image

Kai Tak Sports Park

Three-way tussle to build new Hong Kong sports park includes French and mainland Chinese bids

Consortiums headed up by New World Development and an Alibaba subsidiary among contenders for project which could bring in annual profits near HK$300 million

PUBLISHED : Friday, 24 November, 2017, 7:33am
UPDATED : Friday, 24 November, 2017, 10:38am

The battle to run a showpiece project at the site of Hong Kong’s old airport was heating up on Thursday, with consortiums from the mainland, Hong Kong and France in the final running for the HK$32 billion sports park contract.

Three consortiums – headed by an Alibaba Group subsidiary, New World Development and Dragages Hong Kong respectively – made the Home Affairs Bureau’s shortlist to design, build and run the complex on a 25-year lease, sources said. Three other bids did not make the cut.

The finalists have six months to design the project, with the winner expected to start work in the middle of next year, and finish it before the current government’s term ends in 2022.

The sports park, a 28-hectare site where the city’s Kai Tak airport used to be, will have a 50,000-seat multipurpose stadium with a retractable roof, a 10,000-seat indoor arena and a 5,000-seat community sports ground, plus shopping and dining areas. It is expected to generate up to HK$300 million in annual profits.

“The three companies are selected but they still need to wait for the government’s tender document for official entry,” a source familiar with the bid said.

It was understood that former Ocean Park chairman Allan Zeman had lent support to the Alibaba-associated bid as a shareholder with expertise in running large events. The consortium was formed by nine investors, including Alibaba-controlled AGTech Holdings, mainland sports conglomerate Viva China Holdings and LKF Attractions, of which Zeman is a director.

Viva China is chaired by Chinese Olympic gold medal-winning gymnast Li Ning.

Alibaba, the mainland e-commerce giant which also owns the Post, declined to comment.

Zeman said one of the bidders had approached him, but declined to comment further.

Another of the final three, Hong Kong-based New World Development, enjoys the advantage of already operating the Hong Kong Convention and Exhibition Centre in Wan Chai, through NWS Holdings.

A company called Kai Tak Sports Park Ltd was set up in April with New World’s executive vice-chairman Adrian Cheng Chi-kong and NWS Holdings’ executive director Brian Cheng Chi-ming as directors, according to the Companies Registry.

Sports chief says sports park ‘no white elephant’ – and Hong Kong can play part in China World Cup with it

The company is jointly owned by New World Sports Development and NWS Sports Development, which have a 75 per cent stake and a 25 per cent stake respectively.

The third contender is Dragages Hong Kong, a subsidiary of French giant Bouygues Construction. It is the parent of a management company that runs AsiaWorld-Expo, the city’s other major convention and exhibition venue, on Lantau Island.

Neither New World nor Dragages replied to requests for comment.

Under the plan, the government will cover the building costs for the winning bidder, which will need to bear the operating costs and share a percentage of its income from the site with the government. An operations consultant projected that the operator could make a net profit of HK$51 million in its first year of operation and HK$291 million five years later.

The two runners-up will be compensated HK$60 million each, an arrangement which has drawn the ire of pan-democrats in the Legislative Council.

According to government tender documents, eligible bidders should have experience of completing at least one building contract worth no less than HK$1 billion, and experience running a large stadium or arena for three years or more.

In June, Legco granted cash for the HK$31.9 billion complex even as critics raised concerns over the – as they saw it – pro-business financial arrangements, and the possibility of it becoming a white elephant project.

‘Get Kai Tak sports complex right or you lose HK$1 billion’

A spokesman for the Home Affairs Bureau said three final tenderers had been selected.

“We will invite all pre-qualified tenderers to tender within this year and target to complete the tender process for tender award in mid-2018. We cannot disclose the tender assessment criteria or tenderers’ information at this stage,” the spokesman said.