Unlocking the Sports Hub's Full Potential for Singapore

Please do. [Slides are shown to hon Members.]

Thank you, Sir.

The Kallang Alive Precinct development is on a much larger scale and magnitude, as I have said, about 2.5 times that of the 35-hectare Sports Hub. This picture provides an overview of the future Kallang Alive Precinct. This is what it looks like today.

As part of the Kallang Alive Precinct plan, there will be an expansion of sporting facilities around the Sports Hub, which will be developed, owned and operated by SportSG directly. I will show Members some photos of the ongoing developments.

This includes the Kallang Football Hub, which will be our national training centre, to be ready as soon as the end of this year. Here, we see the ongoing construction and a close-up shot of one of the turfs that is already completed and an artist’s illustration of what it will look like when fully completed.

We have also started work on the Kallang Tennis Centre, which would be ready by next year. Here, we see the ongoing construction and an artist’s illustration of what it will look like when completed.

All of these that I have just shown are assets which sit outside the current Sports Hub group of assets. They are part of the Kallang Alive Precinct but not within Sports Hub.

There are also other facilities, such as the Youth Hub, in the longer-term pipeline with youth-centric activities and "young" and "youth" here include those who are young at heart as well.

Beyond these sporting assets, SportSG also plans to launch a tender for the redevelopment of the Kallang Theatre Precinct into a mixed-use development, comprising a multi-purpose indoor arena, office spaces to bring sport-related businesses and entities together, commercial facilities, such as a hotel and other hospitality offerings.

Once ready, these entertainment and lifestyle offerings will integrate with and support the activities of the Sports Hub. These are exciting plans which we have in store for the future.

But these are not our only plans. We have a vision to transform the entire Kallang Alive Precinct, including the Sports Hub, into one single integrated ecosystem which is not only capable of hosting world-class events, but also to be the home ground for our national athletes as they train and compete. We want this to be the beating heart of our community, grassroots and school sports and the testbed and breeding ground for sports innovation and growth.

Taking over ownership and management of the Sports Hub will enable SportSG to unlock the Sports Hub’s full potential for Singapore. We will integrate the Sports Hub more closely with its upcoming facilities within the precinct to deliver more seamless offerings and capture stronger precinct synergies. Members might ask, what does this integration entail and what does this mean?

I will give a couple of illustrations.

First, integration from a physical perspective, which will allow us to do more with one event. Members would have seen a glimpse of this at the recently-concluded WTT Grand Smash earlier this year, where we had table tennis tables set up around the main event, which the public could use to play with family and friends while they waited for the elite matches, and these were matches that were taking place with some of the world's best and we had tables around to engage the community. People come freely and play while waiting, engaging the entire community in the precinct.

With the fuller integration with Kallang Alive and the upcoming facilities, we can step up on this and activate more of the Kallang precinct. For instance, we can seamlessly combine the facilities at the OCBC Arena, the Singapore Indoor Stadium and the new Kallang Tennis Centre and can confidently bring in marquee sports events, such as an ATP1000 tennis event.

High-quality international marquee events will be complemented side by side with local programming. We can use the entire spread, all 89 hectares of the Kallang Alive Precinct seamlessly to do so.

By concurrently integrating community programming on the sidelines and in the months running up to the event, many more Singaporeans can benefit. These could include community tennis for the masses to try out the sport, tennis clinics for social competitive players and aspiring athletes, youth competitions and so on.

So, we will have a whole ecosystem of sports – our professional athletes competing in the arena, our budding young athletes training on the sidelines and in the facilities, and the general public enjoying a social game, all integrated with the other lifestyle offerings which will be coming up. It will also provide for better and dedicated experiences for participants and audiences.

Second, integration from a user point of view. With different ownership structures and different commercial profit and loss, it can be incredibly challenging to achieve seamless integration in the delivery of services across the entire suite of facilities. In fact, adversarial competition between the facilities is the more likely outcome.

