Highlanders' stadium deal found to be void last year

A deal that was understood to have been struck with the Highlanders to use Forsyth Barr Stadium was found to be void last year, just months before the Otago Rugby Football Union went into financial meltdown.

The result is two new venue hire agreements - one for each union - but those agreements seem set to give less money to Dunedin Venues Management Ltd (DVML), the company running the stadium.

Dunedin Mayor Dave Cull said yesterday the reason was the parlous financial state of both rugby organisations.

DVML chief executive David Davies was asked yesterday about the company's new deal with the rugby organisations, after Mr Cull said at Wednesday's press conference on the ORFU's bail-out package there had been no watertight agreement in place for the Highlanders and the ORFU to use the stadium.

Mr Cull also said an agreement signed in 2009 did not bind the Highlanders, and DVML had found itself in a "risky situation", with no certainty of revenue streams.

That was after the company took over the stadium with the understanding agreements were in place.

When the original 35-year agreement was signed, then-council chief executive Jim Harland said it sent "a pretty clear signal" the stadium would be Otago rugby's home base.

The ORFU was "to take all steps to ensure that it retained a management contract for the Highlanders franchise or equivalent".

The Highlanders split with the ORFU in that year.

Yesterday, Mr Davies said DVML had been "negotiating hard" for the past six months or so in regard to the Highlanders.

"We were talking to the chairman of the Highlanders [Ross Laidlaw], and he simply informed us he didn't believe the Highlanders were bound by it."

The New Zealand Rugby Union said the same thing, Mr Davies said.

"We had to accept we were going to be negotiating a new deal."

That new deal ended up being one the Highlanders franchise was "more comfortable" with, but one Mr Davies said was worse for DVML.

Mr Cull responded yesterday the issue the parties faced was the Highlanders franchise had to drive a deal as favourable as it could under the circumstances.

The ORFU was in an even worse position.

"Neither of them are flush."

Mr Davies said the agreement with the Highlanders was a straight-forward deal under which the stadium got a percentage of the box office for games.

"It's fair to say they got a greater share of the ticket revenue than we had anticipated; that's where the argument was."

Mr Davies said the deal with the ORFU was different, and he expected some people would be "enraged" by it.

There was a percentage for DVML, but with an "incentivised" structure.

While Mr Davies would not release the detailed figures in the agreement, he said the percentage the stadium got from the box office was lower than it had been, but that was offset by the incentive arrangement.

The more people that came in the gate, the greater the percentage kept by the stadium.

DVML would do the marketing.

"The fact that we're going to have to carry out that work for the ORFU will enrage part of the community," Mr Davies said.

But the previous arrangement under which there were three organisations - the ORFU, the Highlanders and DVML - was "patently barmy".

Once people took the "politics of rugby and the stadium" out of the matter, they would see that was the case.

Both deals lasted for three years, something driven by Sky Television's contract with the New Zealand Rugby Union.

Mr Davies said more than 95% of the first year's payments for the seating packages had come in.

That money, along with sponsorship, would make up the more than $40 million of "private sector funding" the company was raising to pay for the venue, over 10 years.

The idea originally was to sell 10-year packages, but that was changed to five years, with the right to extend, paid mostly on an annual basis, after the up-front cost of a 10-year deal proved too much.

On possible new events at the venue, he reiterated what he said in February; it had been a "thin year" for acts.

"We have been working with rugby league, and hope to make an announcement about that soon."

- david.loughrey@odt.co.nz

 

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