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Pre-match build up Behind the scenes preparations for the World Cup finals which kick off in Paris next week, were immense. Stadia had to be built or renovated, an elaborate opening ceremony organised

France's long tradition of using private finance to build major public projects was extended from the water and transportation sectors into stadium construction for the World Cup. The £267M Stade de France, which will stage next week's opening game between Scotland and Brazil - and of course the World Cup final on 12 July - was built using a mix of public and private money.

The stadium is designed, built, financed and operated under a 30 year concession by Stade de France Consortium, whose shareholders are contractor Bouygues and utilities conglomerates Lyonnaise des Eaux and Gnrale des Eaux.

The consortium won the concession after bidding for the lowest amount of state subsidy. In the deal the French government has put up £127M with the consortium raising £140M in private finance. The public money was earmarked specifically to fund the construction phase, set at a fixed amount, with the consortium taking the risk on cost overruns.

The private finance element kicks in during the operational phase and comprises £80M in long term bank loans, £45M from medium term loans and £15M from the consortium's three shareholders. The package has still to be approved by the French government as it has to take on the loan repayments if the operating concession is terminated in the future.

Working out the balance of risk between state and private sector was tricky, largely because of the difficulties in predicting ticket revenues for the operating phase after the World Cup.

The Stade has managed to scoop major events like French soccer internationals and Five Nations rugby matches, but it has so far failed to find the first division soccer club needed to generate more regular ticket revenues. The French government has now agreed to carry the risk that the stadium fails to find such a club after efforts to persuade top soccer club Paris St Germain to relocate from the Parc des Princes failed.

Instead, second division club Red Star will move to the ground. But as this team is unlikely to sell as many tickets as a first division club, the government has agreed to pay the operator £7.3M a year over the next three years to make up for the expected revenue shortfall. This situation provides an unusual scenario of the French government having a vested interest in the success of a football team.

Other aspects of the risk sharing arrangement were even more controversial, with the government agreeing to compensate the operator for loss of revenue should major sporting events be cancelled.

But this arrangement landed the government in trouble with the French courts. Such provisions had been ruled out during the original tender process but were written into the final contract late in the day after Consortium Stade de France was named preferred bidder.

A Paris court ruled that the compensation clauses were illegal after complaints from second placed consortium of architect Jean Nouvel, HOK Sport and Dragages et Travaux Publics. This ruling came in summer 1996 when construction was well under way. It meant the concession agreement could have been terminated, bringing the project to a halt and severely embarrassing the French government.

To get around this problem, the government took the unusual step of passing a special piece of legislation to legalise the concession at the end of 1996. This ensured that work could continue unhindered and the stadium commissioned in time for next week's opening match.

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