So, by taking over the Sports Hub, we will be able to give users a more integrated service experience across the entire precinct, for instance, precinct-wide promotional and marketing activities and hospitality offerings that span across multiple facilities and programming.

Beyond just integrated service experiences, users are likely to enjoy cheaper costs as SportSG will now be able to reap precinct-wide economies of scale through shared functions and services.

Overall, taking back the Sports Hub and integrating it with Kallang Alive will enable us to unlock greater value and achieve our broader social and sporting vision for the wider precinct as a whole.

Finally, the third reason for taking over the Sports Hub at this time is because the wider sporting and entertainment ecosystem has since matured. I spoke a little bit about this earlier. One of the key reasons for working with SHPL and choosing them as a partner was to rely on their expertise and networks with many other networks and international players around the world.

Over the years, our own sector in Singapore has grown and matured and we are now much better placed to continue making Sports Hub a premier hub for sports and entertainment.

Our own internal capabilities have grown. Over the past few years, SportSG had played a key role alongside SHPL to bring in major sporting events, such as the WTA Finals, International Champions Cup and Rugby Sevens and so on. We have developed the know-how, links, networks and the experience to continue doing this.

Besides that, our local and locally-based companies have also matured. Companies, such as UnUsual Limited and LiveNation, are now much more established and can bring in larger gigs into Singapore. Group One Holdings and Ironman Asia have also continued to grow, introducing several flagship events that Singaporeans can identify closely with and actively participate in.

Our growing capabilities and international recognition as a premier hub for sports and entertainment can be seen in major names that have set up operations in Singapore as well, such as AEG and IMG, as well as NBA which has announced the set-up of their Singapore office.

Third, demand for these events has also grown. With our recovery from the COVID-19 pandemic, there is now greater demand and we see that gradually ramping up, both locally and regionally, for larger-scale sport, lifestyle and entertainment events.

Overall, the limitations of the current arrangements, the changing environment and our growing capabilities and ambitions are all factors that we considered when deciding on terminating the relationship. I would add that this was not a decision taken lightly. We felt that, however, having done our due diligence, as I have explained at the start and a confluence of these factors in the ecosystem all coming together, this was now a right time for the Government to exercise its right to step in, take over ownership and continue the management of the Sports Hub.

Members Mr Edward Chia and Mr Sharael Taha asked about the impact which the termination in this case might have on the guidelines and considerations for future PPPs.

Sir, each venture, whether PPP or otherwise, has to be considered on its own merits and to consider the purposes for which you enter into an arrangement in the first place. In this case, we foresaw in this arrangement that it was long term, that circumstances could change along the way and we provided upfront for an agreed no-fault termination without penalty in the PPP.

As I have outlined above, we had good reasons to terminate the PPP, with regard to the reasons I have outlined. But having reached this decision does not necessarily mean in all cases, that the Government should no longer be open to other PPP projects.

Regardless of how projects are financed, we have a sound evaluation process to review the business case, scope, lifecycle cost, implementation approach and also the relative risks between Government and private sector for each of these projects.

For PPPs, in particular, a framework is in place to assess the suitability of undertaking the PPP, including tangible outcomes, potential for downstream lifecycle cost savings, the nature of project risks, which will differ from industry to industry and project to project, the available private sector expertise in that area relative to what the Government can offer and the need for flexibility or the likelihood of downstream changes. All of these are factors to be taken into account and I would say that no two projects would be similar.

This framework is continuously refined and builds on the lessons learnt both here, locally, our own experience, as well as internationally elsewhere. We will, therefore, continue to be open to leveraging PPPs as a model, where suitable.

Having explained the reasons for termination, let me turn now to explain the costs of termination and how it might compare with carrying on with the PPP project till its conclusion in 2035.

Members Mr Seah Kian Peng, Mr Sitoh Yih Pin, Mr Edward Chia, Mr Lim Biow Chuan, Ms Sylvia Lim, Mr Sharael Taha and Mr Raj Joshua Thomas have all asked about the costs of termination.

