Stadium company advises of risks

David Davies
David Davies
A forecast financial surplus of more than $3 million for the company set up to run the Forsyth Barr Stadium has come with extensive warnings of the risks the company faces in "an uncertain future commercial environment".

Dunedin Venues Management Ltd (DVML) has a budgeted financial target of a surplus of more than $3 million in each of the 2011-12 and 2012-13 financial years, after money from seating packages and sponsorship has been raised, but before the servicing or repayment of any debt.

But the company's statement of intent, a draft version of which was presented to the Dunedin City Council this week, makes clear there are risks with financial forecasts for companies yet to enter the marketplace.

The statement's financial targets for the next three years included a surplus of $3.3 million to June 2012, and $3.1 million to June 2013.

The targets were based on financial information from the Carisbrook Stadium Trust based on Horwath HTL reports, peer-reviewed by Price WaterhouseCoopers, sales forecasts and advice from the council and its financial advisers.

"Of necessity, forecasting the results of a business that has yet to start operating entails a number of risks, and the results should be seen in that light," the statement said.

The financial projections had been prepared "using a number of realistic assumptions about the future, and relate to events and actions which have not yet occurred and may not occur".

DVML chief executive David Davies said the council wanted a return from the company, "which for us, is really critical".

Asked if he was comfortable the surplus could be achieved, he said he was, "within reason".

"If all the projections hold, I'm very comfortable with it."

But as the stadium was built, he had no doubt "things will come out of the woodwork".

After the September 11, 2001, attacks on the World Trade Centre, for instance, bands stopped travelling to perform.

"What I would say to residents of the city is the stadium is on target to finish on time and on budget.

"But let's be clear.

"The world will be a different place in two years' time."

As well as the financial aspects of the company, the statement covers the first three years of its operations.

Its principal role was to operate as a successful business, but with the direct influence it had in community affairs, the company was "aware of and sensitive to the community's needs", and would act in a "caring and responsible" way.

Among the measures the company would take to develop its community responsibility would be to make its facilities available to community groups at affordable rates, seek out and encourage groups who were at present unable to use its venues, and establish a community scheme at the stadium.

david.loughrey@odt.co.nz

 

I bet they've finally...

I bet they've finally figured out the best money they'll be able to make will be renting the space out for grazing for the 95% of the time it will be idle - and they be able to avoid purchasing Mikenette's "German Product" for the grass. Think of the Sky blooper reels!

Stadium, concerts and profits

The turf experts who reported to CST said because of low levels of sunlight, the stadium grass would struggle to grow and should be used for rugby only from around March - September. I suppose that means no concerts or any other events during the time of year that the roof would have been most useful. Interesting also that original profit projections (with expected massive crowds averaging 17,000 - now considered highly unlikely) were $200,000 per year. I wonder (now that crowds are expected to be thousands smaller) how the projected profit has increased by an astonishing 15 times (or a 1500% increase)?

The forecast stadium surplus

The financial forecast surplus of $3,000,000 comes with warnings, we are told. I'll bet it does. It's far from the profit anyway. It's simply the budgeted income less operating expenses, and makes no allowance for the massive interest cost, or return on capital. Nevertheless it would be fascinating to know the two figures that make up this $3 million. So please tell us either the estimated income, or the operating expenses that have been assumed to arrive at this surplus. I doubt that anyone believes it possible, other than those councillors who supported the project. And if it is not achieved - guess who makes up the difference?

there are hundreds of stadiums . . .

There are hundreds of stadiums around the world that have concerts and have a natural turf. They will always put it at one end (as every other stadium does) because "most" people would rather be standing down the front than sitting up in the stands. People are just making up problems that don't exist in the real world and if they do then god forbid we can sort them out when we come to them.

Glad you've cleared that up

So what we're going to have is seating in the South stand and everyone else on the grass. We'll all get a great view of the stage which will be built in front of the North stand? I haven't been to Wembley but that's what the pics from there show and it looks great. If the Council or CST can confirm that we're going to be allowed to stand on the grass then I'll be delighted.

Stadium concerts

bands do bring their own lights, stage and sound system. Have you been to one recently?

Honestly?

Unlike most stadiums where the seats face along the stands rather than at the field. Honestly? That is the argument you are going with? "I have to turn my head 60 degrees"? (as unless Bono is in the seat next to you 90 won't be needed) this really is grasping at straws. I went to Wembley to see Live Earth . . . that's a rectangular pitch...no probs. And 70% of ticket are normally GA which would be standing room on the pitch (covered) anyway.

Sane set up for a concert

For any sort of sane setup for a concert they'll have to put the stage on one of the large stands, not as you point out at one end (as you point out there will be no good seats) and they will have to set up seating on the playing field to replace those missing seats. These will be a different sort of seating from the temporary seating they will have to buy for the short ends of the stadium.

