$750,000 a year for community use of stadium

David Cull.
David Cull.
Details of a deal under which the Dunedin City Council will spend $750,000 a year to subsidise greater community use of the Forsyth Barr Stadium have been confirmed.

Councillors at yesterday's full council meeting voted to accept a new service level agreement between the council and Dunedin Venues Management Ltd, the company running the city's loss-making roofed venue.

The agreement confirmed the council would pay $750,000 a year to DVML in return for enhanced access to the venue - at reduced or no cost - for community groups.

The extra funding was first agreed by councillors in May, but the service level agreement - detailing the requirements of each party as part of the deal - was only ready to be endorsed by councillors yesterday.

The deal meant the council would draw up criteria for subsidised access for charitable and non-profit groups, including schools, sports clubs and cultural groups, on the proviso it did not conflict with DVML's commercial arrangements.

Paul Orders.
Paul Orders.
Councillors voted in favour of the agreement despite concerns expressed by Cr Richard Thomson, and endorsed by Cr Lee Vandervis, that the extra council funding served to endorse a high-cost operation within DVML.

Cr Thomson told the meeting he was ''very nervous'' about spending a ''significant amount of money'' to increase community use of the stadium.

Doing so would subsidise access for groups that would not otherwise use the venue, when they might want - but not need - to. At the same time, ''we help to lock in a high cost mode of operation'' within DVML, he said.

Instead, the money could be better spent elsewhere, such as an events incentive fund to attract performers people had ''a reasonable expectation'' might appear at the stadium, and which would provide a commercial return, he suggested.

Mayor Dave Cull said the service level agreement included a clause allowing it to be reviewed or modified at any time.

Council chief executive Paul Orders said the agreement would be ''a holding position'' until the outcome of the wider review was known.

Despite opposition from Crs Thomson, Vandervis and Teresa Stevenson, councillors voted 11-3 to approve the agreement.

chris.morris@odt.co.nz

Proof please

Gazroid: I thought we had done the 40,000 discussion to death. I am (and I'm sure the rest of "us" are) keen for you to re-advise us of the facts that indicate that Carisbrook is currently capable of holding 40,000 spectators.

ITM crowd numbers

The numbers quoted from this years ITM cup games are based on tickets sold and given away, not on how many attended the games, I know of so many people that received tickets for game after game that did not attend yet they are counted as being there - just another method used to make the stadium look like a winner. it's the old Carsibrook "never held 40 thousand" argument - it's wrong but it suits "their" purpose

No consultation

EJ Kerr makes a good point that this expenditure is extremely unlikely to have been part of the Annual Plan process and budget. So I wonder where the money is coming from. And whether it is legitimate or even legal for the DCC to take it from whatever it was originally allocated for.

Ho Hum

Oh who cares! The problem is that all of us are paying for the occassional pleasure of a few. And paying through the nose. Not OK!!!

Council ethics?

The $750K subsidy is an abhorrent and despicable decision by elected representatives of the Dunedin City Council. This item of expenditure is substantial and has not passed through an annual plan process requiring public consultation. This is a crime against city ratepayers. Thank god local body elections will be held in 2013.

This is awesome

This is awesome. 1/ the S15 average crowds were around 16,000 your 5-7000 refers to ITM cup. This average is actually above average for ITM cup crowds around the country. But that's a separate issue. 2/ this is one of those moments that you have only dreamed of. Just like you want the stadium to close so you can say 'I told you so', I wanted something like this to happen so I could say the same ... And I would take an increase in my rates for the privilege. I would then celebrate with a drink at the new hotel...... Now that would be a good day!!

ORFU's viability?

farsighted: I never said they were, I was comparing the most recent games with their abysmal crowd turn out, with the same numbers from last year in Carisbrook, not the numbers from earlier this year in the stadium, and pointing out that the stadium seemed to have lost its shine. The rugby guys seem to have not been following along and have gotten the wrong end of the stick.

Remember, now that the Highlanders and the ORFU have parted ways, these games are the only way that the ORFU has to raise money, last year's terrible turn out at Carisbrook resulted in the ORFU defaulting on the half million dollars it owed the city for the hire of the ground, they can't have made more money at the stadium than last year, it costs more to run the new stadium, and they got less than half last year's turnout at some games - I expect we'll see them coming cap in hand to the city any day now - some have already suggested today that in fact this $750k is really a way to funnel more money to the ORFU as there's nothing to stop DVML from simply using it to subsidise rugby's losses.

