A whole new ball game

Emil Górecki

Does Michel Platini regret the fact that UEFA gave Poland and Ukraine the right to host the Euro 2012 European football championships? although He has certainly gained a few more grey hairs since 2007, the Frenchman seems not to have been discouraged by the regular critical reports on the state of the preparations of both countries. but can the Poles and the Ukrainians really get their acts together in time for the big kick off?

In Monaco at the end of August, Michel Platini expressed his conviction that Euro 2012 would be held as planned in its four Polish and four Ukrainian venues in two years’ time, although he did admit that the state of the preparations in two Ukrainian cities still gave some cause for concern. Back in the spring on an inspection of the stadiums, the head of UEFA had not been so confident, and had given the Ukrainians two months to catch up. The threat must have worked as the final decision concerning the schedule of matches can finally be taken this month.

The matches are to take place in Warsaw and Kyiv, as well as in Gdańsk, Wrocław, Poznań, Lviv, Kharkiv and Donetsk, with the distance between the two furthest stadiums – Gdańsk and Donetsk – being more than 1,800 km. It is the responsibility of both countries to enable supporters to get to the cities relatively quickly and efficiently, find a place to sleep, see the match and return safely to their homes in Madrid, Oslo, Athens, Zhytomyr, etc. And this is no easy task. For the first time in the history of this sporting event – the third biggest in the world – two post-communist countries have been entrusted with organising it. The only previous time that the tournament was hosted by a country from behind the iron curtain was in Yugoslavia in 1976.

In the wake of the decision to award Poland and Ukraine with the right to organise the cup, a plethora of new projects was announced on both sides of the border. A dozen or so months were enough to scale back the plans to the most essential and priority projects. When the credit crunch came along, exacerbated by administrative and political ineptitude, the list became even shorter.

Risk under control

In August the Supreme Audit Office (NIK) published an annual report (for the third time) on the state of Poland’s preparations for the event. The findings were worrying, but not overly so. NIK expressed reservations with regard to the operations of PL.2012, the company assigned to coordinate and supervise the preparations. However, the reservations related to the internal organisation of the company rather than the execution of projects. PL.2012 insists that 85 pct of the 45 projects launched are key for the tournament to take place with the minimum delay. “The remaining 15 pct carry a higher risk, which does not mean that they will not be carried out, but that there could be delays to the basic schedule. All schedules have quite considerable safety buffers. A margin of safety is a normal element of investment projects with strict time schedules, and this is the situation we are dealing with in the case of Euro 2012,” explains Andrzej Bogucki, the member of the management board at PL.2012 responsible for infrastructure.

Higher risk means that the danger cannot be underestimated and the project completions have to be carried out on time. In order to achieve that, PL.2012 has introduced a project management system which allows for the assessment of the actual progress of the work and the precise identification of potential risks so that they can be minimised  and managed. In addition to this, employees of the company carry out monthly inspections at the building sites. Nevertheless, for all their efforts they were given a yellow card for jeopardising the whole tournament.

Enough places to play at

The national stadium in Warsaw is now steadily taking shape. More and more elements are being added to it every day: glass, barriers, supports, walls, etc. It should be finished before next summer, according to the schedule. There is now little risk attached to this project – or in fact to any of the other Polish stadiums. Even in Wrocław, where the city council threw the original contractors Mostostal Warszawa and J&P Avax off the building site, the arena will still be ready on time, albeit with increased supervision, and with the new contractor being Max Bögl. In Ukraine there is also little need to worry about how the stadiums are progressing. The Kharkiv and Donetsk stadiums have already been completed and are now in use. Substantial progress is also visible on the building sites of the facilities in Lviv and Kyiv. Everything points to the fact that they will be completed at the end of 2011 or early 2012,” says Maria Shkarpetina, a senior analyst in the economic and strategic research group at Jones Lang LaSalle.

Holes in the road map

We may not need to worry anymore about the stadiums, but things are not so simple when it comes to other projects. The airports in the four Polish cities are limited by the size of the funds allocated for them and some projects have even been postponed. The reasons given generally include difficulties connected with the acquisition of bank finance, or funding from the state, city budgets or EU funds. City road projects are being cut back every year. Few projects are being completed according to the approved schedule. NIK has also pointed out that the S3, S5, S7, S8, S17 and S19 expressways, which are vitally important for the event, will not be completed before June 2012. The completion of the construction of the A1, A2 and A4 motorways is planned for 2012, but the opening dates of some of the sections fall just a few days before the first matches. Unsurprisingly, NIK inspectors are regarding the assurances that the roads will be finished in time for Euro 2012 with a degree of scepticism. Supporters are unlikely to be able to move between the host cities easily and avoid traffic jams.

