Unlocking the Sports Hub’s Full Potential for Singapore

Ministerial Statement By Mr Edwin Tong, Minister For Culture, Community And Youth & Second Minister For Law

1. Mr Deputy Speaker Sir, I thank all members of the public and Members of the House who have shown a keen interest in the Government’s move to take over the Sports Hub and have filed various Parliamentary Questions.
1. My Ministerial Statement today will address the 25 Oral and Written Questions that were filed for the Parliament Sittings in July. 
2. Sir, the Sports Hub we see today is a fully integrated sports, entertainment and lifestyle hub across a 35-hectare site in Kallang.
1. It is anchored by the National Stadium and the Singapore Indoor Stadium, with a range of indoor and outdoor sports and retail facilities in the surroundings.
2. It has been in operation since 2014, and was designed, built, financed and operated by Sports Hub Pte Ltd (SHPL), under a Public-Private-Partnership, or PPP agreement that was signed between SHPL and SportSG in 2010.
3. Over the last 12-18 months, we spent some time closely evaluating the performance of the Sports Hub project, including its performance in the pre-Covid period, with a view to assessing if we should continue with the partnership. We took a holistic and long-term look at the changing environment in the sporting, lifestyle and entertainment ecosystem in Singapore, and what we wanted to achieve in our sporting and social policy outcomes.
   1. In our assessment, the interests of Singapore and Singaporeans would be better served by the Government taking over the ownership and management of the Sports Hub, instead of carrying on with the PPP arrangement.
   2. A main consideration was our desire to bring stronger community participation and activities to the Sports Hub.
   3. Once we reached that view, a detailed financial, legal and operational due diligence was carried out, with the support of external consultants and advisors, to satisfy ourselves that taking over the Sports Hub would indeed be a viable option.
   4. Thereafter, we engaged with SHPL to inform them of our decision, and worked through the details of the handover.
4. SportSG formally served notice to terminate the Sports Hub PPP with SHPL on 10 June 2022, and reached a mutual agreement with SHPL over the termination and the process of handover.
   1. On 9 December 2022, a few months from now, SportSG will assume full ownership and management of the Sports Hub, and begin a new chapter for the Sports Hub.
5. Sir, in my statement today, I will address the range of issues raised in the various Parliamentary Questions that Members have filed. I will organise my response along the following lines:
1. First set out the historical and contextual reasons leading to the development of the Sports Hub via a PPP. I will explain why we chose the PPP model for this case,
2. Second, explain the changed environment and the reasons which led to the termination of the partnership, as well as the details around the termination including the financial information.
3. Finally, I will touch on what we envisage for the community and Singapore, following the change of ownership and management of the Sports Hub.

Section 1: The history of why and how Sports Hub started

6. Sir, by way of background, let me begin by briefly sketching out some key points in the history of the Sports Hub.
7. Prior to the development of the Sports Hub, the former National Stadium stood in the same location.
1. This was officially opened in 1973 and hosted its first major event in September that year – the 7th Southeast Asian Peninsular Games.
2. It was a place where major national, sports and entertainment events were held, such as the Malaysia Cup, which Members I’m sure will recall, where the stadium echoed with the “Kallang Roar”, and concerts by global stars like Michael Jackson, Stevie Wonder, Bon Jovi, and Mariah Carey.
3. It also hosted 18 National Day Parades before its last day in 2007.
8. In 2001, the Sporting Singapore Report set out how the former National Stadium, whilst one of the best in Southeast Asia when it was first built, had become quite inadequate to support our ambitions to stage major sports events of international or world repute.
9. The Report recommended that the National Stadium be redeveloped into a multi-use Sports Hub with top tier infrastructural facilities for both sporting as well as lifestyle and entertainment activities.
1. This would give us a world-class venue that could compete with the world’s best in attracting major sporting and entertainment events into Singapore.
2. This would in turn also help in the larger development of our sports and lifestyle entertainment industry. 

