#Durban2022 called off due to open-ended guarantee issue

GOVERNMENT has expressed its disappointment at the announcement by the CGF to withdraw the country’s bid to host the Commonwealth Games in Durban.

At a press conference this morning, 14 March, SA minister of sport and recreation, Fikile Mbalula expressed his regret of this outcome, which is “despite all the efforts and the positive responses from the Commonwealth Games evaluation commission on the potential capacity of the host city of Durban.”

According to Mbalula, in 2016 the CFG had resolved to support SA and the decision to revoke hosting rights was unexpected. Following a general assembly meeting in October, the SA government had until 30 November to submit a response on how outstanding issues would be resolved. Mbalula said this was provided timeously and they awaited feedback, which came in the form of this week’s announcement of the hosting rights withdrawal.

“It must be noted that when the Games were awarded to South Africa, South Africa had not signed the host city agreement. Clauses in the agreement were going to seriously compromise SA and government was not prepared to sign an open ended guarantee that indicated as follows:

‘The government will meet any potential shortfall in the budget for the organising committee (OC) arising from the preparations for and the hosting of the 2022 Commonwealth Games.’ And ‘the government also guarantees subsidies or rental costs related to the Commonwealth Games Village.’

Due to the above requirement, the Finance Guarantee was delayed but was signed in June 2016. The minister of finance signed the guarantee in respect of the R2,6-bn operational budget and a contingency budget which is capped at 18%.

The financial guarantee was also subject to the willingness of the CGF to constructively engage with South Africa and Durban on all possible revenue sharing streams related to the Games including among other things, ticketing, merchandising and broadcast rights.

Having learnt lessons from other events, the SA government had no appetite to issue an open ended guarantee including having to transfer a large portion of funds to a newly established private entity. The expectation that the SA government will have to provide more than what cabinet had approved could not be sustained in the current economic environment,” he explained.

“At this juncture, our country is regrettably not in a position to make huge financial commitments given the current competing socio-economic needs and global economic downturn. In the interests of fiscal discipline and financial prudency, our government has considered all options and remains confident that we have acted in the best interest of South Africa.”

Click here to read Fikile Mbalula’s full statement.


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