Letter to Mayor Dave Cull

If it costs $100,000 to open up the stadium for a big event the tickets will cost $100,000 divided by the number of seats.  Some of the seats don't get a good view so they would presumably be cheaper, therefore to make $100,000 the others would have to be dearer.  But that only pays the cost - it doesn't provide a profit for the city to pay off its debt.  So add that to the seat price.  Then add the promoter's margin, and the artist/team's fee.  Looks like the ticket price will be rather high, doesn't it?  It will have to be an amazingly popular event before the stadium can be sold out at those prices.  So if it's not expected to be fully sold out the ticket price will have to be higher in order to pay what it costs.

How likely is this?  How often?  It is true that if the event attracts people from outside this area and they spend money in the city while here, this will be beneficial.  But if the event is subsidised by ratepayers, as has happened so far, they will have to pay the equivalent of the ticket price as calculated above plus their food, accommodation etc before we get any real benefit over mothballing the stadium until Dunedin's debt burden is reduced to manageable proportions. 

Theone: the problem with that math is that from the point of the city's debt it doesn't add up. We're better off closing the stadium and losing less than it costs to keep it open because then we can pay the debt off faster. It doesn't matter if some people in town get to make more money from the stadium when it's open because the amount of rates those people pay doesn't increase if they make more money in their bar or restaurant. Your plan doesn't address the debt problem. In fact it makes it worse.

This is why, in my plan to pay off the debt faster and cheaper, we would change the rating on local industry sectors that benefit from the stadium such as accommodation, bars and restaurants, etc to reclaim some of that income generated from the stadium to pay off the debt - then it's in our interest to keep it open.

One thing that's really important is that we should be charging people who do use the stadium at least the cost of using it - if it costs $100,000 to open the doors (that doesn't include debt servicing, just paying people to pick up trash and hose down the toilets afterwards, electricity, security guards, ticket takers, insurance for damage etc etc) that's only $20 a head for 5000 at a Highlanders game. We should be aghast that the local rugby people are too cheap to pay the extra $20 it actually costs to use the stadium.

The point is that the cost/ benefit of the whole community needs to be taken into account when hires are considered. The stadium is going to loose money whether it is open or mothballed. At least if it attracts visitors from out of town to events some money will be left in the city to help offset the community subsidy. The fixed cost of the stadium, used or not, is way higher than the marginal cost of use. It is even rational to pay people to use the stadium for events if (and its a big if) those that are attracted spend more money on airport charges, parking fees, hospitality services etc than the overall cost to us of staging the event. If our stadium loses money hosting the event, but our community makes more than the stadium loses, we are up overall. The last thing we want is for the community to bear all the cost and get none of the benefit. By the way, whether we wanted it or not it is now öur stadium". Let's try and get something out of it.

Digger: blush! Being Mayor is not for me, I have a business to run, and I spend way too much time on the road dealing with clients. Someone has to try and bring money into the local economy to replace the millions streaming offshore to the Aussie banks.

I actually still have high (but sadly diminishing) hopes for the current mayor - he promised that he would only support the stadium until the RWC was over (ie until this weekend). I expect that he will then come up with a real plan to get us out of this mess. He defeated Chin with a mandate from people who were against the stadium and will have to make a large political move in that direction to solidify his support base if he and his Greater Dunedin compatriots want to be re-elected.

During the years I spent working in the retail game, a woman, (not originally from New Zealand), made an expensive purchase. Her repayments fell behind, but suddenly, one day, she materialised out of the blue beaming from ear to ear, and flourishing an application to authorise direct-debits from her bank account. She had found these wonderful people, as she saw it, to relieve her of her burden of debt. Her naive and trusting nature had her believing that, henceforth, her debts would be paid by the bank. The fact that money had, firstly, to be paid into the account seemed to have eluded her. 

I think our council these days functions on much the same principle. They are currently nearing 'maxed-out' status, (in credit-card terms), if they haven't already passed it, and the most realistic solution the 'gnomes' are able to come up with is to make a further approach to the sources of easy finance, to have the credit-limit raised. That, unfortunately, is not the solution to anyone's problem, and if further spending takes place, as it is bound to do with a facility which cannot conceivably pay its way, the outcome will be to put our city yet deeper into the financial mire than it is now.