Our Vision for Sports Hub at the beginning

10. Following the Report, the Government commissioned an in-depth feasibility study. It then announced plans in 2003 for the redevelopment of the former National Stadium into the Sports Hub that we see today, to achieve the outcomes stated in the Sporting Singapore Report.
    1. The Sports Hub was to be a new, best in class international stadium envisioned to bring our sports, social, and lifestyle offerings to the next level, and position Singapore as a leading venue for local, regional and international events

    Section 2: Why we chose a PPP approach to help us achieve that vision

11. With this in mind, the Government had to decide the best way to design, finance, build, and operate the Sports Hub.
12. Broadly, there were two options available to us at that point in time.
    1. First, a traditional procurement method.
       1. Under this model, the Government fully finances the upfront capital investment for the project and thereafter either pays a service provider to run the project, or does it on its own. 
       2. The Government would also bear the costs and risks of undertaking the project, from the start, including the design and construction, and also in getting suitable parties to operate the project. 
    2. Alternatively, a public-private partnership model.
    1. Under this arrangement, the Government could tap into current international private sector expertise, particularly where the project was innovative and cutting edge, as the Sports Hub was intended to be.
    2. A suitable partner would fully undertake the design, construction, as well as the financing of the operations and management of the project, and thus in this way also directly bears the risks. 
    3. The Government would not have to incur any upfront capital costs, or financial outlay, until the project was completed and operational.
    4. Thereafter, the Government would then commit a steady stream of payments to the private sector partner for the entire duration of the project term.  
13. Given the unprecedented scale and complexity of such a major sports infrastructural project in Singapore, and the limitations, at that time, of not having sufficient depth and breadth of such expertise in Singapore, including in the private sector, we chose to adopt the PPP approach.
1. These reasons have previously been fully explained in this House, but let me briefly emphasise a few points in relation to the choice of the PPP model for this project, to address the questions raised by Honourable Members.

