MELBOURNE—19-21 January 1999

Meetings at the Melbourne Major Events Company and the offices of Melbourne 2006

Mr Tony Holding, Chief Executive, Melbourne 2002 World Masters Games, and Ms Sally Judd, Financial Controller, Melbourne Major Events Company

99. The constitution of the Melbourne Major Events Company. The Melbourne Major Events Company was a non-profit-making, State Government-funded Company limited by guarantee. The Company was established in 1991 following the failure of Melbourne's bid for the 1996 Olympics. It had two shareholders, the Premier of Victoria and the Treasurer (the State Finance Minister). It reported directly to the Office of the Premier and the Cabinet.

100. The Company's finances. The Company received funding from the Government and employed five people. It did not seek to make a profit or a direct return on its expenditure. It did not enter into partnership arrangements or seek sponsorship for bids. This meant that, if a bid was successful, no debts were owed which might affect the organisation of an event.

101. The role of the Premier. The Premier's involvement with the Company was crucial to its success. Although the Company pre-dated the Kennett premiership, the drive and vision came from his leadership. It was his vision to put Melbourne and Victoria on the world stage through staging major events.

102. The rationale for seeking events. Melbourne was not a "natural" tourist destination; it lacked the weather conditions of some parts of Australia and did not have an iconic building comparable to the Sydney Opera House. Major events offered a way to establish Melbourne as a major tourist destination, to enhance its competitive position within Australia and to "internationalise" Melbourne as a destination. Sport united the world in a way nothing else did.

103. The scope of the Company's activities. The Company's Charter limited its scope to "major"events, defined as those which could be demonstrated to produce an economic impact of approximately $20 million (£8 million) or more.

104. The reasons for success. There were several reasons why Melbourne possessed competitive advantages in seeking events and why the Company was successful in attracting them. They included: (i) effective networks and co-operation; (ii) the quality and proximity of venues; (iii) the local appetite for spectator sport; and (iv) the quality of the transport infrastructure.

105. Networks. The Company had a strong network of contacts. Mr Ron Walker AO CBE, the Company's Chairman, and the Directors, had very strong business and social contacts within Melbourne. Mr Walker also had a strong style of leadership, which contributed to the Company's effectiveness.

106. The venues. Melbourne had a range of major venues all within a 3 or 4 kilometre radius of the city centre. These included the Melbourne Cricket Ground and the neighbouring Melbourne Park, venue for the Australian Tennis Open, the Albert Park sports precinct which was the venue for the Grand Prix, and the Melbourne Sports and Aquatic Centre.

107. The appetite for spectator sport. The people of Melbourne had a unique appetite for major events. There was a far greater willingness to spend money to watch sporting events than in other major Australian cities. One factor which might explain this was that Melbourne's climate was not as suited to participation in sport as that in other parts of Australia, which might have encouraged a greater emphasis on spectator rather than participation sport. The 1956 Olympics had contributed greatly to this culture, but it was apparent before then.

108. Transport infrastructure. Melbourne had a fine transport infrastructure including an extensive tram system. Major venues were highly accessible by public transport. Venues also emptied remarkably quickly at the conclusion of events without great congestion. Also, the transport system adapted very well to meet the needs of particular events.

109. Event search. The Company took an active role in searching out events which might be suitable for staging in Melbourne. In each case they determined who owned the intellectual property of the event and how it usually operated. In certain cases, the Company was willing to create special events to be held in the city. An example of this was the very recent 1999 World Sailing Championships designed with particular regard to the benefits to Melbourne's coastal suburbs and to the benefit of the sport.

110. Event assessment. The next stage in all cases was a detailed assessment of the event, its costs and its benefits. This examined the full range of potential benefits from an event, including participation, the audience and the television profile. An economic impact analysis always took place at this stage before a bid was made; some studies were completed by outside bodies. At this stage the Company also undertook a full analysis of the costs of staging the event and whether it would require a public subsidy. This analysis included all costs to the State Government, not simply the direct event costs. Many possible events were rejected at the assessment stage without a bid being made.

111. Deciding on a bid. Where the Company favoured a bid, it provided the Premier with a one page summary of the event explaining why it should be supported. By this stage, it was the Company's aim to know more about the event than the organisers themselves. In some cases, an event would require a public subsidy, but this was considered worthwhile in some cases where there was a clear wider economic benefit. For example, the World Masters Games to be held in October 2002 would receive a public subsidy and the Grand Prix generally lost money in terms of direct operating costs.

