UDIT SHETH, Founder and Managing Director of TransStadia, believes that good infrastructure is the catalyst to development of sports in the country, which is why he wanted to be in the infra, lifestyle, development side rather than the front end
After playing host to a successful Kabaddi World Cup, which concluded recently, The Arena by TransStadia can be expected to be the venue for many more sports events. Located in Ahmedabad, the Rs536-crore sports-cum-entertainment centre is being completed by SE TransStadia Pvt. Ltd., which is part of the Setco group. For Udit Sheth, Founder and Managing Director of TransStadia group of companies, launch of The Arena is a culmination of a journey which started in 2008. Speaking to SportzPower, the 37-year-old outlines his vision of creating many more indoor mutli-sport Arenas in India.
While you have launched The Arena for the Kabaddi World Cup, when do we see a fully-complete facility with all parts in place?
We are on schedule and only few aspects of the stadium need completion, which should also be done by February 2017. Once complete, I am proud to say, The Arena will deliver the functionality of a multi-purpose stadium for 14 sporting disciplines. In addition to its numerous facilities, we will also have a Sports Rehabilitation Centre with a state-of-the-art mobile medical van, and a team of specialised doctors delivering the best in sports science.
What made you chose sports infrastructure as an area to invest in, while most entrants into the industry are focused on creating leagues and owning teams?
This is the indispensable side of sports. We wanted to be in it -- the infra, lifestyle, development side of it. Not really on the front end; the teams etc where the whole emphasis is on who is bigger. We believe that good infrastructure is the catalyst to development of sports in the country.
But does it not worry you to enter an area where there is already so much idle capacity, with many a white elephant in nearly all major cities?
That is where we differ. We are creating a destination, not a stadium. The moment you term it a stadium, empty grounds come into the mind. We are developing what can be called a "utilisation model". The emphasis is on creating a facility where each part will contribute to the revenue. But this model requires that the facility be situated within the city.
But then does it not become a real estate play with the unaffordable price points in every city.
It does. That is why we need to have a public-private partnership (PPP) model. Where the land has to come from the government at a nominal rate. In this case we have a 35 + 35 years lease. Only the state government of Gujarat, then under the leadership of current Prime Minister, Narendra Modi, responded to us and we had no hesitation in locating the facility here.
So how will the utilisation model work where the football stadium is the centrepiece?
The Arena boasts of a FIFA standard natural turf with a seating capacity of 20,000, including patented expertise that enables the conversion of a section of the stadium into a 4000 capacity pillar-less multi-purpose indoor venue, creating an optimum spectator experience. Not only can the latter can be utilized for 12 indoor sports, we can increase our revenues by hosting exhibitions, social functions, conventions and corporate events. This increases our earning capacity tremendously. We also will house a 'members only' Eka Club, which will become a fitness and entertainment hub for the city. We have a built-up area of 13.72 lac sq.ft, part of which will also be rent out to top-notch retail brands. A 150-room hotel is also coming up in the complex. Hence the opportunities to earn revenue increase dramatically, thus insulating us from being merely a stadium and surviving on rentals.
What kind of a revenue mix has been forecast? How dependent are you on sports activities?
The interesting part is that nearly 80% of our revenue is expected to come from non-sports activities. To be precise, 78%. Only the remaining 22% is sports-related. Club membership, food & beverage, hospitality will be the major drivers. The club should contribute 55 to 60% while events and F&B should bring in 30-odd% from the non-sports business. You see, as long as the playing area is protected with the turf protection technology that we have imported, the facility can be utilised in multiple ways. In addition, we are also talking to various brands for selling the naming rights. This is the beauty of this model where there is limited pressure on sports activities to run the venue.
So, is the club membership programme going as per projections? What numbers are you targeting.
It is way beyond our expectations. Once potential members visit the place, conversion is at a high 25%. We will be happy with 1200 a year, and don't want to go over 8000, though we have a capacity for 22,000.
Is the hotel part of the Rs536 crores, or are you going to put in more funds.
The hotel will need an investment of another Rs80 crores. But whatever study we have done shows that the ARR (average room rate) due to this model will be very high. It will be a premium property, a deemed five-star. In fact, we might have few floors of commercial space, some for serviced apartments too.
When will it be operational?
We are aiming to start work next February and it should be completed in 18 months.
How is the financing of the entire project being done?
We have invested around Rs170 crores. It is a 2:1 debt-equity ratio. The lead bank is Bank of Baroda, supported by Bank of India and Union Bank.
And what kind of break-even period are we talking about.
Internally we are targeting 4 years, but to be on the safer side we have put it at 7 years.
Are you ignoring cricket, which is where all the money is?
We are not. We have been in talks with various stakeholders, especially for renovation of existing structures, to convert them into new-age stadiums with similar such convertible options for optimum utilisation. Now that we have a model ready on ground and not only on paper, it will be easy to showcase what can be done. There is a lot of interest from various entities to replicate this model, especially to set up new facilities.
Who all have shown interest till now?
Various state governments. We are in talks with a few and we should be able to finalise soon. The important thing is, as I had mentioned earlier, to get land within the city. The infrastructure has to be useful and accessible for citizens. If that can be done, then we can have a similar facility in each city. There is so much demand in our country.