How our PPP arrangement with SHPL benefitted us

14. First, as I said earlier, the PPP approach allowed us to benefit from the expertise of major international private sector partners with worldwide experience.
1. This was an important consideration. The Sports Hub development, as an integrated sports, entertainment and lifestyle hub, was to be the first of its kind in the region.
1. In terms of infrastructure, it was to be a new, innovative and forward-looking world-class sport facility that was intended to be configured for different events, be it sports, entertainment, or lifestyle.
2. And as a global events venue, it had to be able to attract live entertainment events from all over the world as well as provide a first class spectatorship experience.
2. Sir, we have to remember that when we started exploring this, it was in 2003, almost 20 years ago. At that time, neither the Government nor our local sporting and lifestyle/entertainment industries had sufficiently matured or developed depth of experience, networks, contacts in bringing in marquee sports and entertainment events from all over the world.
   1. Thus, besides needing to tap on market leading experts, with not only the right technical expertise to build the infrastructure, we also needed someone with the experience and connections with major sporting and entertainment networks.
   2. Based on our assessment, SHPL was chosen as the PPP partner because each of the consortium partners in SHPL brought with them substantial expertise that was relevant to certain key aspects of the project. For instance, InfraRed Capital Partners for project financing; Dragages Singapore to design and build the project; Cushman & Wakefield for the subsequent facilities management and Spectra for venue operations.
15. At the same time, we also wanted to ensure that our partners would have skin in the game. The PPP model was useful for this because it allowed risks to be shared with the private sector in two material ways. I would illustrate this by outlining the terms of our own PPP with SHPL.
16. First, there is no upfront cost to the Government. The entire project design, planning and construction were borne by the PPP partner, from the time the project started in 2010.
1. The Government did not pay any of the upfront construction costs at all. The entire sum, an amount in excess of S$1.3B, was borne by the consortium upfront, and they took out a loan to finance this cost.
2. The Government only started paying the annual availability fee, at $193.7M per year, subject to inflation and other benchmarking adjustments, when the project was ready and operational in 2014. Under the terms of the agreement, this was to be paid to SHPL every year until 2035, which is the end of the project agreement period.
   1. These annual payments go towards SHPL’s debt service repayments for the loan they took out to finance the Sports Hub construction, as well as day-to-day maintenance and operations of the asset.
   2. These are payments we would have had to make had the Government chosen to undertake the project on our own. 
3. These payments were also subject to, and moderated by, SHPL’s achievement of a broad and comprehensive range of Key Performance Indicators (KPI) which were set out expressly in the Project Agreement.
1. These KPIs included the availability of Sports Hub facilities and performance of services, such as events and activity programming, infrastructural maintenance, cleanliness, estate management, security and so on.
4. Overall, having no upfront costs for Government turned out to be useful, for instance, when the Global Financial Crisis in 2008 hit unexpectedly.
1.  As the Government’s fiscal resources were not tied up, we were able to use those resources to meet pressing economic and other needs.
17. Second, this structure also allowed Government to mitigate the sometimes unexpected risks of such a major project undertaking.
    1. In fact, these risks did come to bear – for instance, the project encountered construction delays, for which SHPL underwrote the costs. SHPL also bore the costs of addressing defects such as the roof leaks, inadequacy of the pitch and the poor sound quality for concerts.
    2. In all of these cases, whether in delay to the project, or the cost of rectifying the defects, the associated costs were borne by SHPL because, under the PPP, it assumed the risks for both timing and quality. 
18. Third, the PPP structure also ensured that there would be inherent financial discipline in the project. This was a ground-breaking, novel project, and we had not undertaken a project of this scale before. It was therefore important for the Government to ensure that costs would not run away.
    1. This was achieved by ensuring that the consortium would have to bear any costs above their expectations and also return the assets back to the Government at zero cost at the end of the project period in 2035.
    2. As such, this was an effective incentive built into the PPP model to ensure that they align and maintain commercial discipline, and minimise the risks of any budget overruns. 
19. Finally, when considering the use of the PPP model in this case, it is also useful for Members to have this in mind. This was essentially a project that had two parts – the design and building of a world class sporting, entertainment infrastructure, or the hardware, which took place at the outset; and the subsequent running and operations of the project to meet sporting, lifestyle and community aspirations, spread out over about two decades.
1. On the infrastructure, it is vital that we get it right, from the start. It would be difficult, if not impossible, to change the hardware, once it is built.
   1. And we needed the relevant expertise to achieve this, to get it right, build a world-class, cutting-edge facility.
2. As to the operations and running, I have explained how the consortium’s knowhow and networks were key to the initial periods, when international marquee events were attracted to the Sports Hub in Singapore.
3. But we also envisaged that there could come a time when Singapore would be ready to operate the project, after it has been built – both in terms of expertise in the Government, and also growth and maturity of the industry and broader ecosystem.
4. This is why the structure of the PPP provides for a unilateral right on the part of the Government (but not SHPL) to terminate the project, to take over ownership and management at any time it wanted before the expiry of the project, with no penalty for such an early termination.
   1. This reserves to Government the right to assess, at any time, if its interests might be better served by stepping in, to run, own, and manage the Sports Hub directly. If so, there is an agreed mechanism by which to do this. And there is a formula to define what happens consequent to the decision.
20. Overall, this structure enabled the Government to manage its interests, through the different phases of the project, mitigate its financial risks, drive greater economic efficiency, and also align the parties, particularly in relation to the upfront design and construction of the new infrastructure.

Section 3: Taking over Ownership and Management of the Sports Hub through terminating the PPP

Confluence of Reasons for Termination

21. Various members have asked about the termination. Members Sitoh Yih Pin, Cheng Li Hui, Xie Yao Quan, Leong Mun Wai, Lim Biow Chuan, Sylvia Lim, He Ting Ru, Edward Chia, and Sharael Taha asked about the roles of SHPL and Government in the PPP and what the arrangement entailed, the ways in which SHPL has fallen short, and the reasons why Government decided to terminate the PPP.
22. There is a confluence of several reasons, and not just any single one, which has led to our decision to terminate the partnership. Let me explain them.

