Peter Williams: Hothead for the stadium

This morning a colleague pointed me in the direction of this item from HeraldonSunday (NZ Herald). My colleague says: “Here’s another simplistic analysis that comes to the conclusion: if the ratepayer contribution is only $66 a year, surely $1.26 a week is worth it to have a stadium to be proud of? There’s an email link to the author on the page. I will be using it! Let’s have analysis of substance.”

### HeraldonSunday 3:00AM Sunday Apr 05, 2009
Peter Williams: New stadium only hope for Dunedin

By Peter Williams

One of New Zealand’s proudest rugby provinces is witnessing the decline and fall of the national game within its borders, and is hardly raising a whimper. That’s the message beaming loud and clear out of Otago in the last week after the Highlanders hugely successful foray into Palmerston North, and the increasingly well-organised opposition to the proposed new stadium in Dunedin.

Read More Online Here…

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46 Comments

Filed under Economics, Geography, Hot air, Inspiration, Media, Politics, Site, Stadiums, STS

46 responses to “Peter Williams: Hothead for the stadium

  1. Elizabeth

    ### Sunday Star Times Live Last updated 05:00 05/04/2009
    Fitzy blasts New Zealand rugby

    By Greg Ford

    All Blacks living legend Sean Fitzpatrick has launched a withering attack on New Zealand rugby saying the game in the southern hemisphere is too loose and is detrimental to the All Blacks’ future success.

    Read more

  2. There is nothing over simplistic about this. IF the rate payer contribution is $66 per annum, then what the hell is all the fuss about.

    How’s this for over simplistic analysis. Overheard a very impassioned conversation at a cafe in Dunedin this morning. The person (table of 6 all into their 50s+ well off – presumably reasonably intelligent) was lecturing the table that a heavy stadium built on old lime foundations which have been waterlogged from Leith seepage for the last 600 years (WTF?), coupled with a very heavy glass roof, that we were setting ourselves up for disaster. Someone asked about the money, he thought it wasn’t an issue, the issue was the foundations and glass – glass breaks and falls on people you know. That was it, there was no if, what or maybe, he knew the facts and that’s why we shouldn’t build a stadium.

    And you wonder why us pro stadium people fret, because once again ignorance and disinformation continues to win the day. That’s over simplification.

    To tell the truth the attitude of P Williams, is pretty consistent to attitudes I have encountered outside of Dunedin.

    YES PLEASE let’s have analysis of substance and dispel the lies and just pathetic uninformed rubbish. I will never begrudge someone opposing this stadium if they know what the hell they are talking about. If they are basing said opinions on supposed ‘Sky Falling” stuff that just isn’t true, based on reality – whatever you call it, then that opinion has no validity and equally no place holding any credence,.

  3. David

    Paul – you’re right. The amount of misinformation about the stadium is appalling.

    But it’s in both sides, and the pro loby have been totally useless at answering legitimate questions, making people suspicious of them.

    For example the $66 per year per house for 20 years, added to the $13,000 for the average commercial property, doesn’t even come to half of what the DCC has committed to.

    So the $66 is clearly false information as well.

    The closed meetings, failure to answer questions, no public debate on the projections, making $200M decisions without even bothering to ask whether we’ll still have the Highlanders or not etc etc, add up to put us in a position where we should be having 1-2 years public debate, with ALL the facts, before we’re even ready to make a decision.

  4. KGB

    People outside of Dunedin have no idea what is going on in regards to the stadium at all Paul.
    They think that is only going to cost ratepayers $66 a year and that it will create jobs in the region.
    Many Dunedin folk may well be asking..’Who is Peter Williams anyway?’

    {Paul here, yes it will only cost $66, yes it will create jobs 300 needed to build it, how many to staff it, oh I see it’s going to be built and run by ghosts, is that the next myth from the sts, and sorry more people out of Dunedin know who Peter Williams is than not. Really why do you bother with this rubbish?}

  5. Richard

    The average residential property with a rateable value of $291,000 paying $66 for the (so-called) stadium rate will, in the 2009-10 Financial Year, receive an increased “dividend” from council investments of $445.

    The average commercial property with a rateable value of $968,000 paying $664 for the (so-called) stadium rate will, in the 2009-Financial Year receive an increased “dividend” from council investments of $4,477.

    Two years from now, the dividend will be netted.

    Think about it!

