Stadium rate 'tax on being busy'

Peter McIntyre
Peter McIntyre
Business owners in Dunedin have been floored by the idea of a new targeted rate for the hospitality sector to help rescue Forsyth Barr Stadium from its financial hole.

Those contacted said the suggestion came as a surprise, and would be unfair if other businesses that benefited from big stadium events - such as taxi companies - were not also included.

They said Dunedin City Council appeared to be scrambling to cover possible ongoing losses from the stadium, and Otago Chamber of Commerce president Peter McIntyre urged the council to "tread very carefully".

The idea of increasing the council's economic development targeted rate for hospitality businesses was raised by Dunedin deputy mayor Chris Staynes on Wednesday, as the council grappled with a $3.2 million loss by Dunedin Venues Management Ltd, the company running the stadium.

Cr Staynes believed increasing the rate - or creating a new one - could help pay for an events fund to lure big concerts and other events to the stadium, something DVML staff and board members said was needed.

The fund would be good for DVML but also for the city's hospitality sector, Cr Staynes believed, and Dunedin Mayor Dave Cull on Wednesday confirmed the idea would be considered as part of the stadium review.

However, Terrace Bar owner John MacDonald said the idea was "bizarre" and would amount to "a tax on being busy".

The council appeared to think bar owners were all making huge profits, when margins were tight and some were struggling, he said.

There was "no doubt" bar owners had busy nights when the stadium was full, but also faced extra costs, as more staff were needed and premises were extended, he said.

Big nights were also followed by "extremely" quiet periods, as those who saved up for a big event stayed in afterwards, he believed.

He would not rule out supporting the idea, but believed more information was needed about how it would be applied, whether other businesses would be included and how any events fund would be used.

Otago Motel Association president Richard Hanning - the owner of 555 on Bayview - said other businesses, the city's economy and even the council were already benefiting indirectly from the stadium.

"The stadium is a huge asset to the district as a whole, not just to the accommodation sector.

"I think Mr Cull needs to understand that."

He said the council - and the city - needed to be patient while DVML's operation settled down before profits were possible.

"It's not going to happen overnight . . . I think they [council] are just looking at a quick fix."

He would not support a targeted rate focused only on the hospitality sector, as spreading it around other businesses benefiting from the stadium would be fairer and raise more money.

"It's common sense."

Hospitality Association of New Zealand Otago branch president Mark Scully wanted to hear more about it, but questioned how it could be implemented.

If bars were busy on the night of a big event, should they be the only ones to pay a targeted rate, or should their suppliers - who were also busier - also have to pay more, he asked.

"I can understand the basic philosophy behind it, which is those who gain should be paying.

"It's easy to go to the low-hanging fruit, which is bars and restaurants and hotels . . . but lots of people benefit from it."

Mr McIntyre said he was yet to hear from chamber members, but believed any new targeted rate would have to be considered "very, very carefully".

"The council needs to go back and look at the way that they budget for the stadium. To identify key bar owners and hoteliers could be a little bit dangerous.

"We do want a vibrant city and we do want our bar owners and accommodation sector to be very strong."

Dunedin Restaurant Association president Steve Richardson said restaurants did not get any advantage out of the stadium as any patrons were at night-time events, not dining.

chris.morris@odt.co.nz

 

 

Stadium tax

All stadium supporters should pay more for tickets and on their rates. Put their money where their support is. I'm sure there would be far less anti stadium sentiment.
The stadium would pay and the problem would go away. Instead we have no accountiblity, no supporter funding and a big fat debt. 

 

Nothing 'dangerous' about it

Why, please, would it be considered dangerous, to rate members of the hospitality trade and industry - probably the major beneficaries of the stadium's operation - for part of the windfall they accumulate due to events being run there?
If the hospitality industry benefits, as we all know it does, then the same hospitality industry should be prepared to pay its whack, and not sponge off the public at large. [Abridged]

Dunedin stadium

"...pull it down and Dunedin would be a laughing stock"
Guadalajara has not been listening to the same commentators and comedians as I have or she would have known - it's too late. Dunedin and its unaffordable edifice are already bywords for councils that go off the rails and end up turning their city's resources into a train wreck complete with a consignment of chickens, some headless and the others coming home to roost.

Who makes profit on drinks at stadium...

...Trev asks, and I do not know.  During the rugby world cup there were stringent rules that forbade anyone so much as having a poster up in their own window for companies other than those who had the supply contracts, which were an arrangement between those companies and the IRB.  They were if I remember correctly big multinational companies, so there would have been no advantage to NZ producers and the profits would have gone straight off-shore - if I've remembered this incorrectly I am sure someone else will remember the details and write in with the correct info.

As for the Fubar Stadium, I don't know about locally arranged events but assume that exclusive arrangements have been entered into such as with one taxi company, making it impossible for competing firms to pick up or deliver passengers close to the building let alone the entrance.  I expect that, as with cruise ships and tourist buses, there is a system  for allowing certain suppliers special opportunities to make more profits than their competitors. 

Thank you

Guadarlajara: That is good to hear - that you are happy to put your money where your mouth is. I am sure other stadium proponents feel exactly the same.
I fully endorse your opinion and hope, further, that the business people who believe the stadium is an 'asset' also put their money where their mouths are and support the targeted rates to pay for the stadium. That includes the Chamber of Commerce.
Personally, I think it is crazy fiscal logic, but I am thrilled that you are still happy to put your money where your values are.