Reason 1: Current arrangement falls short of promoting vibrancy

23. The first reason is this – the current arrangement has helped us achieve a world-class sporting infrastructure. But nonetheless it still falls short of promoting sufficient community vibrancy in and around the Sports Hub.
24. At present, it has been about 8 years since the Sports Hub first opened, though the operations of the last two and a half years were affected by the pandemic. So, it has really been about five and a half years of operations, with another 13 years to run.
25. In terms of getting a world class sporting infrastructure, we have achieved that.
1. When we set out to redevelop the former National Stadium, the intent was to have a Sports Hub capable of staging major events.
2. And through the PPP arrangement, which worked well with driving strong market discipline, we now have a world-class Sports Hub structure:
   1. It has won international accolades for its architectural design. 
   2. And it has hosted multiple major international events including the International Champions Cup, HSBC Rugby 7s, and international concerts by groups such as BTS, U2 and Coldplay. 
26. Members in this House know that there were some early infrastructural problems that occurred after operations began, such as the roof, pitch, lights, and so on.
1. Where these issues occurred, we imposed financial penalties to hold them accountable.
2. And by and large, SHPL made efforts to work with SportSG to correct them.
27. However, when it came to promoting and enhancing the vibrancy of community sports and lifestyle activities at the Sports Hub, the project did not do so well.
1. The quality and volume of its calendar of events and programming fell short of what we had envisaged, even taking into account the private sector interest in this project.
   1. We wanted to see SHPL invest in the creation of their own new event intellectual properties and building on existing event properties, but these did not come to fruition. 
   2. Apart from the Super Rugby event from 2016-2019, SHPL has not secured any recurring or marquee sport events at the Sports Hub on a multi-year basis.  
   3. The Sports Hub is a world class sporting facility, and of course international marquee events are important.  
2. But it is also an iconic, national sporting asset, and there must be a strong sense of affinity and connection between Singaporeans and the Sports Hub. There ought to have been more community participation and activation, around the Sports Hub.  For instance, we would have liked to see the sporting community from the grassroots, schools, or junior national athletes having more access to the Sports Hub:
   1. National School Games – key events like the finals, can be held at the Sports Hub.
   2. Grassroot programs and activities.
   3. Family Day or Carnivals around sporting or social objectives.
3. These are programmes for which there will not likely be any or much commercial return. But there is an intrinsic social value in realizing a young athletes’ aspiration to play in the national stadium, cheered on by his or her schoolmates, or having seniors take part in a social event at our iconic stadium grounds.
4. This is where the profit-driven model of the SHPL consortium, which had worked well in the infrastructure phase of the project, was not sufficiently aligned in the current phase of the project, 
   1. where greater emphasis was needed on community programming and driving social outcomes, 
   2. even if such programmes did not always resonate with commercial returns. 
5. Our assessment is that this would be difficult to change by just adjusting some KPIs or trying to improve the outcomes, with SHPL via negotiation. We had in fact tried this for some time, but the difficulty lies in the inherent structure of the project terms.
   1. For example, SportSG had wanted to bring in ActiveSG academy programmes such as the Basketball Academy at the OCBC Arena but encountered resistance as such programmes were not revenue generating. 
   2. The costs of hosting school sport events, such as combined sports days and National School Games, were also high and prohibitive in some cases. 
   3. Due to SHPL’s exclusive subcontracting arrangement with its catering subcontractor, community events organisers that wanted to cater its own food and drinks had to pay high levies to do so. These costs were then either borne by the event organisers or passed on to participants. 
28. Accordingly, terminating the present arrangement, and taking over the infrastructure on a clean break basis, would allow us better flexibility and discretion in being able to drive our own policy outcomes.

