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MR. STEPHEN LAU MAN-LUNG (in Cantonese): Mr. Chairman, I will be more than happy to try to answer the questions posed by Mr. Li Wah-ming. We are talking about a very huge facility. It has got 40,000 seats. It has not been opened yet. It will be difficult for me to estimate the possible revenue and profit. It is true that the Board of Governors has some sort of plans. But whether the plans will be realised or not, we have to wait until the opening of the Hong Kong Stadium before we can make further estimation. Regarding the first year, the expected expenditure will be spent on 35 programmes. Then every year there will be 5 more programmes and when it reaches the 5th year, there will be 60 programmes for that year. It is fortunate on our part that all the 50 suites have already been hired. All the restaurants and small food outlets have also been hired. As regards the estimated revenue, the admission and ticket charges are calculated on the basis of HK$150,000 per day or 20% of the proceeds. Regarding income from restaurants and small food outlets, between 20% to 25% of the turnover will be calculated as our revenue. But the most important thing is that after the opening of the Hong Kong Stadium, how many performers will come to give performances and how many people will turn up as audience are still unknown to us. So it will be difficult to give exact figures. Assuming all the projected figures turn out to be true, then it is estimated that there may be ten million dollars as profit. The Chairman had been talking about recovering the expenditure in a time frame between 3 to 7 years. I think this is not far from our estimation. But of course, as I have already mentioned, this is a new facility with no proven track record. If we are to write it down on the paper, I am sure members will ask to justify the figures. I do not think the Chairman nor the Board of Governors will be able to back up with very solid figures if Members ask how these figures are derived. There is a technical difficulty. I hope Mr. Li Wah-ming will be satisfied with my answer.
CHAIRMAN (in English): Maybe I can supplement a little bit. Although we plan 35 events for the first year, so far according to our bookings, there will be 8 event days in March, 10 in April and 12 in May. So altogether that makes up 30 already in three months. So in all probability the total number of event days booked would be over our targeted figures. In addition, as Mr. LAU pointed out, we have income from the VIP suites which are fully over-subscribed already. Some for 1 year, some for 2 years and some for 3 years. Another aspect of our income would be merchandising, we will be selling souvenirs with special regard to the Stadium. Of course Mr. Lau also mentioned the percentage of charges on all the food outlets. This would be another source of our income. Advertising would be another source of the income. So for the first year, we are looking at a surplus of at least $10,000,000. But again as Mr. Lau pointed out, it will be very difficult for us to make a forecast, over-optimistic or over-pessimistic would mislead the Council or mislead the Board of Governors. We have got to be conservative in case we under-perform below our target. But in all probability, the Board of Governors and the management of the Stadium would try very hard to make as much surplus as possible and to repay the
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Urban Council as soon as possible. So maybe we have another follow-up from Mr. WONG Siu-yee.
MR. WONG SIU-YEE (in Cantonese): Mr. Chairman, regarding the $175 million that have already been advanced, I understand that some have been spent on the fitting-out of the restaurants. I want to know how we are going to recoup the expenditure. What I really meant was that: Were we going to get something from the rental or the hire charges of the restaurants or will the operators of the restaurants be reimbursing us on a lump sum basis?
MR. STEPHEN LAU MAN-LUNG (in Cantonese): Mr. Chairman, regarding the fitting-out costs, we do not have a separate item as to how much we have spent on the restaurant. There is no statutory provision to require how much is to be recovered from the restaurants. But I understand that as far as the main kitchen is concerned, we have spent about $15 million. Regarding the remaining $160 million, they were spent on general facilities, e.g. the connection of sewage pipes and also the air-conditioning of the facilities. It will be difficult to attribute them to individual operators. But what I can see for certain is that for some small food outlets willing to provide for their own facilities, the percentage of repaying back to the Urban Council will be lower. For restaurants who are taking out smaller amount in terms of investment, in future they will be giving a higher percentage of their turnover to the Urban Council. I can only talk about 'percentage' because in future the higher the patronage of the restaurants in the Hong Kong Stadium, the more we will get. Please therefore patronize the Stadium as much as possible in order to facilitate early recovery of the expenditure.
MR. WONG SIU-YEE (in Cantonese): As far as the fitting-out costs for the restaurants are concerned, my calculations show that we are spending a figure of about $80 million. That is for food outlets and restaurants. I do not think it is $15 million. It should be $80 million. Can Mr. Lau confirm to me on this point? And my second point is: I wonder whether such an arrangement will give people the impression that we are giving capitals for operators to invest in the business? I think it has never been our practice to furnish the restaurants, to furnish the kitchen, to pave the carpets, etc. for others to operate their business. So what is your view, Mr. Lau?