  6. Elizabeth

    Glad the word dividend is in quotation marks, Richard. Others would argue it is no such thing, against the (so called) stadium rate. Semantics, with good intent.

  7. Richard

    Well no semantics. In two years time, the $5 million is to be taken off ” the dividend” so it will be netted. “Apples with apples”.

  8. David

    Whether ratepayers pay directly for the stadium, or directly from their share of city income, makes no bottom line difference to them at all.

    The main difference in telling ratepayers that they are only paying $66, when in reality they’re paying much more, is that this is dishonest – it sounds very much like a scam to try to trick ratepayers.

  9. Richard

    The re-routing of SH88 to link the heavy traffic bypass ex Thomas Burns Street at St Andrew Street through to Ravensbourne Road has long been on the roading programme of council. It was most recently confirmed when the Transportation Strategy was adopted two years ago.

    The stadium proposal and the acquisition of land resulted in a shift of the route from Parry Street to closer to the railway line. This will happen whether the stadium proceeds or not and is a major plus as it puts the two physical “barriers” to the harbour alongside each other.

    The project is one for the REGIONAL Land Transport Committee to determine and fund from their funding allocation.

    The estimated extra cost of the shift is estimated at $700,000 approx. with an additional $1 million if the gyratory option found favour. Council may – or may not – have to fund that.

  10. Richard

    “Whether ratepayers pay directly for the stadium, or directly from their share of city income, makes no bottom line difference to them at all.” – David.

    Correct but I would have preferred consistency, from the outset rather than changing in two years.

    “The main difference in telling ratepayers that they are only paying $66, when in reality they’re paying much more, is (sic) dishonest” – David.

    A strong accusation! In what way is the $66 per average household payment dishonest, David?

    As is clearly stated in the DCC Draft Community Plan (which has been audited by Audit NZ), the ratepayer contribution of $66 per year for 20 years from a property with a rateable value of $291,000 will repay the “upfront” loan that the DCC will take out to start and continue construction.

    All the other matters you have alluded to from time to time are covered in financial and other reports which are all public.

    Their are significant benefits to be gained from using the company structure, for our average rateable property (then $289,000), the cost of not doing that would add $22 to the rate levy. A table showing comparisons was set out in the draft Annual Plan 2008-09 and is shown on page 11 of the confirmed Annual Plan.

    Some of your previous comments puzzle me. This debate started FOUR/FIVE YEARS ago.

    In 2008 Council passed a set of resolutions to obtain all the information – the precise information – it needs to make a final decision as to whether the project is affordable and viable.

    That information including that of a Guaranteed Maximum price contract etc. is being finalised for council to consider before it makes its decision on 20 April whether or not to proceed.

    Further information may be required. I do not know as yet, nor does anyone else in council.

    Of one thing you can be certain, we will not be making any decision until we – and the public -have “all the facts”.

    Which has been the position all along.

  11. David

    Will the public have “all the facts” and the time to debate them, before a desicion is made?

    Like how much is depreciation?
    Who will pay for it?
    Why does the city pay more to the ORFU in ticket rebates than they pay for stadium hire?
    How much of the membership fees, earmarked as a large part of private funding for the stadium, have to be paid back to the ORFU in rebates?
    How much in interest is not covered in the “$66” per year per household?
    Where do the capital payments come from, who pays, and how much?
    If rugby spectator numbers do not go up massively as predicted, but follow the rest of NZ and go down, who pays?
    Why do we have an average rates increase of $593 per house in the next four years (according to DCC) if the stadium is only $66 per year and we have been told we have low debt rates?
    What is the average cost per house of the new roading alignment?
    How much will the average house be losing in rates subsidies from DCC companies, compared to if there was no stadium?
    What other projects were considered for this money, and how did they compare in returns to the city?
    How far into the future are we guaranteed to keep the Highlanders?
    If we pay more to the ORFU in ticket rebates, than we get in venue hire, would it not be a large saving for ratepayers to have no rugby events at the new stadium?
    In the guaranteed contract, what is guaranteed and what is not?
    What happens if the contractor goes broke?
    The projected return is $200,000 for a $200,000,000 stadium. That is just 1/1000th. How low would it have to be for the council to consider it financially unfeasible?
    Is this pathetic return the best we can find for $200m?

  12. David:

    Like how much is depreciation?
    Accounting, depends on which method of depreciation the DCC uses or chooses to use for this asset?