What Sports Hub will look like in future

29. A number of Members: Darryl David, Sitoh Yih Pin, Seah Kian Peng, Christopher De Souza, Shawn Huang, Cheng Li Hui, Cheryl Chan, Poh Li San, Gerald Giam, and Wan Rizal asked about the Government’s vision and plans for the Sports Hub moving forward, after we take over, and how it would benefit Singaporeans.
30. Besides what I have already outlined, let me share a few ideas which SportSG and other agencies are already working on.
31. As an over-arching consideration, the Sports Hub will be made more accessible to Singaporeans.
    1. We want to make it a community icon that Singaporeans can identify with, and feel a part of, in their social and sporting activities.
    2. We are thus planning regular Sports Hub and National Stadium Open Houses with activities for the young and old, and everyone else in between. 
       1. For instance, as part of our Unleash the Roar! national project, children who have joined our new ActiveSG Football Academies can also participate in the year-end football tournament at the National Stadium. 
       2. We are also working with MOE to host even more National School Games, such as the Track & Field, Netball and Rugby competitions, as well as Singapore Youth Festival performances, or even some Sports Days for schools, at the Sports Hub. 
       3. Our children can then aspire to play and compete at the National Stadium, or simply come, soak in the atmosphere, and cheer on their schoolmates. 
       4. The plans for National Day Parade for the next few years are not out yet, but regardless, the Sports Hub will be a place where all of us – both young and old - will be able to build treasured memories and meaningful shared experiences. 
       5. Seniors from all walks of life can also participate in mass events such as GetActive! Singapore at community spaces in and around the Sports Hub, including the 100Plus Promenade, OCBC Square and along the waterfront. 
       6. We also hope to see the return of the casual stroller or jogger to the stadium, by enhancing access to the stadium. 
       7. Where community programmes such as ActiveSG events and activities are concerned, we will also aim to keep them affordable and accessible to all. And we will ensure that as many community spaces as possible are open and free for all to use.

Reason 2: Taking over will help us better achieve deeper integration with Kallang Alive

32. The objectives I have set out above – enhancing sporting and social outcomes, and driving greater community affinity with the Sports Hub – will be complemented by the impending development of the Kallang Alive Precinct in our Kallang Alive plans, which aims at developing the area in and around the Sports Hub.
33. Therefore, the second key reason for taking over of the Sports Hub is to achieve greater integration with the broader Kallang Alive plans.
34. Kallang Alive is an 89-ha site along Kallang River and Kallang Basin. For comparison, the Sports Hub is 35-ha, so this area will be more than 2 times larger than the Sports Hub. This is envisaged to transform into a vibrant sport, entertainment and lifestyle precinct by 2030. With your permission, Mr Deputy Speaker, may I display some pictures on the LED screens.
    1. The Kallang Alive Precinct development is at a much larger scale and magnitude, approximately 2.5 times that of the 35-ha Sports Hub. This picture provides an overview of the future Kallang Alive Precinct. This is what it looks like today.
35. 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 some photos of the ongoing developments.
1. 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, a close-up shot of one of the turfs that is already completed, and an artist’s illustration of what it would look like when fully completed.
2. 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  what it would look like when completed.
3. All of this, which I have just shown, are assets that sit outside of Sports Hub’s assets. They are part of Kallang Precinct, but not inside Sports Hub. There are also other facilities such as the Youth Hub in the longer-term pipeline, with youth-centric activities, for youths and those who are young at heart.  
4. 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 and commercial facilities such as a hotel and other hospitality offerings. 
5. Once ready, these entertainment and lifestyle offerings will integrate with and support the activities at the Sports Hub.
6. These are exciting plans which we have in store for the future. 
36. But these are not our only plans. We have a vision to transform the entirety of the Kallang Alive Precinct, including the Sports Hub, into one, single integrated ecosystem which is not only capable of:
1. hosting world-class events,
2. but also to be the home ground for our national athletes as they train and compete. 
3. We want this to be the beating heart of our community, grassroots and school sports and 
4. the testbed and breeding ground for sports innovation and growth.
37. 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 it mean? I will give a couple of illustrations.
1. First, integration from a physical perspective will allow us to do more with one event.
   1. Members would have seen a glimpse of this at the WTT Grand Smash 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. These were matches that were taking place with some of the world’s best, and we also had tables around to engage the community, where people could come and play freely. 
   2. 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, Singapore Indoor Stadium and the new Kallang Tennis Centre, and confidently bring in a marquee sporting event such as an ATP1000 tennis event.
   3. High quality international marquee events will be complemented side by side, with local programming. And we can use all 89-ha of the Kallang Precinct to do so seamlessly. 
   4. 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 elite athletes, youth competitions, and so on. 
   5. So we will have a whole ecosystem of sports – our professional athletes competing in the arena, our budding youth athletes training in the sidelines, 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. 
2. Second, integration from a user point of view.
1. 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.
2. 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. 
3. Beyond just integrated service experience, users are likely to enjoy cheaper costs as SportSG is now able to reap precinct-wide economies of scale through shared functions and services. 
38. So 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.

