Adelaide Oval hotel inquiry: SMA reveals they turned down CBA bank loan as it was too risky

An inquiry has heard why the Adelaide Oval’s Stadium Management Authority turned down a bank loan to fund its $42 million hotel.

Adelaide Oval will become the first stadium in Australia to feature an integrated hotel under the SMA proposal.

The Adelaide Oval’s Stadium Management Authority had the opportunity to borrow up to 70 per cent from a bank to fund its $42 million hotel on the stadium’s eastern side, it has been revealed.

But the SMA turned down the offer from the Commonwealth Bank to get a loan of up to $29.4 million, at a rate of 4.51 per cent, because the SANFL and SACA would have to put up $12.6 million in cash equity upfront.

At the second hearing of a parliamentary inquiry into the proposal, and the $42 million the State Government will provide towards it at a 4.5 per cent loan, SMA chief Andrew Daniels revealed the offer by the Commonwealth Bank to fund part of the construction.

But Mr Daniels — who is paid about $450,000 a year — said the outstanding amount, and the conditions on it, the proposal did not satisfy the SMA’s “risk appetite”.

He said if the SMA didn’t get the $42 million contribution by the State Government then there was likely the project wouldn’t have proceeded.

“I as chief executive could not have recommended it to the board because there was no way we could fully fund this project with a 70 per cent loan,” he said.

“We did not have the $12.6 million in cash.”

Stadium Management Authority’s Andrew Daniels.

Adelaide Football Club CEO Andrew Fagan

But Mr Daniels, and SMA chair Kevin Scarce rejected the idea that the finances of the proposed hotel was on “thin ice”, and said taxpayers would receive at least $5 million over 10-years in the form of interest.

This was even though the Department of Treasury and Finance chief executive David Reynolds said Treasury believed the business case for the proposal “did not stack up” with a rate higher than 4.5 per cent.

Labor Treasury spokesman Stephen Mullighan said it was stunning the SMA didn’t pursue the Commonwealth Bank offer.

“None of this is providing any comfort that this is a good deal for taxpayers,” he said.

It also emerged that the Adelaide Crows is dissatisfied with the governance model of the SMA, and has called for a representative from them and Port Adelaide to be installed at the expense of a SANFL member.

In their submission to the inquiry, Crows chief executive Andrew Fagan wrote that “key data and information” was withheld from the two AFL clubs despite their value to the Oval.

Committee member Frank Pangallo said the AFL clubs needed a place on the SMA board.

“Both clubs are the principal tenants and provide the bulk of their revenue stream,” he said.

Mr Scarce said the Crows and Power had “no financial skin” in the Oval but he would speak to Crows chairman Rob Chapman in the coming weeks.