Approximately 65 percent of Ulaanbaatar’s population consists of young people, a demographic reality that places growing pressure on the city’s social and recreational infrastructure. Despite this, the capital still faces a shortage of properly developed leisure areas, as well as modern sports and cultural facilities that meet the needs of its residents. In this context, the proposed Ulaanbaatar Arena, a 74-million-USD project planned under a public-private partnership, has attracted significant public attention, though not without concern. Rather than generating widespread optimism, the initiative has prompted caution, largely due to the country’s experience with past publicly funded construction projects that were delayed, left incomplete, or never fully put into operation.
Questions have also been raised regarding the project’s overall necessity. Ulaanbaatar, home to approximately 1.6 million people, already has four large venues that meet international standards. Critics argue that before embarking on another major construction effort, the Government should clearly demonstrate why existing facilities are insufficient and how the new arena would provide added value. As public discussion continues, doubts remain about whether this project will avoid the shortcomings of earlier initiatives. Issues of transparency, long-term management, and effective use of public resources are central to the debate. Until these concerns are addressed in a clear and credible manner, public skepticism toward the Ulaanbaatar Arena is likely to endure.
It has potential to become an economic engine
To assess the relevance of the proposed Ulaanbaatar Arena, it is first necessary to clearly understand what an arena is, and how it differs from the conventional sports halls familiar to the public. The term “arena” originates from the Latin word harena, meaning sand, a reference to ancient Roman gladiatorial venues where sand was spread across the floor to absorb blood during combat. In the modern era, however, the concept of an arena has evolved far beyond its historical origins. Today, an arena is designed not merely as a space for athletic competitions, but as a multifunctional, self-sustaining business complex. Its primary purpose is to host a wide range of large-scale events, including international sporting tournaments, concerts, conferences, exhibitions, and cultural performances, often on a year-round basis.
A contemporary arena typically incorporates commercial infrastructure such as restaurants and cafes, fitness centers, retail outlets, VIP lounges, media facilities, and office spaces. These components are not secondary features but essential elements of the business model. They allow the arena to generate steady revenue regardless of whether major events are taking place, ensuring continuous economic activity rather than sporadic use.
By international standards, an arena is expected to function as an economic engine for the city in which it operates. It should attract foreign performers, athletes, investors, and visitors, stimulate surrounding businesses, and contribute to employment and tax revenue. Crucially, such facilities are not designed to depend on ongoing state subsidies. On the contrary, their viability is measured by their ability to finance operations, maintenance and future development through their own income. In Mongolia, however, this model has often failed to operate as intended. Large public facilities have frequently relied on government funding to cover operational costs, while commercial components remain underdeveloped or poorly managed. As a result, venues that should generate profit have instead become a financial burden on the state budget. This disconnect between international practice and domestic implementation lies at the heart of public concern surrounding new arena projects. Until this structural issue is addressed, through transparent planning, professional management, and a clear revenue strategy, any new arena risks repeating the same pattern, regardless of its scale or design.
The 74 million USD project and taxpayers’ concerns
The Government has recently announced its decision to construct the Ulaanbaatar Arena in partnership with Shunkhlai Holding, with a total investment of 74 million USD under a public-private partnership framework. According to officials, the project aligns with the long-term “Vision-2050” development policy and is intended to improve public health and overall quality of life by promoting healthy lifestyles and providing children and young people with a safe, constructive environment in which to spend their leisure time.
Under the proposed arrangement, financing for the project will be provided entirely by the private sector, while the Government will be responsible for land allocation and supporting infrastructure. The complex is scheduled to become operational in the third quarter of 2028 and is planned for construction on a three to five hectare site in either Chingeltei or Sukhbaatar District, within areas designated for land acquisition.
According to preliminary plans, the arena will cover 20,000 to 35,000 square meters, accommodate 3,000 to 5,000 spectators, and host 150 to 200 events annually, attracting an estimated 200,000 to 300,000 visitors per year. Based on these projections, annual revenue is expected to reach 15 million to 26 million USD, with the private partner assuming full responsibility for the total investment.
These figures, however, are widely viewed as ambitious. Several risks merit closer examination. By international standards, the design, construction and commissioning of a facility of this scale typically require 24 to 36 months under optimal conditions. More importantly, when the country’s market size, household purchasing power, and patterns of attendance at cultural and entertainment events are realistically assessed, the expected return-on-investment period is likely to extend to eight to 12 years.
For a relatively small market such as Ulaanbaatar, such projections may be overly optimistic. If the project fails to achieve its revenue targets, there is a real risk that operational and maintenance costs could eventually fall on taxpayers, an outcome that would contradict the core principles of public-private partnerships.
At its core, an effective PPP model is designed to allocate resources efficiently and address genuine gaps in the market. From this perspective, some experts argue that rather than investing in another large, multi-purpose arena, greater public value might be generated by developing facilities currently absent in Mongolia, such as a modern water park or a comprehensive family entertainment complex. Such projects would respond directly to existing public demand, reduce the need for citizens to travel abroad for leisure and recreation, and help retain domestic spending within the national economy. In the absence of this market-driven approach, concerns will persist that the Ulaanbaatar Arena risks becoming another well-intentioned project whose economic assumptions fail to match reality.
