Confidence football will be popular

Terry Davies.
Terry Davies.
Dunedin Venues Management Ltd is to underwrite next month's top-tier football clash between English Premier League team Newcastle United and Sydney FC at Forsyth Barr Stadium, it has been confirmed.

However, DVML chief executive Terry Davies told the Otago Daily Times he was confident the deal ''ticked all of our boxes'' and any financial risk was ''minimal''.

As part of the deal, DVML has agreed to pay an underwrite fee to the Wellington Phoenix club, which organised the Football United Tour featuring three three clubs and another EPL team, West Ham.

The Newcastle-Sydney clash in Dunedin on July 22 will be the only South Island fixture in the four-match exhibition tour, with other matches in Auckland and Wellington.

Mr Davies said the size of DVML's payment to the Phoenix remained commercially sensitive, but it left the company with the goal of selling about 9500 tickets to break even.

So far, about 3500 had been sold, which was a good start when attention remained on next weekend's All Blacks test at the stadium, he said.

A crowd of up to 15,000 was hoped for and Mr Davies expected DVML to break even or make a small profit from the fixture.

The real benefit would come from the international exposure to a television audience of 3.5 million people - through Australia, Asia and Europe - and the economic benefits if fans travelled to Dunedin for the clash, he said.

The fixture was expected to lure some fans to the city, but ''we're not going to get carried away on that one'', he said.

Ground members and other stakeholders would get free entry, as part of a push to increase benefits for supporters of the venue, he said.

DVML was also in talks to stage a community skills session featuring some of the players at the stadium ahead of the match, he said.

The event had been assessed against those priorities before DVML decided to bid for it, and stacked up well, he believed.

''The intent on this was never to make a lot of money. It was to deliver all those other elements.

''All of those tick boxes get ticked, and we won't lose any money, and the members get free entry, which is a great product.''

Mr Davies was confident at least 9500 tickets would be sold, on top of free entry for the 2200 ground members.

Expectations for the crowd had been measured against previous football matches at the venue, including Wellington Phoenix's first appearance in 2011, which drew a crowd of 15,000, and their last, in March last year, which drew just 3000.

''If you were to be rational about this, it [next month's crowd] would sit somewhere in-between.''

However, he was confident the financial risk from underwriting the event was ''minimal, if not mitigated''.

''There's always risk, but the reality on this is we've mitigated our risk by negotiating a competitive underwrite but also by ensuring the reasons we're bringing the event in tick all of our boxes.''

chris.morris@odt.co.nz

Answer the question please

You had plenty to say prior to the Newcastle Sydney game re how DVML were underwriting the event with ratepayer money. A gamble you undertook on our behalf. So how did it go Mr Davies, did we make money? Did we lose money? Do you have any intention whatsoever of letting us know or will any losses be added to the millions we are already tipping down the drain? [Abridged]

Did we make a profit?

Okay, now the game has come and gone, was the gamble worth it? 9500 tickets needed to be sold on top of the 2200 free tickets to ground members. I have heard that around 10,000 people attended, so did Mr Davies make a profit from the fixture? 

 

'Stadium funding model'

Zenith: I think you are right about the purpose of CEO Bidrose's changes to the stadium funding model. There is already a good deal of financial obscurity with the various subsidies, unapproved equity injections and so-on. The next step seems to be to make DVL (the owner of the stadium) disappear. DVML will be relieved of having to pay rent to DVL and so DVML will be financially better off and DVL will be worse off by $4 million per annum. DVL already looses $12 million each year ($5m disclosed loss + $7m subsidy) so that will increase to $16 million/year.

Unless your are Mr Magoo the losses of DVL and DVML stand out because the companies are required to produce audited financial reports in accordance with the law. This requirement is a severe impediment to financial obscurity and so the stadium restructuring will put a stop to those pesky financial reports. Wherever they try to hide the stadium, the huge loss that it makes every year will still be hard to hide. When Sue Bidrose releases her restructuring plan I am expecting the spin doctors will be overflowing with the good news stories, but there will be absolutely no financial benefit to the ratepayers. [Abridged] 

'Funding model'

Every time someone says the stadium needs "A different funding model" I wonder exactly what that means. I could change my own financial position dramatically by adopting "a different funding model". One where I don't pay full rates, don't pay any of my mortgage, and have my loan servicing shifted on to my neighbours property.