Reason 3: The wider sporting and entertainment ecosystem has matured

39. Finally, the third reason for taking over the Sports Hub at this time is because the wider sporting and entertainment ecosystem has since matured.
40. I spoke about this earlier, that one of the key reasons for working with SHPL is to rely on their expertise and networks with international players around the world.
41. Over the years, our sector has grown and matured, and we are now much better placed to continue making Sports Hub a premier hub for sports and entertainment.
    1. Our own internal capabilities have grown. Over the past years of partnership, 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 series. As such, we have now developed the know-how, the links, the networks, and the experience to continue doing this.
    2. Our local and locally-based companies have also matured. Companies such as UnUsual Limited and LiveNation Singapore are now much more established and bringing in larger gigs. 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. 
       1. 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, such as AEG and IMG, as well as NBA which has announced their set-up of a Singapore office.  
    3. Third, demand for these events have also grown. With the recovery from the COVID-19 pandemic, there is now greater demand – and we see it ramping up both locally and regionally – for large-scale sport, lifestyle, and entertainment events.
42. Overall, the limitations of the current arrangement, the changing environment, our growing capabilities and ambition were all factors we considered when deciding on terminating the relationship.
    1. I would add that this was not a decision taken lightly, but we felt that, having done our due diligence at the start, and with the confluence of all these factors coming together, this was now the right time for the Government to exercise its right to step in, take over ownership, and continue the management of the Sports Hub.

What it means for future PPPs

43. Members Edward Chia and Sharael Taha asked about the impact which the termination in this case might have on the guidelines and considerations for future PPPs.
44. Each venture, whether PPP or otherwise, has to be considered on its own merits, and the purposes for entering into the arrangement in the first place.
    1. In this case, we foresaw in this arrangement that in the long-term, circumstances might change along the way, and we provided for an agreed no-fault termination mechanism in the PPP.  
    2. As I have outlined above, we had good reasons to terminate the Sports Hub PPP. Having reached this decision does not necessarily mean that all other PPPs will not be considered or that the Government should no longer be open to other PPP projects in future.
    3. Regardless of how projects are financed, we have a sound evaluation process to review the business case, scope, lifecycle cost, implementation approach and relative risks between Government and private sector for such projects. 
    4. 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, 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 Government can offer, and the need for flexibility or likelihood of downstream changes. All of these are factors that need to be taken into account, and no two projects would be similar. 
    5. This framework is continuously refined and builds on the lessons learnt locally and internationally elsewhere. 
    6. We will therefore continue to be open to leveraging PPPs as a model, where it is suitable. 

