Do big sports events like
London 2012 offer an opportunity for lessors? Antonio Fabrizio
reports.
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The impact of big sporting events
on leasing is evident in countries where hosting them represents an
opportunity to modernise infrastructure. In Poland and Ukraine,
which will jointly host the 2012 UEFA European Football
Championship, lessors are benefitting from large-scale
projects.
Andrzej Krzeminski, head of the
Polish Leasing Association, credits the UEFA Championship for the
recent resurgence of the Polish leasing industry.
“For the first time since 1989, a
huge investment has taken place in Poland. Hosting Euro 2012 is a
big opportunity for us. Leasing companies are providing financing
of construction and civil engineering machinery, as well as other
fixed assets connected directly or indirectly with Euro 2012,” he
said.
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By GlobalDataInvestment in
infrastructure
The new projects in Poland include
the construction or refurbishment of stadiums in Warsaw, Gdansk and
Wroclaw, new motorways and ring roads, national roads being
modernised, and new investments in railway transport.
De Lage Landen (DLL) has used the
event to boost its presence in Central and Eastern Europe.
Frans Janssen, DLL senior
vice-president for the region, said: “If you look at Poland for
Euro 2012 there is big infrastructure to be built, and for that
they will need machines.
“We have already seen an increase
in construction business. In our business model, it is very
important for our vendors to be in that process, and we will
support them to win tenders.”
He added that the same goes for
Russia, with the winter Olympics coming in 2014 in Sochi.
The case of Ukraine, which will
jointly host Euro 2012, is different. Although opportunities are
abundant, there are also more risks.
Roman Ivanenko, head of the
Ukrainian Union of Lessors (UUL), said: “Construction carries some
risks in Ukraine. All construction works in Ukraine are financed
with the state budget, but during the past years there have been
problems with the money in this budget.
“It is quite hard to be completely
confident when you are financing road construction companies,
because they don’t have stable sources of payment.”
‘Vast
possibilities’
Despite this, the list of new
projects connected to Euro 2012 in Ukraine is even more impressive
than in Poland.
It includes four new airports in
all four cities involved in the event (Kiev, Lviv, Kharkiv and
Donetsk), two new stadiums, new roads, and a large number of hotels
which will be built by 2012 in the four cities for football fans
and tourists. In Kiev alone, 12 new hotels are in the process of
being built.
“We are talking about vast
possibilities in real estate leasing, and also for the equipment
and furniture, because each hotel will have 200 to 300 rooms. It
might be risky for these hotels once the Championship is over, but
it is also an opportunity to promote tourism,” Ivanenko said.
The UEFA Championship will increase
the country’s air transport capacity, renew its train
infrastructure, and drive investment in coaches and trains.
“The Championship has forced us to
build four new airports, something that we haven’t done since the
last days of the Soviet Union in the early 1990s. It is a very good
example of how these events motivate people to do something good
for their country,” Ivanenko said.
Olympic
opportunities
A large number of tenders for the
London 2012 Olympic Games, including leasing for equipment such as
containers and commercial vehicles, have been published on
www.
CompeteFor.com
The majority of 2012 opportunities
have arisen from the big construction projects planned in east
London. These have included sporting venues like the Olympic
stadium, the aquatics centre, the velodrome, arenas and buildings
for the athletes, a new shopping mall in Stratford, and a new
utilities infrastructure in the Olympic park.
Many of the lessors financing
London 2012 activity are being tight-lipped about their
involvement; in any case many of the contracts are hires rather
than leases.
JCB Finance, which provides finance
for JCB’s construction equipment, described the London 2012 Olympic
Games as a “big opportunity”. It has secured a lot of hire purchase
deals for assets such as demolition machinery, telescopic handlers
and tracked excavators in 2008.
“Very often, the equipment financed
would be a hire purchase by a plant hire company, which would then
rent the equipment out to construction companies,” a JCB Finance
spokesman said.
Last year two consortia comprising
12 plant companies were awarded licences to run hire centres on the
Olympic site. One of the two consortia is led by Ashtead Plant Hire
and includes Greenshields JCB (one of the world’s largest JCB
dealers), Aggreko, Hilti, HSS Hire, LJG, DHL and Screwfix. The
second consortium comprises Speedy Hire, Lavendon, BSS Group and
Hewden Stuart.
At the Beijing Olympics 2008,
Deutsche Leasing China provided machinery including heavy mobile
cranes for the construction of the Bird’s Nest stadium.
Lu Qigan, general manager at
Deutsche Leasing China, said: “Construction is one of our main
portfolios. A lot of our lessees participated in the Beijing
Olympic construction project, so we saw an increase in our
business, too.”
Deutsche Leasing customers were
also involved in building roads and highways around Beijing,
driving demand for road pavers, asphalt pavers, rolling machines,
and other road construction machinery.
Sport and media
leasing
Large sporting events push demand
for other assets too, especially broadcast equipment such as
cameras, video recording equipment and screens.
Paul Robson, director of broadcast
finance broker Medialease, said: “Rental companies will be
absolutely sold out for the 2012 Olympics. In every town, every
major park, every piazza, people will want a big screen.”
The short term nature of such deals
can make them unattractive to lessors.
“Lessors are looking at a
three-year deal, and the Olympics provides only a three-month deal,
so the hire companies have to convince them that their business is
going to be able to sustain that. It is down to that, rather than
the Olympics,” Robson said.
Other Medialease customers include
sports clubs looking to install perimeter advertising boards and
replay screens. It has talked to lots of cricket grounds wanting to
install screens following a decision by the English Cricket Board
(ECB) two years ago that any test match venue should have a replay
screen.
For the Olympics, Medialease has
been talking to a manufacturer interested in sale and leaseback of
seating in temporary stadiums, and to a number of outside broadcast
companies looking to finance trucks and cameras.
Robson said the muted demand thus
far is down to the UK’s “last minute” approach.
“Elsewhere they might be more organised. In the UK, we have a
‘just in time’ attitude. Same goes for the Olympics: it will all be
just in time,” he said.
