The Forsyth Barr Stadium. Photo by the ODT.
Dunedin Mayor Dave Cull says the Forsyth Barr Stadium's
finances are "not sustainable", after confirmation the company
running the venue lost nearly $1 million more than expected in
its first year of operation.
The result was contained in Dunedin Venues Management Ltd's
2011-12 annual report, released to the Otago Daily
Times yesterday, which showed the company lost $3.2
million in its first year.
That was $814,000 worse than the $2.4 million loss forecast
in May, when DVML's revelations of a half-year, $1.9 million
loss prompted the council to launch a review of the entire
The loss was largely fuelled by the nearly $4 million in rent
DVML was required to pay to Dunedin Venues Ltd, the separate
company that owned the stadium, to cover loan-servicing
However, the results showed DVML would have made a loss of
$302,000 even if it did not have to pay rent to DVL.
Mr Cull said the council had not been anticipating "a great
result", but the final figures were worse than expected.
"It's not sustainable. There's no doubt about that."
That made the review of the stadium and DVML all the more
pressing, and getting "a good result" even more important, he
"There's all sorts of possibilities could come out of the
review, and I mean all sorts.
"Anything could change."
Questions about DVML were referred to board member Peter
Hutchison, who said the results were "a disappointment", but
insisted the company remained in start-up mode and results
would improve in time.
The results reflected delays staging some events, and others
that failed to eventuate, but also the "pretty typical"
frustrations of a new venue in its first year of operation,
"It was a disappointment to everyone, including the board,
that we kept on having that frustration."
Asked why the result had deteriorated since May, he said it
was because of a "combination of factors" which could not be
detailed at short notice.
However, one example was a delay moving the media suite from
the south stand to the north stand - a switch that, through
increased television coverage of advertising hoardings,
provided more revenue to DVML, he said.
The company was also continuing to struggle against the
impact of the global economic downturn, which had fuelled a
drop-off in the events market, meaning less revenue than
expected from concerts, Mr Hutchison said.
"It's pretty difficult to achieve a result when you have a
market and an economy that's going backwards," he said.
The performance of the Highlanders and the Otago ITM Cup
rugby teams had been highlights for the venue, but it was not
yet known whether DVML made a profit from the ITM Cup, he
If it had, it would be small, he said.
Dunedin needed an events fund to compete with other centres
fighting to lure big concerts and other events to the city,
"If the city wishes to see leading concerts in the city then
there has to be a way to attract those concerts, and that's
"At the moment, those types of incentives simply don't exist
here," Mr Hutchison said.
It was a point raised by DVML's former chief executive, David
Davies, before his departure, and one Mr Cull said was to be
considered as part of the stadium review.
Mr Hutchison insisted the company was capable of recording a
small operating profit, and was forecasting one for next
year, but only before rent was paid to DVL.
The nearly $4 million rent was "a pretty big number for a
stadium to meet", but whether the arrangements were sensible
was a matter for Dunedin City Holdings Ltd and the council to
consider as part of the review, he said.
"It is my understanding that that is one of the components of
Whether the company could ever pay rent and make a profit
would be "a tough ask", but there remained ways DVML could
improve revenue streams, he said.
A profit could be achieved, "but it's going to take time".
A copy of Dunedin Venues Ltd's annual report was also
released yesterday, and showed the company that owned the
stadium - and received rent from DVML - recorded a $4.312
million loss for the same period.
Mr Hutchison cautioned against adding the two losses
together, as they overlapped, and because DVL's results were
largely accounting losses - not cash - and expected.
"It [DVL] is behaving exactly as it should do."
Council finance and resources general manager Athol Stephens
also defended the results yesterday, saying the first year of
operation had been "hardly a normal year" for DVML.
The report covered the year from July 1, 2011, but the
stadium was not handed over to DVML until August 5, and then
almost immediately taken over - together with its revenue -
for last year's Rugby World Cup, he said.
That meant lost income on top of the disruption of feeling
out a new venue, and the real test would be results from the
first full year of operation, he believed.
"That's the context in which the performance has to be