112. The bidding process. Once the Premier's support had been been gained, the Company moved onto the bidding process. The Company sought to avoid events where the bidding process seemed unduly risky or the selection process was arbitrary. There were usually four stages to the bidding process: the profiling of decision-makers; facilitating inspection of Melbourne by the decision-makers; preparation of the formal bid; and presentation to the decision-makers. The Company considered that a successful bidding team had to be small and manageable to ensure that the message was consistent.

113. Implementation. The Melbourne Major Events Company was never directly involved in the staging of an event. Implementation was for other organisations. The Company identified those who could organise an event at an early stage. These might be staff from outside, as was the case with the Presidents Cup. They might be an existing organisation, such as the Victorian Yachting Council which had run the 1999 World Sailing Championships. They might be a special company established and partly funded by the Government, as was the case for the World Masters Games and the Grand Prix. In the latter case the operating company was established under statute. The hand-over did not, however, amount to a breakaway. Organisers drew upon the expertise and experience accumulated during the bidding process. For the Masters Games, Mr Holding was using a business plan prepared during the bidding process.

114. Conclusion. The success of the Melbourne Major Events Company could be attributed to the following factors; the fact that the organisation was small; that it nevertheless had enormous resources at its disposal; that it could draw upon well-established networks; that it extensively investigated event proposals; and that it had impressive venues available to use.

115. The rationale for the 2006 Commonwealth Games bid. The Commonwealth Games probably had a higher profile in Australia than in any other country. Viewing figures compared well with those for the Olympics.

116. Preparation of the Commonwealth Games bid. Before a formal bid was made, Melbourne had first had to secure the endorsement of the Australian Commonwealth Games Association. A major bid document had been prepared for this internal bid process. A separate bid Company had then been established as the bid was too large for Melbourne Major Events to absorb within its existing resources. That separate Company had spent 12 months undertaking detailed work on budgeting for each sport and for each aspect of the Commonwealth Games infrastructure, as well as profiling decision-makers and facilitating inspections of Melbourne. That level of detail would be used as the basis of the final bid document and also as the basis for the business plan for the organisers.

117. Facilities for the Commonwealth Games. The Committee's offices in the Rialto had been selected as all the proposed venues for the Games (with the exception of the shooting range) were visible from those offices and this reinforced the fact that all venues were geographically close to each other and to the city centre. The Commonwealth Village would be purpose-built and would comprise 2 and 3 storey medium-density accommodation which would pass into private ownership once the Games had concluded. The media centre would be housed within the Melbourne Congress Centre.

Visit to Albert Park Sports Precinct and the Melbourne Sports and Aquatic Centre

Mr Tony Holding, Chief Executive, Melbourne 2002 World Masters Games, and Mr Warren Green, Business Manager, Melbourne Sports and Aquatic Centre

118. Grand Prix circuit. The Grand Prix circuit was situated in Albert Park; the park functioned as a public park except at the time of Grand Prix. It was situated 2 kilometres from the city centre and formed part of the city's road network for the remainder of the year. The park had been upgraded after it was chosen as the venue for the Grand Prix and had become more popular as a result. The pit building was a permanent structure which was used for indoor sports for the remainder of the year. All the stands were installed especially for the event. The event had more corporate hospitality facilities than any other event in Australia. The televising of the Grand Prix provided a good showcase for the city of Melbourne.

119. Melbourne Sports and Aquatic Centre. The Melbourne Sports and Aquatic Centre had opened in 1997 at a cost of $65 million (£26 million). The primary source of finance was the Community Support Fund which was distribution of gaming revenue. The Centre was now run on a commercial basis with sponsorship events providing a major income stream. The Centre had been built as many of the venues constructed for the 1956 Olympics had become run down. The Centre, where seven main sporting associations were based, had served to consolidate previously separate venues under one roof with a common management structure. The facilities (which included a 50-metre pool, a badminton hall, table tennis, squash and basketball courts) had all been built to major event standard. The facilities were used by the general public and local schools, as well as by professional sports people. There would probably be space for modifications to provide the necessary spectator seating at the swimming pool for the Commonwealth Games, but an additional temporary pool for the Games on the same site was also under consideration.

Meeting with the City of Melbourne

Councillor Ivan Deveson, Lord Mayor of Melbourne, Councillor Peter McMullin, Chairman of the Planning and Environment Committee, Mr Michael Malouf, Chief Executive Officer, Sally Hirst, Director, Marketing and Communications, and Vicki Davidson, Acting Director, City Services and Group Manager, Parks and Recreation

120. Melbourne the sporting capital. The Lord Mayor said that Melbourne was the world's most livable city and the sporting capital of the universe. It offered a range of cultural and business opportunities to bolster its sporting appeal. It staged at least one major event every month. The City Council was responsible for many of the facilities used for major events and also for a whole range of facilities for community use. It also had the important role of serving as the interface between the major events and the needs of the city's residents and the city's development. The City played its part in the increasingly competitive process of seeking and staging events. Much of this competition arose from improvements to venues and the increasing influence of the media. Even events traditionally associated with one venue could not be taken for granted.