I have no idea how on earth they're going to protect their natural turf during concerts - it really doesn't seem like a natural fit. I bet after the first or second concert the damage will mean they'll have to lay something like astroturf - something they seem to have large stores of.

Concerts at the Stadium?

As the stadium takes shape, the reality of this becoming a concert venue also becomes clear.
Imagine I've bought a ticket to Pink Floyd (or Ronan Keating) for the opening extravaganza and I'm sitting in either of the new stands.

As I look at what's been built so far I can't work out how will I be able to see the band.
I'm assuming Ronan or Elton will be on the stage they will erect in the empty space between the stands at one end - but that's 90 degrees away from where I'm facing.

I do wish the Council and CST would honestly admit what their own reports are telling them. This is a rugby stadium. There is nothing being built into the core design for any other type of event.

If promoters want to hold a concert in the Stadium they'll have to bring their own stage, lighting and sound system. And it seems they'll also have to bring their own swivel seats so that I can see the band.

Shenanigans at the new stadium

Muse might not have filled the Westpac Arena in 2007, but we have a concentrated mass of zombified peer pressurised university students within bottle-throwing distance of the stadium. No other centre can boast that.

It won't be only the young ones filling the stadium. Those approaching their autumn years, those made rich in the Thatcher and Reagan era, those always happy to spend their fortunes on new ways to relive their youth, will flock from all corners of the country to enjoy the sounds of bands from their formative days and to try to relive their varsity experience, memories of which remain as rose-tinted as ever.

Tickets for Simon and Garfunkel, Ray Davies, Mott the Hoople, and a large number of other similar era bands, will sell out in minutes, The sheer number of older citizens at these emotional events should pre-empt the health board to demand more cash for cardiac services during such events – yet more income for the city.

The increasing number of singles in this group, with money to spend and pharmaceutical props making what had been near impossible now predictable, will lead to shenanigans the likes of which will make the students blush. Dunedin will rock.

A dog's show

Ha ha Digger, love your words. There we are, we could hold dog handling shows in there... one in one wee corner. We're off to a good start.
Someone will have to coax them from the adequate venue they use so far, though. Like any other named cause about town...

re: High class performer?

Any better ideas? Oh, yes, I'm sure Coldplay, Fleetwood Mac, Phil Collins and many more are are vying for a spot in the 'real busy' stadium bookings schedule, like a market in one corner and four nights a year of rugby. No, thats right, they (markets) prefer the unique ambience of the railway station, even if it isn't under cover, to a dull stadium. After all, most people in Dunedin aren't made of cotton wool and can cope with being outside, as they have done since day one.
While Ronan Keating wouldnt be one of my true faves, he can't be that much of a has-been if he's still churning out albums.

Your confidence is wonderful Funkie

"Funkie' has wonderful and uplifting confidence in the success of the stadium. I am very happy to hear it. This means that the stadium can be easily sold into private business if other stadium proponents share 'Funkie's optimism, which they must, otherwise why would they have built the stadium to begin with? I am looking forward to hearing the plans of the stadium being weaned off the rate/rentpayers funds and onto the much more accountable world of private enterprise.

High class performer??

What a has been from a teenies boy band. Get real, I wouldn't cross the road to see him. I'm not surprised no one went.

Reality check

I think the most telling thing is that our airport is too small, any international act will have to fly into Christchurch and will naturally play a gig there before heading south - that will soak up any potential audience from at least Timaru north - this is going to make it close to impossible to find 30,000 to watch any big act.

Dunedin is for sale

I went to Ronan Keating's winery tour in Auckland recently and there was room left for thousands more.
I'm not saying that Ronan Keating is the greatest singer in the world, but when a high class performer like him can't fill an Auckland venue,what hope does a Dunedin stadium have of attracting the best in the world? It's obviously not going to. For one thing,  it's situated at the end of the world.
Secondly, it would cost an arm and a leg to get equipment sent there.
And it doesn't have the population to support it.
Finally, where would visitors stay when most of the accommodation places in the city have their 'for sale signs' out right now?

Guaranteed rock concerts

Nice - just out of interest where would the likes of Muse (who incidentally were unable to fill Christchurch's Westpac arena in 2007, so probably won't hurry back to the Sth Island) and their entourage stay - the Alcala motel? And where will the Red Hot Chili Peppers stay if they are playing the next night and Muse already have the Alcala booked out......Even if all this stadium "field of dreams' stuff ever transpired, does Dunedin really have the infrastructure to support those dreams?

Success of rock concerts is guaranteed?

But surely, before a rock concert can be successful in the stadium it has to be held in the stadium. And according to the promoters when contacted by the media some months ago, they won't be including Dunedin in their itineraries. Perhaps it is time for the media to check again with the major promoters. Their opinion about the feasibility of such tours may have changed in the meantime.