I'll say it again

If making a profit was the sole criterion for the construction of stadia, then there probably wouldn't be any anywhere in the world. I'm sure most people would agree that the world would be a much lesser place for the lack of these high citadels of endeavour.
Minimise the losses, and focus on the pleasure, enjoyment, and sense of community a leading-edge facility of this nature can bring to the city (a facility which, believe it or not, is actually the envy of many other NZ cities).
And yes, pull it down and Dunedin would be a laughing stock - and not just in New Zealand.

 

 

Who makes a profit?

So HypeOThermia, who makes the profit on booze and cordial and the world's biggest con - bottled water - sold at the stadium during rugby games?

Things going badly

It's interesting that even pro-stadium people are acknowledging things aren't going well for the stadium.
Mr Hanning, president of the Otago Motel Association, says the council just has to give the stadium/DVML time before 'profits' can be made. 'It's not going to happen overnight.' he says.
Quite. It's never going to happen and it was predicted way back in 2007 with the peer reviews and in the 2007 CST Feasibility Report. The stadium was declared 'high risk' in terms of revenue received.
We have taken that risk, and now we are paying the consequences.

Chamber

Doesn't the Chamber squeal, at the suggestion that businesses might have to dig a bit deeper into their rates relief account to help out with the city's financial problems. [Abridged]

Identifying who made money

Levying "businesses" for gains from the stadium could be difficult.  During the rugby world cup I thought my usual watering hole would be unbearably crowded and rowdy, but though it was not a long walk from the Exchange it saw no more "strangers" than the usual number who casually drifted in from nearby back-packers or while strolling around town.  Any levy, to be fair rather than a penalty on existing at all, would need to be based on the increase in real business associated with attendance at events held in the stadium.

Cake, or eat it?

So, what is it?  Everytime there is some event held in Dunedin there are these stories outlining huge economic benefits numbering millions and millions of dollars.  But on the other hand, if there is a hint that this economic windfall is to be taxed to pay for the price of putting dollars into individuals pockets, people start screaming that they aren't actually making the money after all.  The only sure thing we know is that the stadium which is supposedly a vital centre in generating this economic benefit is actually losing money faster than people can count it.  Perhaps Peter McIntyre, who is a supporter of the stadium, can suggest a way to stem the flood of debt.

Stadium losses

Just heard a rumour that Mr Farry was going to cover the $3.2 million loss incurred by "His" stadium out of his own pocket ...

Now, where's that Tui sign of mine gone? 

Bet the farm on a 3-legged horse

"Cr Staynes believed increasing the rate - or creating a new one - could help pay for an events fund to lure big concerts and other events to the stadium, something DVML staff and board members said was needed."  Did the Elton John concert return a profit to the stadium?  This looks like a cunning plan to spend money the council does not have and city businesses cannot afford on top of their rates and taxes, to bribe more promoters to bring that will not break even - not for the city, though with a good enough bribe the promoters will go away laughing.

Stadium a hospitality windfall?

I thought the stadium was supposed to be a windfall for the hospitality industry? Seems like they are distancing themselves from it. If so then who actually still wants the stadium?

As I said in earlier posts, the way forward, or should I say the way to minimise the financial damage to the city is a public float of DVML, then all the stadium supporters will have the opportunity to put their money where their mouth is, and if it becomes a successful business they can tell all the rest of us negative naysayers..... "I told you so"

Who knows we might even see welfare dependent rugby union diverting their ratepayer funded largesse into buying some shares.

Sounds like a fair plan to me

After all, I would say that local businesses were behind the push to have the stadium built against the wishes of most of the ratepayers in the first instance. And to Mr Hanning, Could you please explain to me how the stadium, which won't make a profit and needs to be propped up by the ratepayers, can be called an asset? In my 30 years in business, banking and balance sheets, this is called a liability.

Targeted rate is a good idea

Peter McIntyre, Chamber of Commerce president, is of course a very strong supporter of the stadium. As a businessman he should realise that something like this targetted rate is inevitable. In real life a community has to pay for what it has borrowed and it is only fair that those who stand to gain the most are the ones who should take an added responsibility to pay an 'asset' off.

Reclaiming the stadium 'wealth'

Of course Mr McIntyre is annoyed, no one likes having their rates rise - I should know the stadium has been pushing my rates up for several years now. Instead the city should start rating taxis? How would that work, they keep moving around.

Cities are very limited in their powers for raising money, they just have the ability to levy rates - to raise taxes based on property - suggesting that they should do otherwise is a specious argument - they can't. Mind you DVML has already figured how to extract fees from some taxis, by charging them for the privilege of picking up fares at the stadium so in some sense it's already happening.

We've been continually been told that the stadium is bringing millions of dollars into the local economy - many of us think that this is just smoke and mirrors, the numbers are inflated to make things look better than they are to paper over the financial disaster that is the rugby stadium - if the chamber of commerce thinks that the stadium isn't bringing all this hypothetical money into the city they should speak up, otherwise it's time to extract some of that money to help pay for its source.

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