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applicants of the results of their applications, we do not have such a time limit. The next concert will be staged in July if it is approved. We have not made a decision yet. We have only informed the Stadium Manager that for the time being, such applications should not be considered. After our last motion debate, we have informed the Stadium Manager that he should not accept such applications for the time being.
MR. MA LEE-WO (in Cantonese):—If this is the case, I think this is unfair to the hirers because it is almost mid-May and the concert is to take place in July. If we still cannot inform hirers whether their application is successful nor not, that is not fair to them because they might have to consider cancelling the activities or changing the venue. I would like to know when will the BOG inform the applicants?
MR. STEPHEN LAU MAN-LUNG (in Cantonese):—Mr. Chairman, there is no alternative because last month's motion very broadly restricted the BOG's consideration of such applications. Pursuant to the motion, the BOG must consider such applications discreetly. It is because we can only accept applications after we have effectively controlled the noise level. The BOG has not taken a decision on when to accept such applications.
(5) MR. WONG SIU-YEE asked the following question (in Cantonese): According to the financial forecast of the Hong Kong Stadium released in November 1993, 36 events were scheduled for the year 1994/95. A profit of $31m would be obtained if all 36 events take place rescheduled.
The financial forecast dated 1 March 1994, however projected a profit of only $8.83m for the year 1994/95, which is less than one-third of the previous forecast. There is a significant difference between the two forecasts which were compiled with in an interval of less than four months. I would like to ask the following questions:
(a) On what basis was the financial forecast of November 1993 worked out? (b) How are the 36 events mentioned in the November 1993 forecast classified, are they classified into various categories of activities, such as concerts, sports and other large scale events?
(c) According to the Schedule of Events listed in the Hong Kong Stadium Report by Wembley International (HK) Ltd. dated 1 April 1994, there are, up to 1 April, 21 bookings for sport events, including those already held and 8 already confirmed. In addition, there are 12 provisional or confirmed bookings for non noise-making events. Judging from this trend, there is clearly no problem to meet the annual target of holding 36 events which do not involve the use of noisy sound equipment. If that is the case, will the Stadium have any surplus? If not, what are the reasons?
(d) Can Wembley International (HK) Ltd. be urged:
(i) to assist in supporting the promotion of local sport activities;
57
(ii) to plan and organize sport events of international level for the Stadium systematically; and
(iii) to examine whether the Stadium can achieve self-sufficiency in finance by mainly organizing sport events?
MR. STEPHEN LAU MAN-LUNG, MEMBER OF THE URBAN COUNCIL, replied as follows (in English):— Mr. Chairman, Mr. WONG Siu-yee raised a series of questions regarding the financial aspect of the Hong Kong Stadium. Mr. WONG queries the difference in the two sets of estimates regarding the projected profit in the financial forecast of the Hong Kong Stadium for the year 1994/95; one was prepared in November 1993 and the other was contained in a report dated 1 March 1994.
As a matter of fact, the projected profit in the November 1993 financial statement was $21 million for the year 1994/95, and not $31 million as mentioned in Mr. WONG's question. The $31 million for 1994/95 in that statement was actually the projected cash flow balance, not profit.
The financial forecast was reviewed in January 1994 and a more realistic booking programme was assessed. As a result, 32 event days were considered likely to be achieved for 1994/95. These included 17 days for sport and others, as well as 15 days for pop concerts. The projected profit for 1994/95 adopting the accrual account basis was then revised from $21 million to $8.83 million as against a surplus of $17.23 million adopting the cash basis after the downward adjustment of the anticipated event days from 36 to 32, and a further review of the direct and fixed costs, as well as a change in depreciation policy.
Let me now respond to the four specific questions Mr. WONG raised. On (a), the financial forecast in November 1993 was based on the level of enquiries for booking of the Stadium at that time. It was originally anticipated that in 1994/95 there would be 36 event days. The projected revenue was made based upon the estimated ticket prices, attendances and spending by visitors for these events. The estimated expenditure was based on the estimates of the operating and overhead costs to operate these activities.
On (b), the 36 events anticipated in November 1993 consist of 16 days for pop concerts and 20 days for sport and others.
On (c), assuming that 36 event days will actually materialise in 1994/95 and all these functions will be financially healthy, it would be reasonable to expect a surplus in the 1994/95 account. However, it is probably unrealistic to assume that all 36 events will be held in 1994/95, as indicated by the latest booking position as follows:
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58
Event Sport Pop Concert Others Total Provisional Booking 10 11 9 30 Confirmed Booking 7 (already staged) 11 6 24On (d), yes, Wembley International (HK) Ltd. have been requested by the Board of Governors to assist in the promotion of local sport activities and to examine whether the Stadium can achieve self-sufficiency in finance by mainly organizing sport events.