Gulp this down

QsRC, the two stadium companies together cost the city's citizens over $20 million last year and the official forecasts predict similar costs for this year. These costs include a variety of overt and covert payments and subsidies. One of the most harmful of these schemes is the DCHL Debt Enlargement Program whereby DCHL increases it's debt every year to be able to pay $8 million to the stadium companies as a direct subsidy. The $20 million net cost does not include the loss on interest rate swaps ($8.6 million).

My point is that it doesn't really matter what the NPC or Super-15 attendances were last year or are this year because you are $20+ million away from breaking even. Whatever the attendances were/are, it hasn't been enough to prevent the wasting of $20 million of the City's hard earned money last year and about the same is forecast for this year. Boosting attendances will help, but will not be enough. The gap is too big.

With their limited attention span most of the DCC councilors have forgotten that the main problem is how to stem the bleeding from the huge financial wound that they have created. Instead they have been distracted into thinking that we need to spend even more on community sport etc. Nothing they have done so far has helped to solve the stadium problem.

Clarify

MikeStk said: the early games in the year did get those numbers, but crowds tapered off to 5000-7000, lower numbers than Carisbrook had been getting the year before.

It is not correct to equate Super 15 games and ITM Cup games.  The Super 15 game attendances were officially recorded and do show healthy attendance well in excess of last year's crowds.  I've published figures from two sets of sources in a separate comment.

The ITM Cup attendances were much lower, at the 5000-7000 level.  A major factor in this was that only one stand was open so as to reduce operating costs for the venue.

This is pretty well known and we've churned the numbers over here several times in the past. 

Facts

Publicly reported stats for the games are here

round 16 17401
round 13 14967
round 9 18417
round 7 15000
round 3 17670
round 2 23600
average 17842 

Hoever, the ODT also reported these stats which shows different numbers and a slightly lower average.

Both averages are still higher than the figure that you quote "as a season ticketholder". (Please note I'm not the one quarrelling about the average figure, I just want to get the correct facts).

You see why we insist on authoritative sources during these discussions?   

Head in the sand

Ratepayers were assured by those who said they knew best the stadium would make us huge profits should it be built.  As predicted, we have a financal rock headed stright for the bottom.
No amount of wishful thinking by QsRC and other supporters will stop it sinking.
There's no huge profit, just ongoing and mounting losses, impending asset sales to pay for it, job losses at council owned companies, and cost cutting within council.
Pull your head out of the sand QsRC - stand up and be counted. Simply put,  your staduim needs more of your money, so give it some.[Abridged]

 

You are correct

QSRC: you're right I got the crowd numbers wrong - I was too high. I should have said 3000-7000, with an average of just over 4000 for the late season games - at least that's how DVML reported it. Last year similar games at Carisbrook were getting larger crowds and the ORFU was bemoaning that not enough people were bothered to show up then. DVML trumpeted their 'profit' of $36,000 - less than $1.50 a head including the overpriced beer concession. That about enough to pay one tenth of Mr Burden's salary.

Average crowd

5000-7000 is just plain wrong (and you know it to). The average crowds were 16,411. I'm a season ticketholder. Crowds did not taper off - I was there!
Your whole argument is flawed because you feel bitter towards the rugby union. You just want to believe it's their fault, the truth is irrelevant.
The largest crowd for S15 was 22500, smallest was 14967. Where is the 5000-7000? did you mean 15,000-17000?
When the stadium gates were opened for rugby matches those individual events turned a profit and covered operating cost for those events. It's a bitter pill for the anti-stadium crowd to swallow but open wide and gulp it down. [Abridged]

 

 

An average attendance of over 16,000?

Will QsRC or the Highlanders' administration please publish the attendance at each Highlanders game in the stadium during 2012 so we can see how he/she arrived at an average attendance of 16,000 plus?Research 101: "Facts must be provable"

Which would be fine

"Rugby ticket prices not high enough? Again come on, get it right! We have recently just seen the stats telling us the Highlanders and Otago teams both turned small profits for the completed seasons."

Those individual events made a profit when the event-specific costs were taken into account. That would be fine if DVML was just an event-management company with standard overheads. Then it would turn a profit overall.
The problem is that DVL has the stadium rental overhead, which means it can never turn a profit.
So we end up with a facility which, if it didn't exist, could run rugby events at a profit. There's no way that you can make DVML show a profit overall, and therefore DVL makes a loss and DCC makes a consolidated loss. No amount of tinkering with prices, event management incentives or money go rounds will fix that.
The best thing to do with it is to find a naive buyer in Asia that wants to own a sports franchise and sell it them along with the team.