The horrendous losses which the stadium is showing year after year will continue for as long as it is in existence, and any changes to the "funding model" will be seen for what they are - deliberate attempts to obscure the extent of those losses.

Volunteers

MichaelEG: I agree that volunteer does not mean unskilled, and from my experience some come with far more business acumen, foresight and pragmatism than some so-called directors.

However,. I would be concerned at how such a board would be selected and whether it would be open to capture by the same lot who created this horrendous misadventure.

If it was up to me

I would make them all re-apply for 2/5 the management positions at ½ their current wage. And tell the very lucky winners that for every $1 profit at the end of the financial year they between them get a share of 25% of the profit. Those that stay on would then make sure they are doing their best to make sure that the stadium was in profit every year.

 

Think it could work

I really think it could work. 

Volunteer does not mean unskilled, it just means unpaid. It means instead of paying directors we get people who are in the role because they want to give back to the community they are not necessarily any less skilled.

In any event a board is for governance, not operational matters, so a centre manager would still be required to promote and do the day to day operational stuff. I wonder how hands-on Mr Davis is?

No volunteers

MichaelEG: Many of us agree with everything you say. The one thing I disagree with is the "... go to a volunteer board to run it ..."

While there are many organisations that are successfully run by volunteers, as the facility is owned by the DCC and DVML also manages the Dunedin Centre/Town Hall, it needs people with the experience and understanding of true multi-use facilities, the conference/incentives & entertainment industry and Dunedin's customer base.

Changing DVML

Michaelg: I don't think it's as simple as giving up and saying "we were mugs, we were had by CST and the local rugby elite, we'll just have to pay for it ourselves" - which also seems to be Dave Cull's current take on the rugby stadium.

I think we need a council with the cojones to leverage our owning the only place in Dunedin that one can play professional rugby. When the rugby stadium was built promises were made: that the rugby stadium would make enough money to pay it's own way, and that rugby would raise $50m in private fundraising to help pay their share of creating them a venue. Holding rugby to their promises in exchange for the right to use the rugby stadium seems like a fair exchange to me.

Closing the stadium until rugby comes to the  table would be a good start. Sadly DVML is stuck in a Stockholm Syndrome-like embrace with it's major customer, not helped by its institutional history of hiring CST and ORFU employees, having NZRFU functionaries on its board, and the obviously bad management contract that was forced on them by Dave Cull as part of the ORFU near-bankruptcy bailout - they just don't have the inclination to play hardball on our behalf. DVML does need to change - it needs to understand it should be representing its owners', the ratepayers, interests over its customers' with which it should have an adversarial relationship.

I agree that DVML needs to slim down. I'd normally suggest that people look at their web page to see just how many managers they have, but I guess that was too embarrassing since they've recently taken that down. They need people who do stuff, not people who go to meetings - again a private company would care about the bottom line, management bloat in a quango that expects to continually be bailed out by the publics seems to be unchecked.

DVML's problems have not been that there weren't enough managers - it's that they haven't been charging enough for their services, they should have been reducing their head count and raising their per-ticket revenues, not doing the opposite.

Commercial basis?

MikeStk: Yes, it may be out of control. The question I think that needs to be answered is whether this facility can be run on a commercial basis. So far it appears it cannot.

If it can't be run as a commercial facility then we need to scale back the way it is run, have more realistic expectations, employ fewer people, look at different funding models, get rid of most of the management, go to a volunteer board to run it etc, and then it can become a community facility.

We are angry

Michaelg: if DVML were a real company they would have to worry about the bottom line every time they made a decision, when they made mistakes they would hurt, someone would take less money home at the end of the year, they would be upset.

Instead we have an out of control quango unfairly competing against the private sector overspending its budget at every turn, taking out bank loans without telling the council then expecting them to pay them off. Sadly it's the ORFU business model all over again - but this time backed by the ability to raid the rate payers' pockets year in and year out simply by spending without getting permission.

Well, there are people who end up having less money left at the end, yes we are angry. It's time that DVML was required to break even every quarter, and stopped subsidising professional for profit rugby by not charging enough for use of the stadium.

Masters Games v Soccer

Happy to explain the difference between the Masters' Games and a one-off gamble on soccer at the Stadium. The Masters Games was held over two weeks and filled all motels and hotels - it was boon for all businesses in Dunedin. A one-off event which may or may not work cannot in any way be compared with an event so sure to succeed it was a no brainer for council and all ratepayers to support it.
I hope the soccer does work. I am sick to the back teeth with having millions and millions in ratepayer funds wasted by DVML and in propping up the massive losses incurred by the stadium.