This stadium is not going to trade its way out of its present situation, 'Sweetheart' deals and too many potential parasites will see to that. It will continue to haemorrhage money hand-over-fist, (although how much will always be obscure), and while it remains in that situation, totally unviable and an imposition on city ratepayers, it makes a deal of sense to mothball it and arrest the throwing away of good money after bad until such times as a plan has been formulated which fully implements the principle of 'user-pays'. [Abridged]

It's not rational to take Rod Stewart's $50,000 if it costs you $100,000 to open the doors, even if it's more than the other guys who are offering you even less. It's rational to say "no" and keep the place closed if it loses you money.

Well said, Mike! Mike for Mayor. For all I care you can run the council, anonymously, from behind your PC. We couldn't do any worse. In fact, better.

There must be ways of reducing the $100,000 to open the stadium. Day games, rink fencing the open areas, user cost transfer etc should all be looked at.

Now that we have the stadium we should maximise the use. This will minimise the loss per user and get more community buy in . Examples are children's winter sport and öutdoor" festivals and music events. Why not have a huge indoor garage sale 1 day a year to fundraise?  The Regent does it to help offset the loss to the council. Where are the "Friends of the Stadium"

For commericial users there should be a level playing field, the opportunity should be the same for all users. If Rod Stewart offers say $50,000 for a night when other users are offering $10,000 you take his $50,000. If it is not used you take the $50,000. The stadium makes a loss whether it is used or not. The concert is more likely to attract visitors from outside the region and stimulate the economy.

Kevy. Look at where the complimentary remarks are coming from. Largely rugby folk and people who have no idea of the financial difficulties facing the stadium and city because many don't have to pay for it nor face the debt. Dunedin ratepayers are now each lumbered with five times the debt of the average NZ ratepayer.

Don't let appearances fool you. 

...People forget that mothballing still costs money, because there are minimum costs to be met, and it would be minimum costs not being offset by any form of income generated.

We already are laughing stocks. We're like that cousin everyone talks about when the family gets together, the one who maxed out his credit cards to buy the flash car he really can't afford, and who is now paying off those credit cards with other credit cards. It's a nice car - everyone, even the cousins from out of town and overseas say so, but he really needs to get some help with his debt problem, and his spending problem, and he really needs to stop driving the car because it gets about a kilometre per litre.

Sure, you may be embarrassed in front of your out of town rugby mates when they discover what the local rugby people have forced the city into buying something they can't afford - every time I hear them talk about the stadium on the National programme I already hear them mention the sad financial state the city is in as a result. We're already a laughing stock - and we need to get past this insanity of paying the stadium's interest bill by borrowing even more money. We've done that two years running now. I'm already embarrassed.

I've introduced two very positive ideas below. The first is a very simple one - that Mr Farry and the CST and the rest of the local rugby community follow through with their promise to raise $40m in private donations to fund the stadium. The second is equally simple, that ORFU, the NZRFU and the Highlanders pay an amount for their use of the stadium that is at least as large as what it costs the city.

Neither of these suggestions is particularly radical or crazy - they're sensible. No private business would rent something out and charge less than what it actually costs - we've been told it costs at least $100,000 just to turn the lights on and open the doors for an event - raising ticket prices to cover the actual costs and to help pay off the debt is not a stupid idea.[Abridged]

Do you want us to become the laughing stock of New Zealand? Thats what will happen if we close down or mothball our lovely new stadium. As well as having to pay back the naming rights - Forsyth Barr.  Look at the very complimentary coments that have been made by many people - local, national and international - about the stadium recently.

We have a great new stadium. Lets have some positive ideas, not this continual criticising of the council and our stadium. 

The search for savings is, allegedly, on and it's a matter of urgency.  That's the words - regrettably there's no observable actions so far. In fact the main suggestion hovering around seems to be to sell anything that produces an income for the city.  But if topsy is right,  which is not hard to believe,  "the stadium operator said that it cost around
$100,000 to open up the stadium fully for an event".  As far as I have heard nothing that has been held in the stadium or among the upcoming events that have been announced is paying the full cost, let alone with a margin of profit. Mothballing it for a few years till we get back on our feet isn't such a silly idea.  It would work out cheaper to subsidise public transport for fans to go to Invercaragill for the few events that cannot be held on one of the many sportsfields in Dunedin.   The sooner the debt is paid down, reducing the burden of interest plus capital on Dunedin and Otago ratepayers, the sooner the Stadium could be opened again.  Here at last would be an incentive for raising the CST's promised private funding and for big rugby to lose the beneficiary-entitlement attitude and become part of the solution, instead of the problem.