Sir, the key questions are: how much is the Government paying in total for this termination? How does it compare with what we would pay if we had continued with the partnership till 2035? And if it is different, how do we account for it?

Let me address these points. To do so, let me just quickly recap a few financial points on the PPP which I had raised earlier.

First, SHPL funded the full initial capital expenditure for the construction of the Sports Hub. They did so by taking out a loan. This meant that the Government did not have to contribute any upfront capital for the construction in 2010. So, we did not pay upfront and it is also now that the cost of the loan for the financing of the infrastructure, the capital cost, is still being borne by SHPL.

Second, the Government would pay SHPL a fee of $193.7 million each year from the time the project started operations in 2014 all the way until the end of the project in 2035.

Third, with this fee from the Government, SHPL would then be responsible for the full operating expenditure, including daily operations, maintenance, security and lifecycle costs for the entire project term.

Fourth, the assets would be returned to the Government at no cost in 2035. So, that is the framework of the PPP.

Therefore, if we had continued with the PPP arrangement, the Government would continue to pay SHPL approximately $193 million each year, every year, from now until 2035, and that works out, from 2022 onwards, to be approximately $2.32 billion. That is a committed sum under the PPP. This sum does not take into account net present value and other financial or accounting adjustments.

With the termination, the Government would have to pay two main buckets of costs and let me explain them to Members.

The first is the amount to be paid to SHPL for the termination. This amount is made up of several components, derived from the financial terms stipulated in the Project Agreement. I had explained earlier that this Project Agreement contemplated this early termination on a no-fault basis without penalties and the agreement itself provides for the formula by which such a termination sum can be calculated.

Conceptually, the single largest component which accounts for about $1.2 billion, or slightly more than 80% of the total sum to be paid, is the capital expenditure that the Government would have had to bear. In other words, the $1.2 billion or so of the sum that would be paid will go towards the capital expenditure. As I explained earlier, this is the capital expenditure that the Government would have had to bear if it adopted the traditional procurement approach of proceeding with the Sports Hub on its own.

The remaining components, or about $300 million, are due to the fair market value of the Sports Hub, which is commercially negotiated and also other costs, expenses and deductions, based on the Project Agreement.

At present, the sum to be paid to SHPL for termination is projected, therefore, to be around $1.5 billion. But the final amount will be based on the accounts as at the date of handover, which is December. So, there could be some fluctuations and variations, but we do not expect there to be material variance from this figure.

The second bucket of costs is the costs of the future running and operating of the Sports Hub, post-handover. So, for parity of consideration, let me sketch out what this cost is projected to be. Ms Sylvia Lim and Mr Sharael Taha asked about this.

We will take, as a benchmark, the current operating assumptions and costs incurred by SHPL which include, as I mentioned earlier, maintenance, operations, security, future lifecycle costs, replacement, programming costs, day-to-day costs and so on, all the way until 2035, which is the comparable period.

Based on this, and we use data from actual incurred, that means, this is from SHPL's actual incurred, we expect to incur approximately $68 million per year doing this for operations.

If we were to draw a parallel comparison against the balance tenure of the Project Agreement, in other words, if you compare like-for-like until the end of the period in 2035, at $68 million per year for operational costs, that brings us to approximately $800 million over the balance period until 2035.

If this $800 million is added to the termination sum, this makes the full projected costs of termination at around $2.3 billion. So, it is roughly the same, although I have not gone into the decimal places. The termination sum, added to the projected cost of maintenance and operations, is roughly comparable to what it would cost had we chosen to continue with the PPP and incurred the availability payments over the rest of the project period until 2035.

So, with the component figures taken at face value – and as I have said, without taking into account accounting and other net present value adjustments – this aggregate sum would be comparable to the financial obligation committed under the PPP if we had chosen to continue with it.

