At the end of May, a number of major Russian cities held annual The Future of the City business forums, organised by Delovoy Kvartal magazine. KPMG was the general partner of the event in Ekaterinburg and exclusive partner in Nizhny Novgorod and Rostov-on-Don.
The main topic of the discussions concerned the preparation of Russian cities to host the 2018 FIFA World Cup. As the auditor of FIFA and the Russia-2018 Organising Committee, KPMG was an active participant in the discussions in every city. The regional authorities and heads of leading companies had to answer the question: “The World Cup – is this the goal, or a means of developing a city?” Most participants were of the opinion that the city infrastructure created within the framework of preparations for major sports events should drive the growth of the regional economy.
Talking about infrastructure, the forum’s participants drew attention not only to the construction/reconstruction of stadia, training grounds, airports and roads, which is stipulated by FIFA requirements, but also to the modernisation of the entire urban environment: the construction of hotels and development of transport and social infrastructure. The regions will have to allocate corresponding funds from their own budgets and also raise funds by involving private investors in the process.
Andrey Grichuk, Head of the KPMG Volga Regional Centre, commented: “Today financing issues are more relevant than ever, and accordingly, the topic of organising partnership mechanisms between business and the state has come to the forefront.” Nodirbek Vakhidov, Head of the KPMG Urals Regional Centre, and Anton Peshkov, Director, Corporate Finance, KPMG in Moscow, continued: “In 2011, Sverdlovsk Oblast adopted a law on public-private partnerships. Projects relating to preparations for the 2018 World Cup could become pilot projects for the collaboration of the public and private sectors.” They noted that it was necessary to leverage international experience, where stadia have already been built/reconstructed within the framework of PPP projects, in particular the stadia in Portugal and also in France, where EURO-2016 will be held. “To provide the forum participants in Rostov-on-Don with the best international practice of organizing large-scale sports events, KPMG invited Alexander Koch, Deputy Head of FIFA Communications and Marketing, to share some real examples of running World Cup finals across the globe. The authorities and business community in our city learned first-hand about the challenges and benefits of such events for the host cities,” commented Alexander Merkel, Head of KPMG in Rostov-on-Don.
Speaking about the financing options, one should keep in mind that in addition to PPP there are also other models for raising finance, such as project and debt financing, subsidies, etc. Stepan Svetankov, Director, Corporate Finance, KPMG in Moscow, spoke at the forums about these models. He noted that, in addition to state funds and private investments, securitisation is becoming increasingly popular. This is when football clubs sell a share of their future incomes. As a rule, the rights to name stadia are sold, to advertise on t-shirts, and to supply catering, licences for the sale of VIP seats, and season tickets. Stepan’s presentation was followed by Anton Peshkov (at a forum in Nizhny Novgorod) and Julia Stefanishina, Director, Forensic, KPMG in Moscow (at a forum in Rostov-on-Don) who spoke about construction project management and presented KPMG experience in this sphere.
The participants from the forums in all three cities highly rated the presentations given by KPMG experts, noting in particular the firm’s experience of implementing major infrastructure projects, including PPP projects, and also of structuring and raising finance.