 

Consistency please

Stevenson57 asks 'If it has to be subsidised then what is the point?". Perhaps he and the others who seem to only notice such subsidies when the Stadium (or its users) are involved shoudl read the following report on the Masters Games.

Don't get me wrong, I'm a huge supporter of the Masters Games (as I am of the Stadium) but I don't see anybody complaining about the $176k provided by the Council for this event, or the many other events and organisations that the Council supports, presumably because they can't pay their way!

Some consistency from the Anti-Stadium brigade woudl be appreciated by all, I'm sure.  

Small town mentality?

More than happy to see these soccer teams here as long as its not funded by ratepayers. If it has to be subsidised then what is the point? Where are the private promoters who are prepared to back and underwrite such events? My small town mentality goes as follows: If it pays or breaks even fine, if not this already broke small town already carrying a $650 million consolidated debt simply cannot afford it.

The sort of event they should be hosting

I disagree with the negative comments here displaying a "small town" mentality.

Apart from the obviously popular major rugby fixtures, shouldn't the stadium management be looking for other major sports fixtures such as this? Newcastle United, a team from one of the best football leagues in the world (certainly the most popular) versus the wealthiest team in Australia.

The Wellington game on this tour by English Premier League clubs Newcastle United and West Ham sold 13,000 tickets on the first day of pre-sales before tickets were available to the public. Well on the way to a sell-out now. Auckland game also selling well. 

There's enough interest in Otago and the rest of the South Island to support such a football fixture. I have friends travelling from Christchurch for this one.  

Football is the second most popular football code in NZ after rugby and nearly as many kids and adults play football as play rugby now in NZ. [abridged]

Feeding at the trough

raymondo12: Yeah. Better to spend it on a wealthy sport so that it doesn't have to pay its way, rather it rakes in the money like so many other wealthy snouts feeding at the trough of the public purse.

Benefits and beneficiaries

Well, it seems that we are so used to hearing grossly exagerated claims about the stadium's propensity to make money in the past we are very sceptical of claims made today. Especially as Mr. Davies is quoted as saying, ''The intent on this was never to make a lot of money". Not enough to cover Mr. Davies's annual salary certainly.

Here we go again

Here we go again. Another desperate attempt to lure another event with our money. Let's face it, the stadium apologists are desperate to give the illusion of something happening.

It's time to put this beast out of its misery....and ours.

Wasting more money

Sadly this is wasting more money on a lesser sport in NZ. Popular overseas but MUCH less so in NZ. I hope I am not paying for it...

No risk

I hope the soccer match does break even but whose risk are we talking about Mr Davies? It's the long suffering rate payers of this city who will pay for the gamble if it fails. Of course should the event fail we will never be told by how much, no numbers have ever been released re what Aerosmith or Paul Simon lost or even made. It is deemed by DVML as Commercial in Confidence. Why is DVML underwriting this event? Is there no private promoter willing to underwrite it? Other than this one event what else is lined up? Aerosmith was April 2013, that's a long time between drinks Mr Davies. Perhaps your salary should reflect your success or failure? The endless impost on rates and propping up of DVML certainly reflects the failure of anyone to make the stadium do anything but lose vast sums of rate payer dollars.

Dunedin stadium

Wow - DVML needs to make up its mind - either the stadium is a commercial venture or it's not. No sane commercial entity would host an event where it "might" break even. This sort of woolly decision making is why ratepayers are having to underwrite the stadium for large amounts of money every year in addition to normal debt repayments.

Let's hope it's not going to cost us to much for the privilege of having a skills session as well.

Show us the money

So where is Mr Davies getting the money to become a sports promoter? It can't be from DVML's copious profits can it. I guess that DVML just took out another big bank loan that will eventually have to be paid back by the ratepayers. It's a good thing that New Zealand councils have a stellar history of making lots of money doing sports promotions.

If Mr Davies is really expecting that the real payoff will be the supposed downstream economic  values of the exposure why doesn't he get those who will benefit from that to stump up with the money rather than the ratepayers, I'm sure the Chamber of Commerce will see the value and be jumping at a chance to levy its members to support this venture.

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