Sir, we have carefully examined the finances to ensure proper due diligence and that we can reach a financially rational outcome when we are doing this. Taking the two buckets of costs to be paid for the termination – the sum to be paid to SHPL, which largely reflects the upfront capital expenditure and future operating costs – this would be a fair deal for the Government on which to take back the assets.

None of these components are penalties to the Government, as I have said, because the project agreement provides for a no-fault termination. These are simply the costs that we would have had to incur, or would have incurred, going forward, in terms of the capital expenditure and the operating expenses.

Sir, the financial calculations and their due diligence, as I have said, it is to ensure that we reach an outcome that is financially rational. I want to make it clear that the decision to terminate the Sports Hub project was not driven by financial considerations or to save money.

Indeed, we do not plan to operate the Sports Hub at status quo or on the same assumptions as SHPL.

As you heard me say earlier, we want to make the Sports Hub more accessible, invite more participation, bring more people into the Sports Hub, make it more accessible. To do this, we would have to have more community programmes, invest to bring more world-class events into the Sports Hub and open up the Sports Hub and the National Stadium to general community use.

All of this would probably mean higher expenditures and increases in daily operating and maintenance costs. As such, we should probably expect our operating expenditure on an ongoing basis, once we take over, to likely be higher than what it was previously.

At the same time, however, this might be balanced off against the future revenue generated by the events and activities at the Sports Hub. Previously, under the PPP, any revenue that was generated by these commercial activities would go into the project. When we run it, albeit we want to do it in a different way on different assumptions, the revenue that we generate will go back directly to mitigating and defraying any of the increased costs in maintenance.

Sir, let me be clear that, even as we do this and we have these considerations, even as we want to enhance community participation at the Sports Hub and enhance our programmes, we must also do it judiciously. We must still operate within financial prudence and ensure that we are not profligate in spending, that we are careful in how we spend.

But, taking back the Sports Hub from the private sector will also mean being able to redefine our outcomes away from being mainly or predominantly commercial in nature, we will be able to better realise our sporting and social objectives, open up the Sports Hub to more Singaporeans and bring greater value and outcomes for us, the future of sports in Singapore, our athletes and the everyday Singaporean.

Sir, Members Mr Mohd Fahmi Bin Aliman, Mr Shawn Huang and Ms Sylvia Lim asked about SportSG's confidence and ability to take over and how SportSG will continue working with the private sector.

The PPP project has enabled us to have a strong foundation of a world-class infrastructure. We intend to build on that and continue to bring in top-tier international sporting and entertainment events whilst, at the same time, incorporating our ambition of attaining wider and better social and sporting outcomes for Singapore.

To achieve this, SportSG will incorporate a holding company to own and operate the various pieces of assets within Kallang Alive. A subsidiary of this holding company will be set up specifically to own and manage the Sports Hub.

This structure will enable SportSG to focus on the Sports Hub, but also, at the same time, have regard to the wider Kallang Alive Precinct and what could be done in those cases, when the other projects that I have mentioned in the Kallang Alive precinct come onstream.

Where necessary, it can be operated as a single, integrated entity, able to reap synergies and economies of scale across the entire suite of sporting and lifestyle assets of Kallang Alive. A team of officers from SportSG has already been earmarked to move into the Sports Hub holding company and manage Sports Hub on a full-time basis.

These are officers who have had years of experience with the Sports Hub, many of them having worked alongside SHPL since the inception of the project in 2014, gaining experience and know-how along the way.

These officers within SportSG have already been functionally organised in a structure that coheres with the structure of SHPL, suited to running the Sports Hub. They have been in this position for the last few years, readying for a takeover if and when needed.

Beyond the internal capabilities of SportSG, we value the expertise and experience of existing SHPL employees and would like to retain them.

All SHPL employees have been offered an opportunity to cross over into the new corporate entity and continue on this mission to make Sports Hub the centre of sports in Singapore.

Beyond the internal structure and resources, we intend to continue working and partnering the best providers in the private sector in the areas of programming, broadcast, hospitality, facilities upkeep and management, to name a few.

