Auckland Regional Council has been ticked off for getting it badly wrong when it hosted football superstar David Beckham and his LA Galaxy team in a demonstration game which turned into a financial disaster.
The Galaxy played the Oceania All Stars at Mt Smart Stadium in Auckland in December, 2008, but the much-hyped event failed to attract enough fans and lost $1.8 million.
Chief executive Peter Winder said today it was ARC's first venture into promoting an event and would be the last. The council had learnt from its mistakes, he said.
The ARC budgeted on selling about 25,000 seats to break even, but sold only 14,409, many of those the cheapest in the ground or half-price tickets.
ARC asked the Audit Office to investigate the disaster and in a report just released Phillippa Smith, deputy controller and auditor-general, said ARC chose the wrong event at the wrong time and charged the wrong price for tickets.
Tickets cost between $80 and $150 for adults and $45 for children in the uncovered area.
She said ARC had an "unclear governance structure" for the stadium which "sat uncomfortably in the Parks Department".
"The Stadium Advisory Group was advisory only, rather than a governance body." ARC had failed to review its management plan continuously for the Mt Smart and failed to appreciate its processes were inadequate to support an event as big as the LA Galaxy event.
Mt Smart Stadium operated with insufficient council oversight and the council "was not best placed to consider and approve the LA Galaxy proposal." ARC promoted an event for the first time but underestimated or even discounted the possibility of a loss.
Ms Smith said the decision to promote the event was made without a formal business strategy or a clear policy about the level of commercial risk the council was willing to assume.
She said the council had correctly identified the problems with its governance and management of Mt Smart Stadium and was taking steps to address the problems.
"Therefore, we have not made any specific recommendations for the council. However, we trust that this report will provide some useful guidance for all public entities - especially those with commercial operations," she said.
Mr Winder said action began to rectify internal system failures right after the game.
He said ARC would never risk promoting an event again at Mt Smart and a Mt Smart special committee had been formed with a sole focus on the stadium.
Mr Winder, chief executive since 2005, considered resigning after the event but decided to stay and sort out the mess.
"We did not have in place the systems, processes and people capability to do this. We have learnt from this." He said he could not say why so many inadequacies covering Mt Smart were not identified earlier and fixed but said it would not happen again.
"There are a whole range of things that add up to what was a pretty ugly story."
He said Mt Smart had a good year in 2009 and 2010 has started just as well with 47,500 at the Big Day Out concert last Friday.
He said the LA Galaxy loss was included on the balance sheet of Mt Smart as a debt which would be repaid out of Mt Smart income and would not cost Auckland ratepayers a cent.
