Mothballing stadium an option

Forsyth Barr stadium. Photo by ODT.
Forsyth Barr stadium. Photo by ODT.
The idea of mothballing Dunedin's Forsyth Barr Stadium might raise eyebrows, but it is officially on the table for the Dunedin City Council.

The move was confirmed by council staff yesterday, even as Mayor Dave Cull said it was not a ''particularly constructive'' idea and was unlikely to solve the council's stadium-sized financial headache.

''My personal view is you can mothball the stadium but you can't mothball the debt, so you may as well have the stadium,'' Mr Cull told the Otago Daily Times.

His comments came after council chief executive Dr Sue Bidrose said mothballing the venue was one option among many being considered as part of the stadium review.

The review, which aimed to address $3.79 million of losses forecast by Dunedin Venues Management Ltd over the next three years, was announced in January and due to be completed by early August.

Dr Bidrose said at the time all options were on the table, from bringing the stadium operation in-house operation to privatising the venue.

Yesterday, she said mothballing was another of the ''persistent ideas'' raised by a section of the public that needed to be considered.

The review needed to put all options in front of councillors, ''and that includes the funding model for not having a stadium'', she said.

She would not be drawn on the likely financial impact of mothballing the venue, or say how realistic an option she considered it to be.

Instead, she would only say it was a physically more ''doable'' option than some other suggestions from the public.

That did not stop the news of its inclusion being welcomed by former Stop the Stadium president Bev Butler, who said the city's stadium honeymoon was over and mothballing the venue was now ''inevitable''.

''Tinkering with stadium models is fruitless and will only result in more millions being wasted.''

Cr Lee Vandervis was more cautious, saying he did not believe the idea was being ''seriously considered'', but ''profligate'' spending by DVML still needed to be reined in.

Council finance committee chairman Cr Richard Thomson said he supported investigating all stadium options, including mothballing the venue, as part of the review.

However, he doubted the financial benefits would stack up for ratepayers.

Mothballing would cut costs but still leave the council with the same stadium debt, and no income from DVML to help pay for it.

''If you're asking me is that a realistic option, my personal view is it would an extremely unlikely option.''

The city would also lose the use of the facility, leaving the All Blacks, Highlanders and other stadium users without a venue, he added.

Pick me

I'd be more than happy to push the plunger. 

If it's to be sold, the most likely outcome would be to the University for $1. The sooner the ratepayers have no link to this disaster, the better. [Abridged]

If only they'd listened to us

We opposing it at the outset got called all sorts of derogatory's and now the chickens have roosted, or perhaps more like the airlines coming to Dunedin, flown away. But too late for the 'if only's.

I totally agree with the simile used over the 737s commented on in one of the posts. Or a brand new 747 which is approximately the same cost as the stadium. Consider the fact a jetliner has to basically spend so many hours per day most days except overhauls) for 20 years, carrying a full (or near full) passenger or cargo complement to make it pay for its purchase. The stadium compared to that pales to a grounded white elephant as it only does a few hours per year full capacity yet still has to have all maintenance done which would only increase in time to come.

In 2009 Melbourne only finished off paying a stadium built around 1989, but then were faced with a huge facelift cost for it. In a number of places, they just cut their losses and the stadium gets salvaged for that can be taken from it for scrap, then the rest gets the explosive charges. If we did that here, there'd surely be a lot of people with their hands up to pay to push the plunger.

But it would be better that we can see if the thing can be sold, dismantled and resited. Canberra liked the design of ours, and they might even be able to sustain the costs in a city that size. Surely they can take it away piece by piece and we can at least get most of our money back.

