The Vysočanská O2 arena will swallow up still more money. Sazka is preparing the construction of a so-called “Small Arena” for 6,000 people to be built inside the current arena.
The small arena would cost CZK 1.1 billion, as part of the construction of the whole complex. The addition to the structure will cost another billion. The complex is slated to open next autumn.
Negotiations with Lighthouse
“It is exactly the sort of venue that Prague needs. It could replace Lucerna,” Aleš Hušák, Sazka’s general director, told HN. He said neither Sazka nor Bestsport will fund the construction of the complex addition. “It’s a foreign investment that we will need to pay back over a long period. Sazka doesn’t have the resources to invest in building the Small Arena,” he said.
It is expected the partner for the construction will be Lighthouse, which is building a huge shopping centre near the O2 arena. The building should be connected to the arena not only above ground, but under ground as well.
According to Lighthouse representatives the cost of the Small Arena reconstruction could reach CZK 1 billion. “The investment is still under discussion,” said Pavel Hain- Schmiedberský from Lighthouse.
Lighthouse Group has been on the Czech Market since 2000. One of its well-known projects is the administration centre Lighthouse Towers in Holešovice.
Hungry for small investments
According to Hušák, thanks to the Small Arena, the complex will have a great deal of flexibility. So if an event that sells fewer tickets than expected can be moved to the smaller venue and thus save money for the promoter.
“We have a special position when it comes to big events, but there is also an incredible demand for smaller events, for venues with a capacity for around 5,000. We could fill four such arenas daily. The demand is enormous,” said Hušák, adding that with the addition of the Small Arena, the use, and thus also the efficiency, of the O2 Arena will increase. Catering, for instance, could double.
The multifunctional sports and cultural arena in Prague’s Vysočany, which cost Sazka around CZK 8 billion, will be paid off by 2021 at the earlier. According to Hušák, this will not be a return investment, although the complex is functioning well.
“We are in the plus for the second year now. Earnings before interest, taxes, depreciation and amortization amount up to CZK 650 million to CZK 850 million a year. In terms of cash flow, the arena works very well. If we open the Small Arena, the situation will be even better,” said Hušák.
Partner to help pay back loans
“The owner and the operator of the multifunctional O2 arena is the company Bestsport, whose shareholders are its owners, as well as Sazka. Sazka paid back loans for the constriction of the arena using bill payable, a programme that was stopped because of the impact of the global crisis on the financial sector.
But two weeks ago, the company announced that it has closed a deal with J&T bank for a bill payable programme for up to CZK 1.3 billion. According to the the agreement, Sazka will be the bill payable guarantor.
“The paying back of the loans will happen the way it is supposed to. Those fees put pressure on us, but, even if we hadn’t found a partner, we would have paid the money back. But then we might not have had money left over for other payments – by this I don’t mean loans – but other e expenses,” said Hušák.