CreatingaNetwork ofCommunitybasedSportsHubs

ExecutiveSummary

KualaLumpur,Malaysia|July2017

Photocredit:Shamrie Sainin,2014

IntroductionTheGlobalInstituteForTomorrow(GIFT)isanindependentpan-Asianthinktankprovidingcontent-richandintellectuallychallengingexecutiveeducationforanAsianworldview.InresponsetoagrowingdemandintheASEANregion,GIFTopeneditsASEANofficeinKualaLumpurinOctober2016tocontributetotheregion’sdynamicgrowth.

The Malaysia Young Leaders Programme (YLP) is GIFT ASEAN’s first and annual flagshipleadership experiential programme designed for young Malaysian professionals across sectors:Government, Private and Civil Society to engage in leadership development and constructivedialogue.

In July 2017, 20 participants from 11 companies, representing the government and privatesectors joined the inaugural Malaysia YLP in Kuala Lumpur.

In partnership with the Ministry of Youth & Sports and part of an initiative of NationalTransformation 2050 (TN50), participants worked to produce recommendations for theMinistry for the development of a network of community based sports hubs across Malaysia.

Through field-research, stakeholder interviews and site visits, participants gained deeperinsights into the sports landscape in Malaysia; the challenges faced by different members ofthe community to gain access to sports; and the opportunities to explore new ideas to achieveKBS’s vision to be a sporting nation by year 2020.

The following pages are an Executive Summary of the business plan. More detailed analysiscan be found in the full report which is available upon request.

Malaysia’sHealthChallengeEngagementinsportsplaysasignificantroleinpromotingmentalandphysicalhealthandinbuildinginclusive,vibrantcommunities.Intoday’smodernsociety,physicalinactivity,obesityandratesofnon-communicablediseaseareincreasingglobally.TheWorldHealthOrganization(WHO)reportedthatapproximately3.2milliondeathseachyearareattributabletoinsufficientphysicalactivity.

InMalaysia,obeseandoverweightmakesuphalfofitspopulationandtheMinistryofHealthhasreportedsignificantincreasesinlifestyle-relateddiseasessuchasdiabetesandhypertension.SportsneedtoplayabiggerpartofeverydaylifeamongMalaysians.

SportsParticipationinMalaysiaRegular sports play a significant role in promoting physical and mental health. Yet in Malaysia,participation in sports remains low at 30% in comparison to sporting nations such as Japanwhere 60% of the population regularly play sports. Aside from the physical health benefits,sports (especially group sports) play a vital role in growing and nurturing healthy communities.

Accessibility to sports and involvement in physical activity is important to create a sportingculture and Malaysia is not excluded. A few factors have been identified as reasons for the lowrate of sports participation in facilities among Malaysians.

Unevendistributionofsportsandrecreational

facilities&pooraccessibility

Poormaintenance Facilitiesdonotcatertocommunityneeds

ProjectPartner:MinistryofYouth&SportsFormallyestablishedin1987,theMinistryofYouth&Sports’(KBS)mandateistoempoweryoungpeopleandtodevelopsportsthroughaninclusive,innovateandcomprehensiveapproach.

Sinceitsestablishment30yearsago,theMinistryhasachievedanumberofmilestonesandlednumerousinitiativesthathavesoughttoimprovethelivesofmanyMalaysians.Despitenumerousgovernmentinitiatives,activelifestylehavenottranslatedintothegeneralbehaviouralchangewithintheMalaysiansociety.

Vision

• Empower young people to develop their full potential and become the drivers of nationaldevelopment to achieve Malaysia’s Vision 2020.

• To create a Sporting Nation by year 2020 by advocating for sports as a lifestyle choice amongMalaysians, regardless of gender, age or ethnicity.

NationalTransformation2050TN50 or National Transformation 2050 is Malaysia's 30 yeartransformation plan that aims to serve as a national discourse seriesgeared towards charting the nation's direction via a new canvas.

Malaysia has a high public issue at hand- high incidence for non-communicablediseases such as heart disease anddiabetes… sports is a way to addressthese issues. We need to come up withideas where people can come togetherand have that spirit of community andtogetherness in playing sports. The ideaof the Hubs must be low cost, highimpact, rapidly implementable andfinancially sustainable.

YBBrigJenKhairy JamaluddinMinisterofYouth&Sports

TRUST

TheProposalCommunity Sports Hubs

The solution proposed is the creation of a network of sustainable community sports hubs. Acommunity sports hub is,

• Acentrethatactivatesidlespacesintoaccessibleandattractivesportsvenuestodrivecommunityinterestandincreaseengagement.