MR. STEPHEN LAU MAN-LUNG (in Cantonese): Mr. Chairman, I have already answered these aspects of the questions. It will be very difficult to divide the expenditure on air-conditioning ducts, sewage pipes and drains and they must be done beforehand. When I talked about $15 million, it refers to individual restaurants. I think even for ordinary commercial premises, when you let it to restaurants, you still have to provide for the air-conditioning, sewage drains and pipes. That is an usual practice. As to whether it is possible to rely on one single party for the recovery of the expenditure, it will be hard to say. I think we should adopt a macro view. We should take the Hong Kong Stadium as a
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HONG KONG URBAN COUNCIL
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MR. STEPHEN LAU MAN-LUNG (in Cantonese): Mr. Chairman, I will be more than happy to try to answer the questions posed by Mr. Li Wah-ming. We are talking about a very hugh facility. It has got 40 000 seats. It has not been opened yet. It will be difficult for me to estimate the possible revenue and profit. It is true that the Board of Governors has some sort of plans. But whether the plans will be realised or not, we have to wait until the opening of the Hong Kong Stadium before we can make further estimation. Regarding the first year, the expected expenditure will be spent on 35 programmes. Then every year there will be 5 more programmes and when it reaches the 5th year, there will be 60 programmes for that year. It is fortunate on our part that all the 50 suites have already been hired. All the restaurants and small food outlets have also been hired. As regards the estimated revenue, the admission and ticket charges are calculated on the basis of HK$150,000 per day or 20% of the proceeds. Regarding income from restaurants and small food outlets, between 20% to 25% of the turnover will be calculated as our revenue. But the most important thing is that after the opening of the Hong Kong Stadium, how many performers will come to give performances and how many people will turn up as audience are still unknown to us. So it will be difficult to give exact figures. Assuming all the projected figures turn out to be true, then it is estimated that there may be ten million dollars as profit. The Chairman had been talking about recovering the expenditure in a time frame between 3 to 7 years. I think. this is not far from our estimation. But of course, as I have already mentioned, this is a new facility with no proven track record. If we are to write it down on the paper, I am sure members will ask to justify the figures. I do not think the Chairman nor the Board of Governors will be able to back up with very solid figures if Members ask how these figures are derived. There is a technical difficulty. I hope Mr. Li Wah-ming will be satisfied with my answer.
CHAIRMAN (in English):-Maybe I can supplement a little bit. Although we plan 35 events for the first year, so far according to our bookings, there will be 8 event days in March, 10 in April and 12 in May. So altogether that makes up 30 already in three months. So in all probability the total number of event days booked would be over our targeted figures. In addition, as Mr. LAU pointed out, we have income from the VIP suites which are fully over subscribed already. Some for 1 year, some for 2 years and some for 3 years. Another aspect of our income would be merchandising, we will be selling souvenirs with special regard to the Stadium. Of course Mr. Lau also mentioned the percentage of charges on all the food outlets. This would be another source of our income. Advertising would be another source of the income. So for the first year, we are looking at a surplus of at least $10,000,000. But again as Mr. Lau pointed out, it will be very difficult for us to make a forecast, over optimistic or over pessimistic would mislead the Council or mislead the Board of Governors. We have got to be conservative in case we under-perform below our target. But in all probability, the Board of Governors and the management of the Stadium would try very hard to make as much surplus as possible and to repay the
Page 104 of 132
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209
Urban Council as soon as possible. So maybe we have another follow-up from Mr. WONG Siu-yee.
MR. WONG SIU-YEE (in Cantonese):—Mr. Chairman, regarding the $175 million that have already been advanced, I understand that some have been spent on the fitting-out of the restaurants. I want to know how we are going to recoup the expenditure. What I really meant was that: Were we going to get something from the rental or the hire charges of the restaurants or will the operators of the restaurants be reimbursing us on a lump sum basis?
MR. STEPHEN LAU MAN-LUNG (in Cantonese):-Mr. Chairman, regarding the fitting-out costs, we do not have a separate item as to how much we have spent on the restaurant. There is no statutory provision to require how much is to be recovered from the restaurants. But I understand that as far as the main kitchen is concerned, we have spent about $15 million. Regarding the remaining $160 million, they were spent on general facilities, e.g. the connection of sewage pipes and also the air-conditioning of the facilities. It will be difficult to attribute them to individual operators. But what I can see for certain is that for some small food outlets willing to provide for their own facilities, the percentage of repaying back to the Urban Council will be lower. For restaurants who are taking out smaller amount in terms of investment, in future they will be giving a higher percentage of their turnover to the Urban Council. I can only talk about 'percentage' because in future the higher the patronage of the restaurants in the Hong Kong Stadium, the more we will get. Please therefore patronize the Stadium as much as possible in order to facilitate early recovery of the expenditure.
MR. WONG SIU-YEE (in Cantonese):-As far as the fitting-out costs for the restaurants are concerned, my calculations show that we are spending a figure of about $80 million. That is for food outlets and restaurants. I do not think it is $15 million. It should be $80 million. Can Mr. Lau confirm to me on this point? And my second point is: I wonder whether such an arrangement will give people the impression that we are giving capitals for operators to invest in the business? I think it has never been our practice to furnish the restaurants, to furnish the kitchen, to pave the carpets, etc. for others to operate their business. So what is your view, Mr. Lau?
MR. STEPHEN LAU MAN-LUNG (in Cantonese): Mr. Chairman, I have already answered these aspects of the questions. It will be very difficult to divide the expenditure on air-conditioning ducts, sewage pipes and drains and they must be done beforehand. When I talked about $15 million, it refers to individual restaurants. I think even for ordinary commercial premises, when you let it to restaurants, you still have to provide for the air-conditioning, sewage drains and pipes. That is an usual practice. As to whether it is possible to rely on one single party for the recovery of the expenditure, it will be hard to say. I think we should adopt a marco view. We should take the Hong Kong Stadium as a
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