In May the Ukrainian government allocated nearly UAH 9.3 bln (app. EUR 920 mln) for the construction and modernisation of the roads needed for the event. The head of the National Roads company insists that 720 km of roads will be modernised by the end of the year and that the number will go up by as much as three times in the following year. “At the moment the construction of the most asset-intensive infrastructure, such as stadiums or airports, is being carried out most efficiently. However, the quality of roads is a weak point. Another serious problem is the planned railway service between the airports and city centres. There is quite a serious risk that the connections will not be ready by 2012. However, taking into consideration the recent acceleration of work, the probability is low that the right to organise the event will be taken away from Ukraine,” believes Maria Shkarpetina.

Guests with a roof above their heads

Andrzej Bogucki believes that Poland is well prepared for accommodating the tournament’s spectators. According to the initial estimates of PL.2012, Poland will be visited by 800,000–1.2 mln fans, mainly flooding into the host cities, which already have quite a good hotel base. “UEFA’s hotel requirements apply to only a few thousand beds in four- or five-star hotels for active participants and people connected with the Federation, which is being handled by tourist operator TUI. At this point, two years before the tournament, the company has contracted projects for nearly 100 pct of the required accommodation places,” points out Andrzej Bogucki of PL.2012.

The current hotel base for star-classified facilities has accommodation for app. 160,000 guests. However, PL.2012 is monitoring all possible accommodation facilities for quality and price standards, including hotels, hostels, motels, boarding houses, farm tourism facilities, apartments and other facilities that are not star-classified. During previous championships organised in countries where the number of hotel rooms is much higher than in Poland, railway stations, schools and sports halls were adapted to serve as lodging places. Such a strategy might also be necessary this time.

Private sector stalling

“The hotel sector in Ukraine is not very developed. When the decision about the hosts of Euro 2012 was announced, interest in hotel investment suddenly grew. Nowadays we know that out of all the announced projects, only perhaps every twentieth will be ready by 2012. The preparation of roads, airports and stadiums is not being carried out at such a slow pace. But unlike hotels, these projects are being financed or co-financed by the state budget,” remarks Ivan Kiseev, a consultant from the hotel department of Cushman & Wakefield. 
  However, he does note that officials, starting from those working for the cities up to the government and the President himself, are doing all they can to encourage investors to build hotels in Ukraine, and are trying to ease the procedures in the best way possible, as well as trying to sort out all the legal issues. At the beginning of September, the Ukrainian parliament approved amendments to a number of acts releasing hoteliers from income tax obligations for 10 years, provided that they open their renovated or newly-built facilities between January 1st, 2011 and September 1st, 2012. However, only hotels with three stars or more are subject to this legislation. “Such forms of help will, however, not sway possible decisions to build new hotels. What counts is the average annual occupancy rate,” argues Ivan Kiseev.

Despite the fact that developers have announced dozens of projects in five host cities since 2007, only a few are actually being built or already finished. The reason? Investors have analysed the market and come to the conclusion that apart from this event the demand for hotel rooms is not reliable. “In my opinion, one of the biggest mistakes made by the investors is focusing on luxury and expensive facilities, whereas the demand for cheaper rooms is more stable and less influenced by the economic climate. Even for this event there will be many more two- and three-star rooms needed than those of a four- and five-star standard. However, UEFA inspectors pay much more attention to the latter. Why? The answer is simple: they themselves will be sleeping in the luxury hotels,” believes Ivan Kiseev.

According to the national special purpose preparation programme for Euro 2012, 366 hotels need to be ready by the end of November 2011. According to the representatives of Tourism and Health Resort Service, this involves the modernisation of 265 hotels and the opening of 101 new ones – 47 of them in Kyiv, 24 in Lviv and 15 in Donetsk and Kharkiv at a cost of over UAH 320 bln (USD 4 bln). However, not all the announced projects will be cancelled. Some will be built after the tournament  has finished because, as the expert from Cushman & Wakefield points out, the Ukrainian hotel offer is still quite poor and the economy has significant growth potential.

The closer, the calmer

UEFA these days seems to be more and more content. Only two years ago its officials were thundering at Poland and Ukraine, threatening to take the tournament away from them. Nowadays their language is rather more diplomatic. “There is a lot of work in the area of infrastructure to be done in Ukraine. However, the plan presented by the government at the beginning of June and the deadlines included in it are satisfactory. There are no grounds to doubt its execution. UEFA is satisfied with these operations. We believe that all the projects will be ready on time. And there is now no doubt that Ukraine, together with Poland, will host Euro 2012 matches,” insist representatives of the European Football Federation’s press office.

However, it is not possible to complete all the planned projects – 20 months is simply not enough time. So we need to focus on the event being hosted if not perfectly, then at least as efficiently as possible. The championships will start in June 2012. But for Poland and Ukraine a more serious game than football has been taking place for the last three years.