State is not an effective manager
Excessive state intervention has long been a subject of public criticism. Over the years, government involvement has extended into areas ranging from basic consumer goods to market-driven economic processes, often with mixed results. The cultural and sports sectors have not been immune to this tendency. Experience, however, has repeatedly shown that the state is rarely an effective manager in these fields. One clear example is the Buyant-Ukhaa Sports Complex. Although the facility has been in operation for more than 15 years, questions remain about its financial sustainability and commercial performance. State-run institutions generally lack the capacity to manage market risks, attract international artists and sporting events, or operate with the flexibility required to maintain consistent revenue streams. As a result, in recent years, the complex has largely been limited to hosting New Year’s celebrations and conferences organized by state-owned entities, falling short of its original potential.
Compounding this issue is a well-established pattern of construction projects becoming stalled or abandoned in line with election cycles. A notable case is the sports complex in the VIII khoroo of Khan-Uul District, built at a cost of 11.9 billion MNT but never put into operation. Construction began in 2017 as part of preparations for the Seventh International Children of Asia Sports Games and the East Asian Youth Sports Games. In 2019, the capital’s City Council adopted Resolution No. 65 and even established a state-owned joint-stock company, Ulaanbaatar Sports Management, to oversee the project.
At the time, senior officials, including then-President Kh.Battulga and successive mayors S.Amarsaikhan, S.Batbold and D.Sumiyabazar, publicly pledged that the facility would be completed and operational by 2022. These commitments, however, went unfulfilled. Construction came to a complete halt after the project’s management became the subject of an investigation by the Independent Authority Against Corruption, leaving the complex unused and symbolizing yet another stalled public investment. By contrast, the Steppe Arena (Ice Hall), developed during the same period by the private sector, was completed on schedule and opened as planned. Today, it stands as one of Ulaanbaatar’s most active venues, regularly hosting international events and serving as a key attraction for residents of the capital.
Taken together, these examples highlight the stark contrast between state-led projects that become mired in administrative and political uncertainty and privately developed facilities that operate under clear accountability and market discipline. The lesson is not that the state has no role to play, but that without effective management structures and clear boundaries, public involvement risks turning ambitious projects into costly and underutilized assets.
Focus should be on quality, not quantity
Ulaanbaatar currently has four major event facilities: M Bank Arena, ACA Arena, Buyant-Ukhaa Sports Complex, and Steppe Arena. In addition, each district and satellite city is equipped with smaller sports halls, while the Central Stadium and the Wrestling Palace continue to serve large public gatherings and national sporting events.
According to international planning standards, one large-scale arena is generally considered sufficient for every 500,000 residents. Based on this benchmark, Ulaanbaatar, with a population of approximately 1.6 million, can be viewed as adequately supplied. From a purely numerical standpoint, the existing infrastructure already meets current market demand. The core issue, however, lies not in the number of facilities, but in their management, accessibility, and location. The Buyant-Ukhaa Sports Complex, for instance, has a seating capacity of around 5,000, yet it has never been used consistently or to its full potential. Rather than functioning as a hub for sports, entertainment, and economic activity, it has remained underutilized and has delivered limited public or commercial benefit.
Location has played a decisive role in this outcome. The complex is situated 10 to 15 kilometers from the city center, in a capital where traffic congestion frequently results in complete standstills lasting several minutes at a time. For many residents, traveling such distances, particularly for evening events, is impractical. Compounding the problem are design and operational shortcomings, including an indoor climate that remains excessively cold even during the peak of summer.
In this context, the proposal to construct yet another arena with a capacity of 3,000 to 5,000 seats, even under a public-private partnership model, raises legitimate questions. Without addressing the fundamental challenges of location, management, and effective utilization, the addition of a new facility risks replicating existing inefficiencies rather than solving them. The debate, therefore, should not center on the ambition to build more, but on how to ensure that what already exists is accessible, professionally managed, and genuinely aligned with the needs of the city and its residents.
Risk of repeating the ‘white elephant’ mistake
In economic terms, a so-called “white elephant” refers to a facility that is costly to build and maintain but fails to generate sufficient returns, ultimately becoming a drain on the state budget. International experience offers numerous cautionary examples. Brazil, for instance, spent nearly 3 billion USD to construct stadiums for the 2014 FIFA World Cup. Today, the Manaus Arena alone reportedly requires 250,000 USD per month in operating costs, having long since lost its original purpose and become a persistent fiscal burden.
By contrast, the Chase Center in San Francisco presents a markedly different model. Built at a cost of 1.4 billion USD through 100 percent private investment, the venue operates without reliance on public funds. Rather than burdening taxpayers, it functions as a major contributor to the city’s economy, supporting employment, tourism, and related businesses.
There is little dispute that Ulaanbaatar needs modern, well-managed infrastructure. A contemporary arena, in principle, could play a meaningful role in the city’s cultural and economic life. The concern lies not with the idea itself, but with the risk of creating another inefficient asset, one vulnerable to political interference, stalled by election cycles, and sustained by public money rather than market demand. If the Ulaanbaatar Arena, with its proposed 74-million-USD price tag, is to succeed, the allocation of risk must be unambiguous. The private sector should bear full financial responsibility, while the Government’s role should be limited to policy support, regulation, and the creation of a stable business environment. Experience has repeatedly shown that when the state assumes the role of operator, outcomes tend to fall short. Ultimately, sustainable development is not achieved by the number of buildings constructed, but by the opportunities created around them. The focus, therefore, should be on enabling private initiative and sound management, not on expanding the state’s footprint in projects it is ill-equipped to run.
