Espoo guarantees private sports halls as financial problems mount

Several privately built sports halls backed by Espoo have run into financial trouble this year, raising questions about a model in which the city guarantees developers’ loans, Yle reports.

One example is Kameleonten, a multipurpose sports hall completed in 2023 in Leppävaara’s sports park. The hall has an athletics facility and five ball-sports halls, with about 11,000 square metres of sports space in total. It is often quiet during the day, while use is concentrated in a few busy hours in the evening.

The company behind Kameleonten asked for a break from loan repayments in the summer. In August, its monthly repayments of 130,000 euros were halved. In September, Espoo’s city executive board bought 270,000 euros’ worth of sports time at the hall for the rest of the year, in a move intended to prevent the company from going bankrupt.

The city has guaranteed the 25 million euro loan taken out by the hall company, which is owned by the youth association Logen i Gröndal. The association conceived the project after its old youth hall in Viherlaakso had fallen into disrepair and was no longer attracting young people.

Construction began in autumn 2021, but costs rose after Russia launched its full-scale invasion of Ukraine in February 2022. By the time the hall opened in 2023, several expected sources of income had dried up. There was no demand for trade fairs, and companies did not buy advertising banners as anticipated.

The association had also planned to pay down the loan with proceeds from selling its plot in Viherlaakso. Residents opposed a zoning change that would have allowed apartment buildings to be built there, and the association eventually sold the land to the city for much less than expected. Hall representative Patrik Gustafsson said the association estimates it lost about three million euros that could have gone towards repaying the loan.

Gustafsson said the city had also cancelled planned daytime use of the hall in 2023 because it lacked room in its budget. He said it had been clear from the start that the project needed the city to buy daytime sports slots.

Under Espoo’s partnership model, a private operator builds a sports facility and the city guarantees the loan needed for the investment. The city may also reduce land rent or agree to purchase use hours. Espoo’s sports director, Martti Merra, said that, taken together, users and the city have each covered about half the cost of projects built under the model.

Merra said the model has enabled about 15 sports halls to be built in Espoo over the past 30 years, with city guarantees for loans and investments worth about 150 million euros. But he also acknowledged that high prices can exclude some people: an hour in Kameleonten’s athletics facility can cost up to eight times as much as at Helsinki-owned Liikuntamylly. Espoo is reviewing the advantages and disadvantages of the partnership model.