Stick to the facts

So, DVML's 2013 accounts show an operating profit of $2.469 million. True. But that includes the $400,000 donation from the DCC (ratepyers) for events promotion, plus $725,000 towards DVML's debt repayment. Then we deduct the rent (to DVL) of $4 million and we have a $986,000 deficit. Right? So, if there is no rent the profit stays. Problem. The rent to DVL is required to enable it to service the debt of over $140 million, being the cost of putting the stadium there in the first place. The fact is that in that year the shortfall is the deficit plus the previous years' deficits bringing the total to $7.456 million. Any which way you look at this it is a "black hole"

Can't continue

Topsy: it's worth pointing out that the council's continuing propping up of DVML appears illegal under Section 63 of the Local Government Act - it can't continue, and eventually they will have to give it back.

Council CCOs like DVML are simply legally not allowed to be given ratepayer backing in a way that would allow them to compete unfairly with private sector businesses - they need to be operated on the same level playing field as other local companies that provide entertainment like movie theatres, music venues, etc and private property companies that rent out space.

The Facts

"I'm no accountant", says Proud. Sadly, neither is Terry Davies.

DVML - Disenfranchised Voters Misled Largely 

Yes, let's stick to the facts

Proud: Yes, let's stick to the facts. The $4m isn't really rent, it's the money from the sale of luxury boxes and 'memberships' that the council diverted to help pay off the $55m loan the council had to take out when rugby was unwilling to raise the private fundraising that they promised.

When rugby finally raise the money they promised we'll be able to stop this and actually charge DVML some real rent and rates to help cover the money the ratepayers have been forced to commit to the rugby stadium.

What's really strange is that it was supposed to be $5m - $1m is missing somehow. Any idea where it went?

Facts indeed

The operating loss shown is inclusive of extra additional funding paid to the stadium company by the DCC. Take that funding out of the equation and then look at direct income versus costs. Either way, someone has to pay the rent. It's either them, or us.

Stick to the facts

Here are the black and white facts as taken from the 2013 audited accounts of DVML -operating profit for the year was $2.459 million.The reported loss of $986,000 came after taking off the $4 million in rent. Now, I'm no accountant but if you mothball the stadium then that's $4 million plus $2.459 million the council has got to find - $6.459 million. Anti-stadium people are either not being truthful or are perhaps ignorant of these facts. Over the 2013 year the DVML did not run at a loss on income and expenditure. It's the debate on what is a fair rent to pay. Questions on this have merit, but please stick to the facts.

 

Please mothball the stadium

Anyone who wishes to continue putting money down that gapping hole is welcome to do so....providing it is their money.

So its stand up and be counted.  Those that wish the stadium to continue should be prepared to pay the bills.

 

 

 

 

Public sports grounds

Michael: I think that creating and maintaining public sports grounds is an important function of local government, certainly a far more important one than creating venues for professional sports people to make money. I have no problem with the city providing space for playing amateur soccer, netball, cricket, swimming, basketball, even for amateur rugby.

I think that if you take up a sport with more extreme infrastructure costs (ice hockey is a great example, so is sailing) you probably should kick in something yourself. If you want to build a clubrooms on city land you should probably pay some rent, and certainly pay all the rates.

If the non-rugby sports had stood up as a bloc and said "we don't want or need a stadium, or a high performance boondoggle, we'd rather you spend money on drainage" I would agree with you, but when this money was being spent that didn't happen. In fact, many other sportspeople encouraged the city to go into enormous debt and now have to deal with there not being any money to maintain the sports grounds we already have.

Moths

DVML - Dunedin's Vast Mothballed Liability.

