Major ongoing losses are predicted by the company running
Dunedin's Forsyth Barr Stadium following a review identifying
operating costs and expenditure.
The company's latest draft statement of intent shows Dunedin
Venues Management Ltd (DVML) has gone from predicting a
profit of $10,000 in 2014-15 to predicting a loss of $1.4
The new information leaves the Dunedin City Council once
again scrambling to find savings to plug the $1.4 million gap
if it wants to stay within its self-imposed 3% rates rise
limit for 2014-15.
Ratepayers should expect an increase in stadium-related rates
after that as DVML's losses are expected to continue, with a
$1 million loss forecast for 2015-16 and a $1.4 million loss
Last month, company chairman Sir John Hansen warned the
projected profit for 2014-15 was gone, as no rugby test was
booked at the stadium for that year.
Yesterday, he said the dramatic turnaround reflected not only
the lack of a major event but the reality of the cost of
operating the stadium, following a board review of income and
''It could be called a 'rethink' of the original budgets.''
He would not criticise individuals for the situation, saying
the original budgets had been produced, peer reviewed, and
then accepted by the council.
''We were instructed to work to a budget that had certain
figures for maintenance and income and such like, that our
operation over two years has shown to be very optimistic.''
The revised budgets were drafted with the support of council
chief executive Dr Sue Bidrose, Dunedin City Holdings Ltd and
council chief financial officer Grant McKenzie.
They were much more realistic around both income and
expenditure, particularly expenditure, and would dovetail
into the review Dr Bidrose instigated last month to find a
long-term solution to how the stadium was financed.
He said the stadium was still in a strong position to attract
test matches, but the DVML board now viewed it as optimistic
to think Dunedin would get one or two concerts each year at
the Elton John level.
''It is also optimistic, because of the lack of
infrastructure, to be able to expect to get Springsteen or
the Rolling Stones, to be honest,'' Sir John said.
''We've got to concentrate on the ones we do well, which is
the Paul Simon-sized concert.''
He said he hoped to announce a new chief executive for DVML
in the next week.
''I can tell you they will be someone with a very strong
event acquisition and marketing perspective.''
The financial loss situation should not come as a surprise to
many, he said.
''I'd expect the people opposed to this from day one would
say the expected things, and that's fair enough. I think most
people have seen what's gone over the past few years and
understand where we are at.''
The company was still tracking for a small loss this
financial year, as two or three events planned for December
and January did not happen, but staff were at present
negotiating an event for Easter that he hoped would be
announced ''quite soon'', which ''might make up for it''.
Mr McKenzie said with a realistic budget in place, council
staff would now work on options for how the stadium could be
funded and operated into the future.
Dr Bidrose said whichever model was chosen, the stadium was
''undoubtedly'' going to cost ratepayers, who are already
paying $9.25 million a year towards the stadium, additional
money, although that was unlikely to start from next year.
It was highly unlikely a new funding and operating model
based on the realities of the stadium's costs would be in
place before the council's 2014-15 budget was signed off, so
it was up to staff to find DVML's $1.4 million shortfall
within its existing budgets.
Staff had expected another loss and were already looking into
where the money would come from. She planned to report back
to councillors during their deliberations on the final
2014-15 budget in May.
Council had had to make efficiencies to cover stadium
shortfalls for the past two years, leaving little wiggle
room, but it would be done, she said.
''[Councillors] want us to live within our means. My job is
to make sure we do and and advise how we can, and that's what
I'm going to do.''
Dunedin Mayor Dave Cull said the results were no surprise,
and backed up Dr Bidrose's position that things could not
carry on as they were, with DVML asking for extra money every
year, and a review was required.
He looked forward to hearing how the situation could be dealt
with in the long term.