We will, therefore, continue to retain the contracting model. In other words, the model where we can subcontract and work with external parties in the private sector. This allows us to work with market-leading, optimal partners to provide the best services and facilities fit for the particular purpose in question, for a particular occasion or event.

In the mid to longer term, we also intend to tap into the private sector, to explore the prospects of redeveloping some parts of the Kallang Alive precinct. For instance, projects, such as the redevelopment of the Kallang Theatre into an integrated multi-purpose sport, entertainment and lifestyle hub. Or even turn the Kallang Wave Mall into a one-stop sporting, health and wellness destination. Those are just some ideas.

Overall, with SportSG taking over, the Government would be better placed to drive a synergised and coherent vision for the whole precinct and achieve internal synergies while providing more integrated offerings and programmes to the public.

Finally, Mr Deputy Speaker, as I wrap up my speech, let me bring us back to the very initial vision of a Sporting Singapore more than 50 years ago, all the way back to the early days of our Independence.

Then, at that time, we had the "Pesta Sukan Minggu Merdeka" or Sports Festival Week of Independence, which was an annual feature in our National Day celebrations from 1966 to the early 1970s.

This was an event which was not just about excellence in high performance sports, but really, sports for all, as part of our culture and in our everyday life.

As then-Minister for Social Affairs, Encik Othman Wok, put it in his speech at the ground breaking of the former National Stadium in 1966, he says and I quote, "Sport… must be an essential feature of our way of life. The new generation will not fear stagnant thinking because they will have dynamic reflexes built into them".

We must go back to that spirit and conviction to make sports an essential feature of our everyday life, because of the impact it can make in our own lives and in the lives of others around us.

Some of my own fondest memories growing up were the excitement of being able to play at the Zone or National Finals at the old National Stadium, or simply being in the stands, skipping class, supporting and cheering my friends as they competed against rival schools.

It made me feel like I was part of something bigger, larger, something more. And it connected me with my school, friends and, certainly, with the sport in a way which no other way can – intangible.

Sport has this immense power to bind us as one, to be hungry for more and to strive to be the very best. This is what our TeamSG athletes embody when they compete under the Singapore flag and it is the spirit that we want to see in every Singaporean.

Together, sport can make us more resilient individuals and strengthen our sense of unity as One Singapore.

At the heart of it, this next chapter of Sports Hub is about sports being a part of the life or everyday life of Singaporeans.

As we close the previous chapter, let me also acknowledge SHPL for its contributions. The partnership between SHPL and SportSG has given us a strong foundation from which we can now proceed to drive our social and sporting ambitions confidently. And we look forward to working with SHPL for the next few months to ensure a smooth handover and to welcoming SHPL employees to continue with the new corporate entity which we will set up.

Even so, as we leave this partnership, as SportSG assumes full ownership and management from December this year, the efforts towards Sports for Singapore still remain a partnership. Between the Government and the private sector partners, we will have to continue to work to provide top-class services.

We want to partner with the many community stakeholders, as I have mentioned – students, young athletes, junior athletes, seniors, NSAs and, of course, the many Singaporeans who will participate and make the place even more vibrant and alive.

I am, certainly, excited about the potential we will be unlocking, as we build on what we have achieved to turn Kallang Alive into a larger, more diverse and more vibrant sporting and lifestyle hub for everyone.

The Sports Hub will be a place where our students grow to be resilient, as they deal with wins or losses in their school colours; where we bond with our family and friends, as we enjoy running around the jogging track, participating in the community sports events and enjoying international concerts. And we cheer our athletes on, as they take on their competitors from around the world.

So, let us write this next chapter together to make Sports Hub and our National Stadium, our Home Ground and a place which we can all be proud of. [Applause.]

We have some time for clarifications. Mr Darryl David.

I thank Mr Darryl David. I am glad that he enjoyed marching in the PCF contingent. I take it that he was leading the contingent. [Laughter.]

Yes, I was, Sir.

Mr Xie Yao Quan.