What it costs

Good stuff Trev, except that selling the line companies will only make the problem worse. Otago Power (Blaclutha Lines Company) went from the having the cheapest line charges in the country to the most expensive when it was sold to Southland to subsidise Invercargill City rates. Oddly enough another clever stunt brought to you through the machinations of Delta and a number of the suspects behind the stadium who had tried to get their hands on it to get Otago Power consumers to subsidise Dunedin rates (ie the Stadium). Power companies have a monopoly pricing power (ie an ability to tax) that makes the IRD look like pussycats.
The Stadium will be costing somewhere in the order of $5 - 600 per Dunedin household per annum with a total of servicing capital costs, capital repayments, depreciation and operating costs (indeed I suspect that is light). The bit that isn't coming through your rates bill will be coming out of you electricity bill. This is money that goes down the economic black hole never to be seen again - flushed out of the City economy for good. it is money that would otherwise be household discretionary spending that is now not being spent within the Dunedin economy.
It is wizardry like this that is making the city and the enterprises in it go broke. In addition the stadium competes with coffee bars and theatres and pubs for the recreational spend - it hasn't created much in the way of new business in town it has just addded to the competition for the existing business - and it is the only one subsidised by your rates.

 

Goose and gander

GW-Scam: You are wrong, wrong, wrong.  Anyone that suggests pouring more money into this lost cause must need help.  What do you think is wrong about requiring professional rugby to actually pay the costs of staging their business in the stadium?  Every touring show that goes to the Regent, for example, has to pay a rate of hirage that not only meets all the costs of the Regent but returns a profit.  Putting on a rugby match at the stadium doesn't even cover the costs.  Why, when the NZRU is awash with cash?  I say get rid of all the unnecessary overheads and require rugby to meet the costs and return a profit to the stadium but only when its necessary.  The gates should be shut unless there is a match on.  Do you run a business with a heap of well-paid people sitting round doing nothing?  If not, why should the ratepayers get into this state?  And one last thing.  Dunedin will be the laughing stock of the country unless it does take drastic action to mitigate this financial disaster.

Quit big-note spending on big-noting sports

"Some sports simply do not get any funding from local government yet they are still seen as guilty by implication when people say sport has had to much funding."  
Yes, MichaelEG.  Sports for "doing" have been sacrificed for sports-for-profit and sports-for-watching.  Neither of these is helpful in reducing obesity, encouraging co-operation i.e. teamwork, challenging the averagely physically competent to participate and improve.  Such massively disproportionate handing over of rates and taxes for elite sport is not fair.  It's not reasonable.  It's not sensible investment in the community.  It needs to stop.  
It's time to get priorities in order, and if this means turning a deaf ear to Team Entitlement that's how it needs to be!

Boeing Boeing Boeing

Ciaran Keogh introduces an interesting "if only" - what else the Fubar Stadium money could have bought if only some people hadn't seen opportunities and some others hadn't been carried away with "visions" conjured out of thin air.  His suggestion ties in with what one person said to me when we were protesting, trying to prevent this shocking waste of money.  "It would be cheaper to do up Carisbrook, and fly people to where the concerts are."

There's wasted money, and then there's....

....wasting more and more every year.  Subsidising everything that's done in the stadium comes from what Magic Money Tree?  The one with gold leaves and silver branches in a secret garden that the Mayor knows about but ratepayers don't?  "Mayor Dave Cull said it [mothballing the stadium] was not a ''particularly constructive'' idea and was unlikely to solve the council's stadium-sized financial headache."

As one of the thousands without access to a Magic Money Tree, I understand full well that we are stuck with the debt from building the Fubar Stadium, plus the money spend on high ranked managers to "manage" it and get events to use it.  Since it is unsuitable for concerts for several reasons, this requires money from the Money Tree Fund, and the result is always secret.  Commercially sensitive, how surprising.  Ratepayer sensitive, liable to result in discomfort for those responsible for the whole irresponsible fiasco - how unsurprising that we have been given the mushroom treatment so long, and there has been so much ra-rah cheerleading to keep the dream alive.  

 Credibility is melting faster than polar ice, Dunedin is drowing in debt and our Glorious Leader thinks it's a good idea to keep on dogpaddling because a retreat to high ground wouldn't solve the problem of imminent drowning?