Costs of Termination

45. 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.
    1. Members Seah Kian Peng, Sitoh Yih Pin, Edward Chia, Lim Biow Chuan, Sylvia Lim, Sharael Taha, and Raj Joshua Thomas have all asked about the costs of termination.
    2. The key questions on this issue are: how much is Government paying in total for this early termination? How does it compare to what we would pay if we had continued with the partnership till 2035?  And if it is different, how do we account for it? 
    3. Let me address these points.
46. To do so, let me recap a few financial points on the PPP which I had raised earlier.
    1. 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 Government did not have to contribute any upfront capital for the construction in 2010. So, we did not pay upfront, and the cost of the loan for the financing of the infrastructure was borne by SHPL.
    2. Second, Government would pay SHPL a fee of $193.7M each year from the time the project started operations in 2014 until the end of the project in 2035. 
    3. Third, with this fee from Government, SHPL would then be responsible for the full operating expenditure, including daily operations, maintenance, security, and lifecycle costs for the entire project term. 
    4. Fourth, the assets would be returned to the Government at no cost in 2035. That is the framework for the PPP. 
47. Therefore, if we had continued with the PPP arrangement, the Government would continue to pay SHPL approximately $193.7M every year from now until 2035, and that works out to be approximately $2.32B. That is a committed sum under the PPP.
    1. This sum does not take into account for net present value and other financial and other accounting adjustments.
48. With the termination, the Government would have to pay two main buckets of cost.
    1. The first is the amount to be paid to SHPL for the termination.
       1. This amount is made up of several components, derived from the financial terms stipulated in the Project Agreement. I have 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 for which such a termination sum can be calculated. 
       2. Conceptually, the single largest component which accounts for about $1.2B or slightly more than 80% of the total sum to be paid is the capital expenditure that Government would have had to bear. In other words, the $1.2B or so sum would have had to go towards the capital expenditure. This is the capital expenditure the Government would have had to bear if it adopted the traditional procurement approach for proceeding with the Sports Hub on its own. 
       3. The remaining components, or about $300M are due to the fair open market value of the Sports Hub which is commercially negotiated, and also other costs, expenses and deductions, based on the Project Agreement.
       4. At present, the sum to be paid to SHPL upon termination is projected to be around $1.5B, but the final amount will be based on the accounts as at the date of handover, in December 2022, so there could be some fluctuations and variations. But we do not expect there to be a material variance from this figure. 
    2. The second bucket of costs is the costs of the future running and operating 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 had asked about this.
    1. We take, as a benchmark, the current operating assumptions and costs incurred by SHPL which includes maintenance, security, future lifecycle replacement, programming costs, day-to-day costs and so on all the way until 2035.
    2. Based on this, based on SHPL’s actual incurred costs, we expect to incur approximately $68M per year for operations. 
    3. If we were to draw a parallel comparison against the balance tenure of the project agreement, in other words, if we compare like-for-like until the end of the period in 2035, then we would be looking at $68m per year, which will bring us to approximately $800M until 2035. 
49. If this $800m is added to the termination sum, this makes the full projected costs of termination at around $2.3B. So, the termination sum added to the projected cost of maintenance and operations is roughly comparable to what it would have cost if we had chosen to continue with the PPP, and incurred the rest of the availability payments over the rest of the project period until 2035.
1. With the component figures taken at face value, without taking into account other accounting and net present value adjustment, this aggregate sum would be comparable to the financial obligation committed under the PPP had we chosen to continue with it.
50. We have carefully examined the finances to ensure proper due diligence, and to ensure that we can reach a financially rational outcome.
    1. 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 that Government is making to take back the assets.
       1. None of these components are penalties to Government for the termination, because the project agreement provides for a no-fault termination.  These are simply costs we would have had to incur or would have incurred going forward in terms of the capital expenditure and the operating expenses.   
51. Notwithstanding the financial calculations and due diligence to ensure that we reached 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 reasons, or to save money.
52. Indeed, we do not plan to operate the Sports Hub at status quo or on the same assumptions as SHPL.
53. We want to make the Sports Hub more accessible and bring more people into the Sports Hub. To do this, we will have more community programmes, invest to bring in more world-class events, and open up the Sports Hub and National Stadium to general community use.
    1. 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 we would incur previously.
    2. At the same time, however, this might be balanced off against the future revenue generated via 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. Now, when we run it, albeit in a different way based on different assumptions, the revenue we generate would go back directly in mitigating and deferring any of the increased costs. 
    3. Let me be clear – even as we do this and have different considerations, even as we want to enhance community participation at the Sports Hub, and enhance our programs, we must do it judiciously. We must still operate with financial prudence and ensure that we are not profligate in spending, and we are careful in how we spend.
    4. But taking back the Sports Hub from the private sector will also mean being able to re-define our outcomes away from being mainly or pre-dominantly commercial in nature:
       1. we will be able to better realise our sporting and social objectives, 
       2. open up the Sports Hub to Singaporeans, 
       3. and bring greater value and outcomes for us, for the future of sports in Singapore – for our athletes, and for the everyday Singaporean. 