I think you do close the stadium to make it profitable - if we're losing money every time someone uses it we have to change that. In particular, Mr Davies has told us that we will subsidising rugby particularly highly - apparently they are going to be paying us a only a token amount for use of the stadium, barely more than for the RWC. Frankly we have rugby by the short and curlies. We own both the stadium and Carisbrook - we can close both until the ORFU and the rest of the rugby business gets the message and raises it's ticket prices to at least cover the city's costs.

The other reason why we losing money on the stadium is because $45m of income over the next few years has been diverted and called "private fundraising". This is money that ought to be showing up on the stadium's books as income. Worse than that it's money we need right now, today, to pay the contractors who built the stadium. We've been forced to borrow this money for up to 10 years and pay interest on it for that long. So not only are we losing $45m in income but we have to come up with $5-10m worth of interest. Is it any wonder we're losing money with such bad forward planning?

Fortunately there's a solution to this part of the problem - as soon as Mr Farry and the CST really do raise the private funding they promised us we can pay off the loans, avoid the interest and stop diverting stadium income from covering operating costs.

Mothballing the stadium does sound like a defeatest attitude. Now that it's here, every attempt should be made to minimise the debt incurred. That's sensible. The problem is that the projected income is going to always be less than the projected expenditure.

Recently the stadium operator said that it cost around $100,000 to open up the stadium fully for an event. 75%-plus of the ground usage will be for rugby, for which the NZRFU takes the entire gate takings and pays a fixed percentage back to the ORFU, who in turn pays the venue operator. The only time that the payment figure reaches more than halfway to the $100,000 stadium cost is for a Category A rugby test. At present, the new stadium does not meet the NZFRU conditions to host a Category A test match and, even if those conditions were relaxed by the NZRFU, Dunedin would be awarded maybe one top level match every 3 or 4 years. It's not the only stadium in the country and it's the major stadium in the country with the smallest local population.

So every time the stadium opens it's doors, it has to borrow money from the city. It is accepted that the stadium will always operate at a loss. All parties acknowledge that. Under different circumstances, that would be OK. Carisbrook also ran at a loss. The key difference is that Carisbrook didn't borrow $200m+ that it can never repay. Damned if you do, damned if you don't.

You seriously have to question the intelligence of some people.  "Mothball the stadium" "Close the Stadium"

Yes, brilliant idea - now we have paid well over $200 million dollars for it, let's close it so it has no chance of making an income to pay for it, and makes Dunedin the laughing stock of the world! 

As one of many fairly new residents of Dunedin, I have to say like many others I have met also comment "Thank goodness for the students, because the long term residents - well, they are beyond words really."

Seeing the extra dollar costs now emerging from council, and hearing the reasons related to decisions made by Directors of Council owned businesses (I refuse to use acronyms), and regardless of future decisions made by City Councillors to increase rates to compensate, I absolutely refuse to pay any increase on my rates bill directly, or indirectly related to the Stadium project cost. Do you hear me Councillors and Mayor ? I refuse to pay more costs related to the stadium! I do hope that many other ratepayers take the same course and it results in a court action. Dave Cull, it is not good enough to say we must pay for the inadequacies of Directors and Counillors by raising rates, ignore past actions, and refusing to say, STOP! Again, I refuse to pay more costs related to the stadium!

After the Rugby World Cup the pressingly urgent need for the stadium will diminish. To keep it open to cater for local events, most of which will expect to accommodated at 'mates-rates' now that they have the council over a barrel, will simply haemorrhage more of the city's wealth to no apparent purpose. The longer that applies, the more will disappear down the vortex, the tab to be picked up by the city's ratepayers.

Therefore, mothball it until such time as the financial implications are known down to the most minute detail, there is a prospect that we can see our way through this mess, and we simply don't throw away more 'good' ratepayers' money after bad.

That said, it wouldn't surprise me if the Gnomes of City Hall are naive enough to think that we can, somehow, 'trade our way out of it' A vain hope, I'm afraid.

I support Mr Oaten's call for the stadium to be closed after the RWC. Mothball the stadium until the dire financial situation is resolved.