Mr Sitoh Yih Pin.

Mr Gerald Giam.

Yes, my second question was how will SportSG be able to bring in more marquee events when SHPL, with all its international expertise, was not able to?

Mr Lim Biow Chuan.

Mr Leong Mun Wai.

Thank you, Deputy Speaker. Please allow me to have one or two minutes of preamble, before I ask my questions, okay?

Perhaps, I can restrict you to half a minute, please.

Okay. There has been a lot of aspirational delivery throughout this session. I must also share my experience, that, first, I support the Government taking back the Sports Hub. We are all very attached to the old National Stadium. Ministers past and present have participated in the opening of the old National Stadium together with me in 1973. So, we are very attached to the old National Stadium. We do not know why the Sports Hub was given to a private consortium.

Secondly, throughout the discussion we had today, no one asked the question – is the $1.5 billion compensation or termination cost given to the private consortium fair or not? Of course, then, we have to go into a lot of details of financial calculations and all that, but we still need to debate about that. But so far, no question has been raised. So, let me ask two questions. The fact remains why the decision was made at the beginning —

Mr Leong, please ask your questions.

Yes, my question is —

Be fair to the Members who are after you also wanting to ask clarifications. So, please keep it short. I will give you the leeway, but please keep it short.

Mr Leong, I have been listening to you quite carefully. You have asked your first question quite succinctly.

Yes.

I invite you to ask your second and final question now succinctly.

Thank you, Mr Leong. We will allow —

So, I will let the Minister elaborate first then. Thank you.

I will come back to you, Mr Leong Mun Wai. Ms He Ting Ru.

No, Mr Deputy Speaker, Sir, it is a continuation. Minister has not answered my question.

No, I will come back to you. I think there is a point of order, Mr Leong. We have to give people a chance in the House to ask their clarifications. The next person the Chair is calling is Ms He Ting Ru.

Mr Sharael Taha.

I see two hands. We will have Mr Leong Mun Wai and we will end with Mr Pritam Singh.

Thank you, Deputy Speaker. But actually I have to be given the right to ask because the Minister did not answer the question.

I am giving you the ability to ask, but not to elaborate in a speech.

Okay. Deputy Speaker, can I ask —

One more question and then we will go to the Leader of the Opposition.

Mr Pritam Singh.

Deputy Speaker, we have not got to the bottom of the thing.

Well, if you need to, you can file a specific Parliamentary Question. But to be fair to the Members, this is a topical issue —

But what is the point of having the debate without getting to the bottom of the thing, having all kinds of questions? We must get to the bottom of the issue.

Mr Leong.

I am asking and I do not think —

It is a point of order, Mr Leong. I have been very fair to you and the Chair has called Mr Pritam Singh. But before that, I think Leader of the House would like to have a word. So, I invite you to take your seat, Mr Leong.

Okay. Thank you.

Mr Deputy Speaker, a point of order, what the Standing Orders require is for a Minister to answer a question that is put. In this case, Mr Leong Mun Wai had put a couple of questions. Mr Edwin Tong had answered the questions. I think the fact that Mr Leong does not understand the answer does not mean that the question has not been answered.

Mr Pritam Singh.

Deputy Speaker, point of order, please. Can I answer the Leader? Because the Leader is accusing me of not understanding certain things.

Mr Leong, I invite you to ask Parliamentary Questions, which any Member is capable of doing, if you think that your questions have not been suitably answered by Minister Edwin Tong.

But now, not only my question has not been suitably answered but the Leader is accusing me of something. She said I —

I am not sure that the Leader of the House is accusing you —

She is accusing me that I do not understand the financials behind all the questions I am asking.

Mr Leong, I am going to say this as a final position to you. The Chair has been very fair. I think you have spoken on this issue three or four times in this debate alone and I asked you to give way to the Member whom I have just called, Mr Pritam Singh. Mr Singh.

Order. End of Ministerial Statement. Introduction of Government Bills. Minister for Home Affairs.