As regards Mr. WONG's suggestion to urge Wembley to plan and organize sport events of international level for the Stadium systematically, I must point out that this does not fall within the purview of the Stadium Manager who is tasked to manage the venue and market its usage only. It would be up to the hirers to decide the type of events to be staged at the Stadium, and to plan and organise their own events systematically.
MR. WONG SIU-YEE (in Cantonese):—I have attended a lot of UC monthly meetings but the answer this time is the most disappointing one. My questions have not been properly addressed. May I try to raise certain queries hoping that I can get better answers? Point 3 of the reply says that the projected profit has been adjusted downwards. I wonder whether this trend will continue until the Stadium is running a deficit? After three months, the projected profit has been adjusted to a figure of $17 million. May be eventually you get a deficit. Is it true that the UC will give up managing the Stadium? Is it true that when there is a deficit we are not ready to operate it? May be according to the projection in the near future, we will get a deficit budget. May be we have to decide whether we will give up managing the Stadium. This is my first question.
Secondly, the answer says that the projected profit is adjusted downwards because of depreciation, direct and fixed costs, etc. But I have checked the two financial forecasts. It seems that the direct and fixed costs have not been changed. They are intact. On what basis is the downward adjustment being made? According to my observation, the direct and fixed costs remain unchanged in these two estimates. It is also unrelated to depreciation. Why is it that we have lost $17 million in the proceeds? It disappears.
In point 8 of the answer, it says that Wembley would be asked to study self-sufficiency. It is really a contradiction because it seems it is not possible to come up with a relevant set of estimates. Could Mr. Stephen LAU tell us explicitly that Wembley is really not capable of coming up with a set of estimates? We shall be more realistic because we can see that Wembley is just sitting there passively waiting for people to make bookings. It is very hard for Wembley to come up with a realistic estimate to achieve self sufficiency. Is Mr. LAU telling us explicitly that Wembley is not able to come up with a set of estimates which can achieve self sufficiency? If that is so, we can think of other alternatives. We don't have to wait then.
Lastly, this is the point which I am most dissatisfied. The aim of engaging
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HONG KONG URBAN COUNCIL
applicants of the results of their applications, we do not have such a time limit. The next concert will be staged in July if it is approved. We have not made a decision yet. We have only informed the Stadium Manager that for the time being, such applications should not be considered. After our last motion debate, we have informed the Stadium Manager that he should not accept such applications for the time being.
MR. MA LEE-WO (in Cantonese):-If this is the case, I think this is unfair to the hirers because it is almost mid-May and the concert is to take place in July. If we still cannot inform hirers whether their application is successful nor not, that is not fair to them because they might have to consider cancelling the activities or changing the venue. I would like to know when will the BOG inform the applicants?
MR. STEPHEN LAU MAN-LUNG (in Cantonese):-Mr. Chairman, there is no alternative because last month's motion very broadly restricted the BOG's consideration of such applications. Pursuant to the motion, the BOG must consider such applications discreetly. It is because we can only accept applications after we have effectively controlled the noise level. The BOG has not taken a decision on when to accept such applications.
(5) MR. WONG SIU-YEE asked the following question (in Cantonese): According to the financial forecast of the Hong Kong Stadium released in November 1993, 36 events were scheduled for the year 1994/95. A profit of $31m would be obtained if all 36 events take place rescheduled.
The financial forecast dated 1 March 1994, however projected a profit of only $8.83m for the year 1994/95, which is less than one-third of the previous forecast. There is a significant difference between the two forecasts which were compiled with in an interval of less than four months. I would like to ask the following questions:
(a) On what basis was the financial forecast of November 1993 worked out? (b) How are the 36 events mentioned in the November 1993 forecast classified,
are they classified into various categories of activities, such as concerts, sports and other large scale events?
(c) According to the Schedule of Events listed in the Hong Kong Stadium Report by Wembley International (HK) Ltd. dated 1 April 1994, there are, up to 1 April, 21 bookings for sport events, including those already held and 8 already confirmed. In addition, there are 12 provisional or confirmed bookings for non noise-making events. Judging from this trend, there is clearly no problem to meet the annual target of holding 36 events which do not involve the use of noisy sound equipment. If that is the case, will the Stadium have any surplus? If not, what are the reasons?
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HONG KONG URBAN COUNCIL
(d) Can Wembley International (HK) Ltd. be urged:
(i) to assist in supporting the promotion of local sport activities;
57
(ii) to plan and organize sport events of international level for the
Stadium systematically; and
(iii) to examine whether the Stadium can achieve self-sufficiency in finance
by mainly organizing sport events?