I do not feel like taking the word of the people who promoted the stadium in the first place with "privately funded" and "$188M" stories, but if reputable media were to get up-to-date statements from the promoters we would have something realistic to discuss regarding the profits and social amenity offered to the people of Dunedin by the stadium when it is up and running. Ratepayers deserve to be kept up to date with solid information. We have had enough of surmise and spin.

Stadium

Mr Davies doesn't need a crystal ball to confidently predict that, as the stadium gets built, "things will come out of the woodwork". That was already happening long before the first piles sank. I suspect these undesirable 'things' will pop up in the strangest places.

[Abridged] 

Oh ye of little faith

Faith in the stadium.
A very intelligent colleague has such confidence in the new stadium that he would have you believe it will lead to rampant and rapid growth in local wealth, growth not seen since the gold rush days. Yet another very intelligent colleague thinks the whole enterprise is so peppered with flawed thinking and risk that he would have you believe it will bankrupt the city and lead to tumbleweed blowing through the future bankrupted one horse town. I do not share their overall intelligence, but know in this case the reality will be somewhere between these two extremes.
With a near endless supply of students on tap, the success of rock concerts is guaranteed. Rich students will readily dip into their family- tax avoiding- trusts for the dollars needed to see the latest Muse, Coldplay, Kanye West, or whoever. Poorer students, by far the majority, so lacking in understanding of compound interest concepts, won’t hesitate to extend their loans by, “just a few hundred dollars” to comply with what will be a groundswell of serious partying peer pressure. Dunedin will become THE party town. These students might even revive Otago rugby from what some commentators believe are the death throes of a historic and unsophisticated barbarism. And do remember Dunedin IS the University.

More appropriate use for Traitors Gate

The idea of the stadium having a "traitors gate" for non-supporters, submitted by funkie01, could be more appropriately used in relation to promises of a roofed stadium financed without rates money and costing not a cent over $188 million.

Don't worry

Don't worry dave up the hill, I don't think are too many tiers, maybe three on one side and only one on the other. Last time I looked. On another note, I heard they are going to open it with 10,000 people from around otago performing a haka, now that is going to be awesome.

Brilliant.

What a brilliant tongue- in- cheek post, funkie01.

Traitors Gate?

So funkie01 people who do not agree with your point of view are traitors? People who rightly question the use of thier money are traitors? Just to clarifiy. Traitor, "One who betrays any person that trusts him, or any duty entrusted to him". Does this ring any bells? Remember all the sound bites prior to the stadium being comissioned like "it will not cost a cent more than $189 million, if we don't get the $45 million investment by business it won't go ahead?". This council was entrusted by the people of this city to look after its people's best interests, something they have constantly failed to do, they are the people who should use your "Traitors Gate".  Though I have long been an opponent of this foolhardy project I will attend some of the games should it be built in time for the World Cup, after all I have paid and will continue to pay for the next 30 years for the privelidge, I just hope this is not going to be the most expensive "I told you so" in Dunedin's short history

Stadium sign

Don't worry, given the current state of the city's finances I'm sure we'll find a way to put both your signs over the main entrance.

Oh ye of little faith!

To the drones of doubt , please wake from your afternoon nap and take a sip from the cup of salvation! I too ride past the Stadium of Right and it fills me with pride. Pride that we have persons of loyal character, strong enough to drive forward with this major asset to our city. Persons of high calibre and providant thought. Hurrah! I eagerly await opening day where the prophets of doom will be assigned to anonymity or risk derision. Oh! Joyous day!
I strongly suggest a sign at the main entrance.
Welcome to the Stadium of Dunedin.
Built for Dunedin,
By Dunedin.
Och Aye!
I also suggest another gate, much smaller of course, for those unbelievers. Simply,
"Traitors Gate".

Community- a buzz word

You'll notice in the last two, short paragraphs the word 'community' is used five times. Nothing more than a buzz word used in a valiant attempt to obtain - you guessed it - community buy-in.

Community centre?

Great. With Mr Davies last paragraph it sounds like we are going to get a very expensive community centre now. What next?

That stadium . . .

Is there any truth in the rumour that certain existing city councillors are delaying stating whether they will stand again as council candidates until June/July, because by then the stadium roof frames will be in place and those candidates will bask in the consequent publicity and "wow" factor? Additionally, why is it possible for a business to pay for a corporate box, claim some of that cost against fringe benefit tax, invite their clients to watch stadium events at no cost, while ratepayers who are forced to contribute towards the stadium cost receive no benefit whatsoever - not even reduced entry ticket costs?

[Abridged]

Stadium company advises of risks

I cycled past the rapidly growing stadium on Sunday morning and could not help but think this whole stadium thing is going to end in tiers.
Dave-up-the-hill

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