Diverting income to repay debt

Ciaran Keogh: Your postscript touched on an area that is not discussed by the council with the public. It is not clear how much funding is diverted from council-owned companies to repay stadium debt. City Council financial employees know the details but why not the ratepayers? This funding diversion is not clear in any public reporting - why not? Dave Cull needs to recognise that he cannot have it both ways - in his words:"Council expenditure must be reduced but we must not reduce council services." Well Dave, fund diversion from council campanies for stadium debt means that such funds are not available for council services. Sell off a portion of council-owned companies at least for debt repayment and stop going around in circles. [Abridged]  

We knew it couldn't work

No comment, just silence from those who said they knew what they were doing - build it and they will come, the answer to all Dunedin's worries.

Maybe these finanial geniuses could get together and form a company and buy this stadium from the council at a reasonable cost. Show the city they can make it work as they promised. Enlist support from the rugby union and all those positive supporters who truely believed in their stadium dream. The CEO could be QsRC. No anti's, only supporters in this arrangement. 

Sadly this is just a dream. Accountiblity does not exist for this project. We can only wish the council and its CEO all the best in finding a better solution to fit this predicted reality.

Clearly the total cost of the current stadium cannot continue to be paid for by the city. The present management structure, resulting ongoing operational losses and maintenance have to be addressed at the very least. Await the outcome of this with interest. 

Maybe the council will not have to shut it down and wake up to a reasonable offer?

 

Dunedin would be a laughing stock

Just when I thought people couldn't get more stupid, they do get more stupid. Thats a bit like putting ten million into your bank account, then when you get charged bank fees of $30 a month, you give away the ten mllion because it is costing you money.

I can guarantee you one thing: if you "mothball" that stadium Dunedin, NZ, will be the laughing stock of the world. Future investment will be zero and population growth will be negative until the city keels over and dies completely.  I would even bet the University will look at relocating (which this same anti-everything crowd will no doubt love!). 

Think I am wrong? Just find out the hard way.

By the way, I think the money should have been spent on refurbishing Carisbrook (obviously someone had their eye on that land), and I am also not a rugby fan.  I am a ratepayer, and I also use my common sense.  Pour promotion and positive things into the stadium - don't let a bunch of people who have no idea what they are talking about kill this city once and for all.  

Killing two birds with one stone

And two problems could be solved at once - the stadium costs nearly as much to run (DVML costs only - not interest costs) each year as a chartered Boeing 737 - fuel costs included. But the 737 would generate more than enough income to pay its way.

The city could have bought three of the latest model 737s for the price of the stadium. Think about that in terms of what is possible with a bit of imagination! 

We could have had three Boeings provinding free flights to and from Dunedin each day to all of NZ main centres and east coast of Oz for about the same cost as owning and operating the stadium.  Now what would that do for Dunedin business and tourism?

PS: Don't forget that much of the capital cost of the stadium is buried in your power bill, not your rates. 

Stadium mothballing

Reading all the constructive comments shows that it is vital all options (including mothballing) emerging from the review are widely canvassed with the citizens before Councillors make their final decision. As past events have shown it is too important to determine the future of the Stadium without obtaining a full mandate of majority opinion. I look forward to DCC Chief Executive Sue Bidrose making a recommendation to Council that special consultative procedures as provided for in the Local Government Act 2002 be implemented. This decision is too important to get it wrong.

re: Viability

Mike: One of the problems other sports have is that they tend to all get lumped together when people say things like "Sport has got the stadium and the high performance centre"

These really only benefit a few sports and then only a tiny fraction of the grassroots people who play sport. It's all about elite performance, not participation. 99% of people who play sport get no benefit from this.

Some sports simply do not get any funding from local government yet they are still seen as guilty by implication when people say sport has had to much funding.

I'm just saying.

Conversion option

I'm not sure whether they have discussed this, but I think they should convert it into an indoor beach resort.  Several countries have these and people flock to them in winter.  This would include a temperate climate, white sand beaches, bush, hotels on site.  Have a look at this one in Germany   
As far as entry costs, use the same model as ski-resorts in the US.  That is, locals get a season pass at a lower cost.  If it's done well enough the population of the South Island might consider Dunedin a destination for mini-winter break vacations.  Consider it breaking even at that point + tourist dollars and overall it might work.