MR. STEPHEN LAU MAN-LUNG, MEMBER OF THE URBAN COUNCIL, replied as follows (in English):— Mr. Chairman, Mr. WONG Siu-yee raised a series of questions regarding the financial aspect of the Hong Kong Stadium. Mr. WONG queries the difference in the two sets of estimates regarding the projected profit in the financial forecast of the Hong Kong Stadium for the year 1994/95; one was prepared in November 1993 and the other was contained in a report dated 1 March 1994.
As a matter of fact, the projected profit in the November 1993 financial statement was $21 million for the year 1994/95, and not $31 million as mentioned in Mr. WONG's question. The $31 million for 1994/95 in that statement was actually the projected cash flow balance, not profit.
The financial forecast was reviewed in January 1994 and a more realistic booking programme was assessed. As a result, 32 event days were considered likely to be achieved for 1994/95. These included 17 days for sport and others, as well as 15 days for pop concerts. The projected profit for 1994/95 adopting the accrual account basis was then revised from $21 million to $8.83 million as against a surplus of $17.23 million adopting the cash basis after the downward adjustment of the anticipated event days from 36 to 32, and a further review of the direct and fixed costs, as well as a change in depreciation policy.
Let me now respond to the four specific questions Mr. WONG raised. On (a), the financial forecast in Novemebr 1993 was based on the level of enquiries for booking of the Stadium at that time. It was originally anticipated that in 1994/95 there would be 36 event days. The projected revenue was made based upon the estimated ticket prices, attendances and spending by visitors for these events. The estimated expenditure was based on the estimates of the operating and overhead costs to operate these activities.
On (b), the 36 events anticipated in November 1993 consist of 16 days for pop concerts and 20 days for sport and others.
On (c), assuming that 36 event days will actually materialise in 1994/95 and all these functions will be financially healthy, it would be reasonable to expect a surplus in the 1994/95 account. However, it is probably unrealistic to assume that all 36 events will be held in 1994/95, as indicated by the latest booking position as follows:
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58
Event
Sport
HONG KONG URBAN COUNCIL
Pop Concert
Others
Total
Provisional Booking
Confirmed Booking
10
11
9
7 (already staged)
11
30
6
24
On (d), yes, Wembley International (HK) Ltd. have been requested by the Board of Governors to assist in the promotion of local sport activities and to examine whether the Stadium can achieve self-sufficiency in finance by mainly organizing sport events.
As regards Mr. WONG's suggestion to urge Wembley to plan and organize sport events of international level for the Stadium systematically, I must point out that this does not fall within the purview of the Stadium Manager who is tasked to manage the venue and market its usage only. It would be up to the hirers to decide the type of events to be staged at the Stadium, and to plan and organise their own events systematically.
MR. WONG SIU-YEE (in Cantonese):—I have attended a lot of UC monthly meetings but the answer this time is the most disappointing one. My questions have not been properly addressed. May I try to raise certain queries hoping that I can get better answers? Point 3 of the reply says that the projected profit has been adjusted downwards. I wonder whether this trend will continue until the Stadium is running a deficit? After three months, the projected profit has been adjusted to a figure of $17 million. May be eventually you get a deficit. Is it true that the UC will give up managing the Stadium? Is it true that when there is a deficit we are not ready to operate it? May be according to the projection in the near future, we will get a deficit budget. May be we have to decide whether we will give up managing the Stadium. This is my first question. Secondly, the answer says that the projected profit is adjusted downwards because of depreciation, direct and fixed costs, etc. But I have checked the two financial forecasts. It seems that the direct and fixed costs have not been changed. They are intact. On what basis is the downward adjustment being made? According to my observation, the direct and fixed costs remain unchanged in these two estimates. It is also unrelated to depreciation. Why is it that we have lost $17 million in the proceeds? It disappears. In point 8 of the answer, it says that Wembley would be asked to study self-sufficiency. It is really a contradiction because it seems it is not possible to come up with a relevant set of estimates. Could Mr. Stephen LAU tell us explicitly that Wembley is really not capable of coming up with a set of estimates? We shall be more realistic because we can see that Wembley is just sitting there passively waiting for people to make bookings. It is very hard for Wembley to come up with a realistic estimate to achieve self sufficiency. Is Mr. LAU telling us explicitly that Wembley is not able to come up with a set of estimates which can achieve self sufficiency? If that is so, we can think of other alternatives. We don't have to wait then. Lastly, this is the point which I am most dissatisfied. The aim of engaging
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