121. The role of the City in attracting major events. Mr Malouf explained that the driving force to make Melbourne the major venue for events came from the State Government and the Major Events Company acted as the spearhead. Although the City was not the lead player, it had to share the vision because it had the local knowledge and resources to support events. Many events used facilities owned by the City, which sought to mesh the needs of particular events with long-term community use. The City's areas of responsibilities relating to major events included engineering, traffic and parking, the use of parks, gardens and open spaces, the provision of civic functions and signage. The City considered that wider recreational and cultural activities played a crucial role in the success of events. It was seeking to expand its arts festival as part of the Commonwealth Games bid. The City sometimes made small direct contributions to the operation of events, but most of its event-related expenditure took the form of indirect support which was not separately identified.

122. The City's sports policy. Ms Davidson said that, in developing sports facilities, the City sought to balance its community obligations with its role as a capital city. It was developing additional community facilities; these were partly intended to provide for a broader range of sports reflecting Melbourne's diverse ethnic make-up. Where additional facilities were developed on former parkland, new parkland was developed so that there was no net loss of public open space.

123. Benefits. Ms Hirst said that sport and events contributed about $2.6 billion (£1 billion) annually to the Victorian economy. A study had shown that the staging of the Bledisloe Cup had created over $60 million (£24 million) of economic benefits. The City authorities conducted extensive retail and hotel surveys to measure the economic impact of particular events. The assistance given by an event such as the Grand Prix to the economy and to the image of the city meant that it was worthwhile even if it did not produce an operating profit. Events such as the Grand Prix could be disruptive, but this disruption would be tolerated if there were a clear benefit to the community. Hotels were often involved in the discussion of the timing of events, sometimes encouraging the establishment of events at slack times.

Visit to the Docklands Stadium

Mr Jacques Merkus, Chief Executive Officer, Stadium Operations Limited

124. The development of the Docklands Stadium. The Docklands Stadium was being developed as a wholly commercial enterprise without any Government funding. The total cost of $430 million (£172 million) had been raised from a range of companies including financial organisations and the Channel Seven network. In return for its investment, Channel Seven had obtained broadcasting rights in the Stadium, as well as naming and signage rights which it could sell on. The operating company would be largely reliant on gate receipts and associated income for its profits. It would retain the right to operate the Stadium for 25 years, after which ownership would be assumed by the Australian Football League. Contracts had already been signed to stage Australian Rules Football at the site, but it was also suitable for cricket, rugby and soccer. The Stadium did not yet have any role in the Commonwealth Games; it might serve as a venue during the Games. Participation as a Games venue might not be very profitable, but might help to raise the profile of the Stadium.

125. Tour of the site. The Stadium would seat 52,000 people. There would be a car park underneath the Stadium. The pitch would be set on concrete slabs. It would have a full retractable roof which could be opened and closed in 20 minutes. Ninety-eight per cent of spectators would be under the cover of the roof when it was open. The Stadium was due for completion in February 2000.

Meeting with Mr Tom Reynolds MLA, Minister for Sport, and Ms Louise Asher MLC, Minister for Tourism

126. The role of the State in events. The State Government was essential to Melbourne's success in attracting major events. The process could not be independently and effectively led by sports bodies or by the City Council or by the private sector and produce the same results. The Major Events Company had partly been a way of gathering together the expertise developed during the unsuccessful bid for the 1996 Olympic Games.

127. The Commonwealth Games bid. The bid to stage the Commonwealth Games was not costing a great deal of money. The bidding structure for the Commonwealth Games was very good and far more transparent than its Olympic counterpart.

128. Subsidy and benefit from events. The State Government was happy to pay money to subsidise events which provided clear benefits. For example, it paid an undisclosed licence fee to stage the Grand Prix. The benefit was calculated in relation to expenditure by people from outside the State of Victoria. Much of this benefit went to the retail sector, to restaurants and to hotels.

129. The Community Support Fund and sports facilities. Following the legalisation of poker machines in Victoria, a Community Support Fund had been established to distribute revenue received as a result by the Government. The Fund was used for sport, tourism, the arts and efforts to tackle gambling problems. It was a major source of funding for the development of sporting facilities. The main sporting function of the Government was the provision of facilities; it did not interfere in the running of sports, which was for the sports themselves. The range of facilities, combined with the Victorian Institute of Sport's élite athlete development programmes, helped to explain the enormous contribution made by Victoria to recent successful Australian teams, most notably at the Kuala Lumpur Commonwealth Games.