The pro-boys

Ign: Yeah, I think most of them have awoken to the reality of this mess. However, the odd is still away in La la land.

Qsrc.... Qsrc.... Wake up, wake up. The house is on fire, gotta get out. Quickly now. 

Mothball the city

While you are mothballing the stadium, you can mothball the city as well.

The stadium will never pay its way so you better get used to it. Other cities have similar situations but have a more progressive outlook and understand the importance of funding facilitiies for the benefit of locals and visitors.

Dunedin is a city being killed by a thousand cuts and it seems everyone has a knife.

Highlanders/ORFU run it and pay full rent

Scrap DVML and let the sponges of professional sport, otago rugby pay their way. They could run it with volunteers, and being almost gifted a first class venue ready to use courtesy of the ratepayer, if they can make a profit they can keep it as long as they pay the rent.

Selling of the stadium

We see it oh so clearly now.

The boys who bought us the vision will now turn around and buy back the stadium for a fraction of the cost.

What happens if the city is so broke it can't pay the debt? Does the court take the whole city to court?

Look at the financial facts

Go to www.localcouncils.govt.nz and compare the operating revenues of NZ's main centres. Yes, Dunedin's average rate per citizen (dividing through by population) is slightly higher than Christchurch, but it is considerably lower than Auckland and Wellington. Moreover, the city's operating revenue has been rising steadily for the past 10 years from $127 million in 2003 to $204 million in 2012 (the most recent statistic). To suggest that Dunedin is 'broken' or in financial trouble because of a one million dollar shortfall predicted for the next three years is crazy. There is no crisis here, just a council that is trying to justify its failure to balance the books by scaremongering. We don't need to get rid of the stadium. We need to replace the council with one that is financially literate and while we're at it, let's get a council that talks up Dunedin rather than contunally talking it down. 

Viability

Michael: that's one of the biggest problems I have with the rugby stadium. It's for watching sports, not for participating in them - a place to sit on your backside and drink - and almost all of us already have a device for doing that on the wall in our homes home that gives a better view of what's happening. Any live stadium is going to be competing with such a device.

A great start towards making the stadium more viable would be to black out non-sold out games at the stadium on local (Otago) TVs as they do for gridiron games in the US - Sky has the technology to do this.

As far as funding other sports as part of the stadium we also funded a new building for local high performance sports, I think that sports in general have had far more than their share of the council pie. Once the city's debt is back under control and the money trough starts to flow again I think that cultural groups and others should be at the head of the line of those with their hands out, followed by sports and, having already had far far more than their share, with rugby at the end of the line.

Only option I can see

Mothballing the stadium is the only real option I can see. But I would say put in a grounds keeper and a small crew to keep it to a level where it could be opened at any time with a couple of weeks notice for games and other events. Plan for 3 events per year that are not rugby and contract an outside promoter on a retainer, who is then paid a 10-15% fee on the profits only. Make Rugby pay the full cost of opening and running their Rugby events.

Disestablish the DVML, and manage the Stadium in house at the DCC. Allow the Otago Rugby Football Union, and Highlanders to rent/use the stadium at a good rental as long as they pay they all cost associated with their use of the stadium including their share of the up keep costs up front.

I was against the Stadium being built to start with, but its here now. And it would be a real shame not to have the use of it if and when it was needed. But this cavernous hole in
the cities bank account must be bricked up one way or the other if Dunedin is to move forward. The people of Dunedin cannot afford to keep paying for this. I have notice with interest that the pro-boys and have not made many comments about this. Could it be that they now understand the truth of the matter?

I have seen many suggestion on how or what to do with the stadium on other comments about the stadium. But there always seems to be a lack of suggestions from the pro-boys as well as a lack of understanding why so many people are up in arms about the stadium.

 

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