• Asocialspacethatbringsthecommunitytogetherregardlessofage,gender,ethnicityoreconomicstatus.

• Asociallybeneficialandfinanciallyviableenterpriseofferingemploymentandvocationaltrainingtoyouth.

• Accessibilityhereisdefinedasa5-10minutewalkforchildrenfromhometothehub.Ashortwalkingtimeatthesametimesatisfiedparentsconcernsaboutsafetyandtime.

• Raiseandmanagefundstosupporttheconstructionofnewfacilitiesoftherevitalisationofexistingspace.Fundswillbegeneratedfrombothpublicandprivatesources,includingprivatedonations,sponsorshipandnamingrights,untappedgovernmentandprivategrantsearmarkedforsportingevents.

• Identifysuitableoperatorsthroughcompetitivetenderingprocess.Operatorswillsetupandrunthehubsasfinanciallysustainablesocialenterprisesandmanagesatellitefacilitiesinresidentialareas.Operatorswillpayanannualmanagementfeeequivalentto4%ofinitialcapitalprovidedbytheTrustanda40%shareoftheirfinancialsurplustotheSukaSukanTrust,whichwillcovertheTrust’soperatingexpensesbyYear3.

• Createandmanagetheonlineplatform- MYSportstoenableuserstobookfacilitiesreal-time,easilylocatenearbyfacilities,connectwithotherusersforgamesandtournaments.

The Suka Sukan Trust

The recommendations include the establishment of a newpublic-private entity, the Suka Sukan Trust. The Trust wouldseek to establish sports and community centres that are safe,run efficiently and meet the needs and requirements of theirrespective communities across Malaysia.

Managed by experienced professionals with solid financialexperience and appropriate legal expertise, the Suka SukanTrust functions to:

The Suka Sukan Trust would seek to establish 5 community hubs and 10 satellites as part of apilot to test the approach to operational issues and the financial models in Kuala Lumpur.

It is estimated that RM56million of capital is required and after the pilot has proven to be asuccess both operationally and financially, the Trust will then work with the Government andother stakeholders to build a roadmap to scale up and reach the target of close to 2,000sports and community centres across Malaysia.

ProposedBusinessModelFundingSources

TheTrust• BoardofTrustees• ManagementCommittee

ManagementFeeNamingRightsSurplusSharing

OnlinePlatform

DigitalAdvertising

EntitlementstoTrustbenefactors

Govt Corporate Donations

1

2

4

6RetailOperators

ContractualAgreement

Outreach

OperatorC

◆◆◆

OperatorA

◆◆◆

OperatorB

◆◆◆◆◆◆

OperatorD

◆◆◆◆◆◆◆◆◆

OperatorE

◆◆◆◆◆◆

Communities

HubOperators

7

3

BookingFees

5

Hub

Satellite

Revenue

Expenses

Outreach

◆

1 The Trust will raise and manage fundsfrom the Government, corporations anddonors. The Board of Trustees will beresponsible for fund and revenueoversight- including the construction ofHubs or revitalisation of existing Hubs.

2

The Suka Sukan Trust will selectoperators through a tendering process.Selected operators will participate in siteselection, Hub design and communityoutreach/consultation in run-up tooperations.

The Board of Trustees consists ofrepresentatives from KBS, formernational athletes, business leaders andcommunity leaders. It will be managed byexperienced professionals with solidfinancial and legal expertise.

3

Operators will pay the Trust a one-timemanagement fee. 40% of any surplusprofit is redirected to the Trust. Thefunds will be used to fund capitalexpenditure and daily operationalexpenses of the Trust.

4

The online platform- MYSports will bemanaged by the Trust. The bookingplatform is free of charge and as the userbase of the online platform grows, it canbe monetized for digital advertisementsand serve as an auxiliary revenue for theTrust.

6

Operators will lease spaces at the Hubsfor retail operators.

7

5 Operators manage the day-to-dayoperations of the hubs and oversee theperformance of satellite venues acrossthe community. Operators can managemore than on Hub.

TRUST

ClassificationofaHubandSatellite

Anoperationalmulti-functionalcentrethatincludessportingfacilitiesand

retailsspaces.OBJECTIVE

Existingidlepublicspaces tocreateanevendistributionofcommunitysports

centres.

Tobedetermined bytheTrust- itcouldbeanexistingpublicfacilityinneedofrevitalisationoranewfacilitytobe

constructedfollowingapre-feasibilitystudy

LOCATIONUtilising existingpublicownedspaces

suchaslocalpark,schoolfields,rooftops.