Section 4: How our new structure can help us achieve the vision

54. Members Mohd Fahmi Bin Aliman, Shawn Huang, and Sylvia Lim asked about SportSG’s confidence and ability to take over, and how SportSG will continue working with the private sector.
55. 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.
56. To achieve this, SportSG will incorporate a holding company to own and operate the various pieces of assets within Kallang Alive.
    1. A subsidiary of this holding company will be set up specifically to own and manage the Sports Hub.
    2. 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, when the other projects in the Kallang Alive Precinct comes on stream. 
    3. 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. 
57. A team of officers from SportSG have already been earmarked to move into the Sports Hub holding company, and manage Sports Hub on a full-time basis
    1. 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.
    2. These officers in SportSG have already been functionally organised in a way that coheres with the organizational structure of SHPL, suited to running the Sports Hub.  
    3. They have been in this position for the last few years, readying for a takeover if and when needed.
58. Beyond the internal capabilities of SportSG, we value the expertise and experience of existing SHPL employees, and would like to retain them.
    1. 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.
59. Beyond the internal structure and resources, we intend to continue working and partnering with the best providers in the private sector – in the areas of programming, broadcast, hospitality, facilities upkeep and management, to name a few.
60. We will therefore continue to retain the contracting model. In other words, the model where we can sub-contract and work with various parties in the private sector.
    1. This would allow 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.
    2. 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. These are just some ideas. 
61. Overall, with SportSG taking over, the Government would be better placed to drive a coherent vision for the whole precinct, and achieve internal synergies while providing more integrated offerings and programmes to the public. 

Section 5: Sports as a part of the life of every Singaporean

The Value of Sports for Singaporeans

62. Finally, Mr Deputy Speaker, as I wrap up my speech, let me bring us back to our very initial vision of a Sporting Singapore, more than 50 years ago, all the way back to the early days of our independence.
    1. Then, 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 70s.
    2. 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 everyday life.  
    3. As then-Minister for Social Affairs, Encik Othman Wok, puts it in his speech at the groundbreaking of the former National Stadium in 1966, “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”. 
63. 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.
    1. Some of my own fondest memories growing up was the excitement of being able to play at the Zone or National Finals at the old National Stadium or simply being in the stands supporting and cheering my friends as they competed with rival schools.
    2. It made me feel like I was part of something larger, something more. And it made me connected with my school, my friends, and certainly with the sport – in a way that no other way can
    3. 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.
    4. Together, sport can make us into more resilient individuals, and strengthen our sense of unity as One Singapore.

    Partnering with Singaporeans

64. At the heart of it, this next chapter of Sports Hub is about sports being a part of the life of every Singaporean.
65. As we close the previous chapter, let me also acknowledge SHPL for its contributions.
    1. The partnership between SHPL and SportSG has given us a strong foundation for which we can now proceed to drive our social and sporting ambitions confidently.
    2. 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. 
66. Even so, as SportSG assumes full ownership and management from December this year, the efforts towards Sports for Singapore still remains a partnership:
    1. Between Government and the private sector partners we will continue to work with to provide top-class services,
    2. With the many community stakeholders as I mentioned- students, young athletes, junior athletes, seniors, and our NSAs, 
    3. And of course, the many Singaporeans who will participate and make the place even more vibrant and more alive. 
67. I am certainly excited at the potential we will be unlocking, as we build on what has been achieved, to turn Kallang Alive into a larger, more diverse, and vibrant sporting and lifestyle hub for everyone.
68. The Sports Hub will be a place:
    1. Where our students grow to be resilient, as they deal with wins or losses in their school colours.
    2. 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. 
    3. And where we cheer our athletes on, as they take on their competitors from around the world. 
69. 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.