Rugby cheapskates

QSRC: the early games in the year did get those numbers, but crowds tapered off to 5000-7000, lower numbers than Carisbrook had been getting the year before. Obviously the novelty value of the new stadium has worn off pretty quickly.
DVML did not turn a profit, they lost millions of dollars this year, I don't much care how much the teams made - but I do care if I'm going to get stuck with the bill for your rugby tickets. It seems wrong to me if professional rugby is making a profit when we make a loss and have to pay for it out of our rates, so let me say it a different way: DVML is not charging the ORFU and the Highlanders enough for using the stadium. They need to charge enough to cover not just the cost of opening the stadium for games, but also: insurance, electricity, grounds upkeep, security, Mr Burden's salary, rates, the water they spray on it, cleaning seagull poop, rent to DVL, and of course doing for free all of the ORFU's publicity. .
If DVML is losing money then they are not charging the ORFU and the Highlanders enough, and the cost of rugby tickets needs to be raised enough to cover all the costs of putting on rugby entertainment.

 

Pointless money-go-round

Full marks to the DCC for creative accounting; not unlike their generous gesture in writing off hundreds of thousands from the rates bill, which of course means an increase to every other ratepayer.
It might make the losses from the stadium look a little less, but really it fools only the very gullible. At this rate of money-spinning nonsense the stadium could be showing a profit in ten years or so.
Pity that the rates will have to rise to pay for the propping up so as to maintain other council activities.
This is an attempt at deception, and it's a disgrace.

Has the place gone mad?

What's the point of charging ourselves twice as much as we charge rugby to use something that we have already paid for? Hope it's not compulsory to attend. I won't be there.
Why don't we find a better way to spend money? It is not the city's role to both own and operate a stadium for professional rugby.

 

Misunderstanding

Sparrowhawk: I don't think you understand. The whole point of the stadium exercise was that the ORFU wanted a new stadium but didn't want to pay for it. This exercise has been to set up a rolling scheme to pick the ratepayers' pockets. In this case our wallets are being rifled to pay an extra $20ish a year.
Of course, an extra $750,000 a year won't solve the multimillion dollar DVML losses so we should expect further initiatives from the council - perhaps a tax for greener or more artificial grass, a seagull poop removal rate increase, another for refurbishing the player's massage tables, and perhaps something to help restock the bar for the next ORFU black tie do.
Of course, there are still enough people around town who won't attend events at the stadium on principle that many organisations that might use this fund will have to continue to hold events in the town hall, at a community hall, the museum or at the Edgar Centre; bribery isn't going to persuade everyone.

 

Come on Mike

If you're going to quote stats and try run down rugby such as only 5-7000 attendance at least get it right. The Highlanders' 2012 average attendance was 16,411. 

You need to rethink your attack - the old rugby bashing it is wearing thin.

Rugby ticket prices not high enough? Again come on get it right! We have recently just seen the stats telling us the Highlanders and Otago teams both turned small profits for the completed seasons.

[Abridged]

Agree

Yes. It's now being proposed that we pay more for the privilege of using what we have already got to pay for. If ORFU want it, sell the stadium to them.

Money go round

DCC pays DVML

DVML pays DVL

DVL pays DCC

I thought we agreed that this had to stop? 

Feel good farce

This is ridiculous. Subsidising community groups who could go elsewhere anyhow. What a gross waste of money from a council still in spend mode. This funding is an attempt at 'feel good' for a failing stadium...and still won't pay the bills.

Rugby pay your way

Mr Farry and the CST promised us that the rugby stadium would return a small operating profit - $100,000-$200,00 per year. But despite these assurances DVML is losing millions - the real problem of course is that the stadium's major fee paying users are not paying enough to cover their costs.

Paying another $750k a year (increasing the $66 we were promised we'd have to pay by 25%) to prop up this losing proposition is really another indirect subsidy of professional rugby - it's very simple, rugby ticket prices are not high enough and rugby crowds are too small - prices have not gone up enough since rugby moved to the new stadium from Carisbrook to reflect the actual costs of running it - just because the ORFU chose to run its operations at a loss doesn't mean the city has to.

With crowds of only 5-7,000 at games the rugby fans obviously don't like the stadium enough, or heaven forbid the game, to bother attending.

ODT/directory - Local Businesses

CompanyLocationBusiness Type
Forbury Sports Bar & Function CentreDunedin
3D Marine Development LtdGlenorchyMarine
GlyconutrientsDunedinHealth Products
The Hair Port DesignPort ChalmersHairdressers