What is it about owning and building trophy stadia assets? The aura
surrounding the Sydney Olympics persuaded a group of normally sensible
investment banks to underwrite the Stadium Australia float which was always
going to be a dog and left them with a loss of more than $200 million.
The same thing then happened to the original investors in Melbourne’s
Docklands stadium although this might yet turn around for the Seven
Network which is currently in intense negotiations to sell the
management rights for around $200 million.
Multiplex made a tidy profit building the Olympic Stadium but then
deluded itself that it could do the same in a completely different
environment at Wembley and has now dropped well over $100 million,
causing a share price rout.
The latest example is the $423 million redevelopment of the MCG which
is headed for the courts in the next few weeks as Grocon finalises a
claim of close to $100 million.
The Grollo family’s Grocon has at least been able to deliver the MCG in
time for the Commonwealth Games, but now both the state government and
the Melbourne Cricket Club members don’t want to share the cost of this.
Multiplex is well-known for taking a different approach over disputes,
such as the time they simply stopped working on Federation Square until
the Bracks Government agreed to fund huge blowouts. Interestingly,
Multiplex appear to be playing a similar game over the completion of
Wembley in time for this year’s FA Cup final, although there’s no
suggestion they’ve actually stopped work.
The Grollos were expecting John Wylie and the MCG Trust to do what
Lloyd Williams did with the Crown Casino project – agree to pay for all
the additional changes and tight deadlines as they emerged.
Wylie’s decision to play hardball has brought back memories of the
notorious 1993 dispute over a new headquarter for the SECV when the
Kennett Government simply refused to pay the $32.6 million a year in
rent which was due to Grocon for the next 20 years.
Instead, with the banks breathing down their necks, Grocon sold the
Flinders Street building back to the government for $250 million, a
hefty discount on the $646 million over 20 years that was stupidly
committed by those incompetents in the Kirner Government.
Ironically, John Wylie was the man who then flogged off Victoria’s $30
billion energy sector for the Kennett Government, although he wasn’t
directly involved in the hard-ball negotiations over the SECV
headquarters which left a very bitter taste in Bruno Grollo’s mouth.