poor’s, which cited the widening deficits.

Portugal’s debt load will equal 85 percent of GDP this year, according to the European Commission. Portugal and Greece must implement “politically difficult fiscal retrenchment if they are to avoid an inexorable decline in their debt metrics,” Moody’s said Jan. 13.

The national government’s budget plan may favor a “soft” approach for 2010 with cuts of less than 5 percent and bigger sacrifices in following years, Mateus said.

“Everyone will have to make more with less,” Mateus said.

Razing the stadia is a “ridiculous” idea after so much was spent on building and renovation, said Joaquim Evangelista, president of the national soccer players’ union.

Family Events

“Soccer is very important in Portugal like it is in other European countries,” Evangelista said. “It’s possible to fill the stadia and encourage families to go along to matches.”

Portuguese soccer authorities should work to promote the game in smaller cities, Evangelista said. The 16-team first division is dominated by Porto and Lisbon’s Benfica and Sporting, which between them won all of the championships bar one since 1946.

In Poland, the government is financing a 55,000-seat stadium in Warsaw for the 2012 European Championship and helping municipalities pay for or renovate arenas in Wroclaw, Chorzow, Krakow, Gdansk and Poznan. Co-host Ukraine is spending 100 million euros on a Kiev stadium.

Poland, whose 40 million population is four times bigger than Portugal’s, may get a bigger return on stadium investment because its national league is still growing, Jacek Bochenek, a consultant at Deloitte & Touche LLP, said.

“It’s going to be something new, something that will definitely attract new fans,” Bochenek said. Even so, there are risks because top Polish clubs are not as “financially strong” as counterparts in Portugal, Bochenek added.

Politics

Calls to demolish the stadium are “a political game” to castigate the parties that sanctioned them, Das Neves said. Paulo Almeira, a spokesman for Aveiro’s local government, said it has no plans to demolish its stadium. Leiria city officials didn’t respond to calls and an e-mail seeking comment. Paulo Franco, a spokesman for local authorities that own the Faro- Loule stadium on the south coast, didn’t reply to e-mailed questions seeking comment.

Municipalities are finding other uses for stadia. The Leiria stadium, whose annual electricity bill this year will be about 111,000 euros according to published accounts, hosts corporate events. Rooms at the Faro-Loule stadium are being used for temporary classes as a local school is renovated. In Coimbra, the municipal stadium will stage a concert by rock band U2 in October.

Still, the situation is unsustainable, according to Pereira, the Aveiro deputy. He said the town should consider demolishing its stadium.

“It was a mistake building it in the first place,” Pereira said. “Now we have to do something about it.”

To contact the reporter on this story: Alex Duff in Madrid at aduff4@bloomberg.net.

Last Updated: January 18, 2010 05:25 EST

by on Jan. 18, 2010 at 1:49 PM
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