Revenuecentres OPERATIONS Costcentres

BangsarSportsComplex, Kompleks 3K-Subang Jaya

EXAMPLES 1MalaysiaFutsalcourts

◆HUB SATELLITE

OperatorSelection

Scaling&GrowthStrategy

Potential operators will be carefully reviewed on a case-by-case basis against a set of criteria andrequirements to ensure that the best interests of the trust, the community and the hub operatorare met.

Operatorswillbeselectedbasedon:

Yearsofexperienceoperatingcommercial

facilities

Sportsrelatedexperience

Financialmanagementcapabilities&

entrepreneurialexperience

Reputationandrelationshipsinthecommunity

Commitmenttocreatingsocialvalue

Hubs & Satellites

MYSports App

The online mobile platform will serve to connect individual community sports hubs andsatellites to a single network.

Construction/RevitalisingofHubs

Existinggovernmentandlocalcouncilownedsportsfacilitiesareviablesitestopilotthe

project.

ActivationofSatellites

Byleveraginguponexistinglocalparksandavailableschool

playingfields.

Coverage

Locationofthesatellitesandhubsarenomorethan1KM

apart.

• Revivingsmallandexistinggroundsandconnectingthemtoalargernetworkoffacilitiescanincreasecoverage.

• Centralisedpointforfacilitylocation,availability,instantaneousbookingandpayment

• Sharingofinformationandaplatformtoorganisesportingevents

• Virtualengagementwithmultipleusersandcommunities

• Datacanbemonetisedfordigitaladvertisingastheuserbasegrows

FinancialProjections

0

500

1,000

1,500

2,000

2,500

-RM4,000,000

RM6,000,000

RM16,000,000

RM26,000,000

RM36,000,000

RM46,000,000

RM56,000,000 Revenues

NetProfit

Noofhubsandsatellites

Breakeven

332,640

450,540

566,740

657,660

746,043

(200,000)

(100,000)

- 100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

Year1 Year2 Year3 Year4 Year5

Revenue

NetProfit(excl.depreciation)

The Suka Sukan Trust

The Suka Sukan Trust presents an excellent opportunity for investors, both from theGovernment and Private sector, who wish to increase sports participation among Malaysians.The Trust will require an initial investment of RM16million to cover capital expenditures andexpenses.

• Accordingtothebasecase,theTrust’soperationsareself-sustainingbyYear3.

• Theprojectionindicatesasoundlong-termfinancialposition,allowingtheTrusttosupportandfacilitateongoingoperationsofthehubsandsatellites.

• Themodelproposedispublic-privatepartnershipdriven,with90%offundingcomingthroughtheprivatesector,andgovernmentfundingonlyneededattheinitialstage.

* Formoredetailedanalysis,scenariosandthekeyassumptions,pleaserefertothecomprehensivereport.

ProjectedNetProfitfortheSukaSukanTrust

RM56mil

-RM4mil

Prospective Hub Operators

For operators of the hubs and satellites, base case projects operations are self-sustaining byYear 2 with an average of 60% utilisation rate.

• Accordingtothebasecase,theTrust’soperationsareself-sustainingbyYear3.

• Healthyprojectionsforhubsarebasedonincreasedutilisationratesandnumberofhubs.

• Analysisisbasedonacombinedprofileforanoperatorwithonehubandthreesatellites.

The financial analysis projections presented here were modelled around preliminary findingsand data. Further analysis is required at the implementation stage to determine the viableoptions palatable to all stakeholders.

MYR

ProjectedNetProfitforOperators

• Setting up the right public-private model and good governance, the Suka Sukan Trust candrive a robust development of a network of community sports hubs that are accessible andsustainable.

• Connecting and activating the network through the MYSports platform for single point ofvisibility and ease of operations.

• Stringent operator selection and contract management to ensure that the need forcommunity sports take precedence over rent-seeking practices.

• Encouraging community involvement in all stages as ownership will help communities to beself reliant instead of being dependent on the Trust or government as service providers.

The recommendations present a compelling case for all stakeholders including very criticallythose with a role in investing in the Suka Sukan Trust and those wanting to run the hubs andsatellites on a commercial basis. It is recommended that at the next stage of implementationmore analysis be conducted and the proposal carried forward with the aim of breakingground on 5 pilot hubs to test the operational and financial models.

FormoreinformationontheMalaysiaYoungLeadersProgrammepleasecontactusatenquiry@global-inst.com

KeySuccessFactors

Pilotperiod Scalingupnationwide

2,000Centres500Hubs+1500Satellites

RM56M

Year1

15Centres5Hubs+10Satellites

Year0

RM424MCapitalrequired:

Expansionplan:

Year5

Year5

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