Ukraine Races To Prepare For Euro 2012 As World Cup Concludes

KIEV, Ukraine -- Ukraine, co-host to the Euro 2012 soccer championship, is struggling to avoid the pitfalls that plagued South Africa when the World Cup host battled ballooning costs and tight deadlines.

The former Soviet state has less than two years to finish stadiums in Lviv and Kiev, renovate airports and railway stations, and build hotels that were promised when it won the joint bid with Poland. The $3.3 billion project corresponds with a recession that has drained the state budget.

“We need to work, work and work non-stop,” said Hryhoriy Surkis, president of Ukraine’s Football Federation, in a July 5 interview in Kiev. “The biggest problem for us is personnel. Building a facility is not a problem, the question is who will manage it?”

The Euro championship is the second-biggest football event after the World Cup, drawing as many as 1.2 million fans from across the continent and as many as 150 million television viewers per game, according to the Union of European Football Associations, or UEFA. The final game will be played in Kiev, Ukraine’s capital, on July 1, 2012, after 16 nations compete over more than three weeks.

Ukraine’s government was criticized as recently as March by UEFA President Michel Platini for failing to make substantial progress on the stadium in Lviv. UEFA now says the country, along with Poland, will probably be ready.

‘Generally Satisfied’

“UEFA is generally satisfied with the status of preparations in the host countries, even though a few delays have been experienced in the development of some infrastructure, notably due to the past political instability in Ukraine and the very harsh climatic conditions during the last winter,” UEFA said in an e-mailed response to questions.

Preparing for an event of this scale is unprecedented in Ukraine, a country where living standards are less than half the level of Switzerland and Austria, according to a January 2010 study published by International Living. Switzerland and Austria hosted the Euro 2008 championship.

South Africa estimated it would need 2.3 billion rand ($303.7 million) in 2004 to build five stadiums and renovate five others for the World Cup. The price tag ballooned to more than 16 billion rand by the time the tournament was staged. Human rights organizations said the money and expertise could have been put to better use providing homes to the 12 million South Africans that lack proper shelter.

The World Bank has estimated the cup, which has been held every four years since 1960, will help boost economic growth in Poland and Ukraine because of jobs created for construction of facilities and investment by the government. Euro 2008 generated about 1.3 billion euros ($1.6 billion) from broadcasting, ticketing and corporate hospitality, according to UEFA.

‘Zero’ Doubts

Ukrainian authorities have “zero” doubts the facilities will be prepared in time, said Deputy Prime Minister Borys Kolesnikov in a July 8 interview at his office in Kiev. UEFA officials also denied a media report on July 12 that UEFA could move the entire cup to Poland if Ukraine isn’t ready.

“There is no reason for UEFA to look into alternatives, the so-called ‘Plan B,’ if this plan is respected and delivered,” UEFA said. “Should the plan not be respected, then UEFA would of course have to look into alternatives for the staging of Euro 2012. Alternatives that could be considered in the first place are a reduction in the number of host cities.”

Ukraine has “wasted time,” said Martin Raiser, the World Bank’s director for Ukraine, Belarus and Moldova, on July 1. The government should use the tournament to generate and attract investment, he said.

Money Woes

Completing construction in Ukraine has been hurt by a lack of money. The state budget deficit swelled to 11.5 percent of gross domestic product in 2009 from 1.32 percent the previous year. The economy contracted 15.1 percent last year, the steepest drop since 1994.

Kolesnykov said the country will find funds for Euro 2012. Spending for new stadiums in Ukraine will cost “no more” than $700 million, he said. Airport runways in Donetsk, Lviv and Kharkiv will cost about $500 million, and new terminals in Donetsk, Kiev and Lviv airports will be another $450 million to $500 million, Kolesnikov said. Terminal ramps will cost $200 million to $250 million.

Ukraine may issue a Eurobond later this year or sell other debt to cover the costs, Kolesnikov said.

“We are worried solely about the servicing and management of the facilities,” Kolesnikov said. “We need people who have technical education and at the same time they need to know languages. South Africa, like us, had never hosted a top championship.”

Source: Bloomberg