    Who will pay for it?
    Hmmm , how does one answer this?

    Why does the city pay more to the ORFU in ticket rebates than they pay for stadium hire
    What do you mean, is this new, old or will be the model for the new stadium, and are you certain of this?

    How much of the membership fees, earmarked as a large part of private funding for the stadium, have to be paid back to the ORFU in rebates?
    I don’t know you tell us, (starting to sound a little conspiracy theorist)

    How much in interest is not covered in the “$66″ per year per household?
    ???

    Where do the capital payments come from, who pays, and how much?
    Do we really need to know, is this important? Do we need to know this information for the poo pipe, or the road budget???

    If rugby spectator numbers do not go up massively as predicted, but follow the rest of NZ and go down, who pays?
    This is a doozie. Put a stadium 100m from 20,000 students and don’t expect walk in crowds to surge, especially if they carry on the innovative marketing like having Shiad playing after games etc. Hmmm which rest of NZ are you talking about? If you are talking about early season Super 14 games, well that is a whole different issue. Or are you talking about the wave of hysteria that will be sweeping the country in the year(s) before and after RWC2011, even more so if we win the thing. Then there is the classic winning teams attract crowds, spurs on teams, attracts crowds cycle that happens.

    Why do we have an average rates increase of $593 per house in the next four years (according to DCC) if the stadium is only $66 per year and we have been told we have low debt rates?

    Poo pipes, Roads, Rubbish Collection, Water Treatment Upgrades, really don’t be so disingenuous.

    What is the average cost per house of the new roading alignment?
    I thought Richard answered that question in a previous comment. Good money spent as far as I am concerned. Regardless of the new stadium that whole road around Logan Park district is a real mess and any improvements there are preferable.

    How much will the average house be losing in rates subsidies from DCC companies, compared to if there was no stadium?
    ???

    What other projects were considered for this money, and how did they compare in returns to the city?
    Ah the old ‘opportunity cost claim’. Yeah I really wonder what $200m projects were being considered for the city? Bev seems to think that the council should have created a competing technology park (with the university), or wasting money on an upgrade of the broadband network. Why should council be investing in Broadband when both Govt and Telecom already signalled that. On this point I really want to thank Fliss Butcher and her committee working on upgrading all of the parks around the city. My kids just love the new flying fox.

    How far into the future are we guaranteed to keep the Highlanders?
    Ah so you want absolutes where none are supposed to exist. A top grade representative rugby team will always be based in Dunedin, regardless of the competition. I could probably answer this for you though, as long as there is a top quality stadium and crowd supporting it – so yeah a long time into the future.

    If we pay more to the ORFU in ticket rebates, than we get in venue hire, would it not be a large saving for ratepayers to have no rugby events at the new stadium?

    Again a big IF, and you know this as fact?

    In the guaranteed contract, what is guaranteed and what is not?
    And what is none of your business and what isn’t. I’d be astonished if commercial ventures were ever to reveal such stuff, and if they do, will they ever get work again as they have just given away all of the their commercial advantage. Seriously the public (despite what people think) does not have the right to this sort of information

    What happens if the contractor goes broke?

    And the sky falls…

    The projected return is $200,000 for a $200,000,000 stadium. That is just 1/1000th. How low would it have to be for the council to consider it financially unfeasible?
    Is this pathetic return the best we can find for $200m?

    Again you know this as a matter of fact, or is this from the StS slide rule of so called truths? IF your figures have any basis on reality, they then seem to neglect any future increases in revenue, which isn’t too hard to suggest. Funny so many questions were asked of the Vector Arena in Auckland, ‘we already have facilities, who will pay, how much, what if, why….’ Until it started they didn’t have a 1/4 of the bookings it does now. As soon as bands and promoters saw how successful it was it began taking more and more bookings.

    I will never begrudge anyone wishing for the council’s projects to be as stringently as possibly watched, and of course many questions should be asked of the council. But we should not expect to know information that isn’t required in like projects nation wide, nor should we be expected to know information that isn’t normally available to the public. All of these questions may be relevant, and you know what, I’m guessing they have already been asked at CST, Council and all of the professional bodies associated with this development.

  13. Jody

    That’s a great list of questions, David.

    I would be very interested to know if there has been (or will be) any projects that have been ‘shelved’ or delayed, due to our money being tied up in the stadium.

    Also, who is covering the bridging finance of $45million, less government contribution of $15million, required for construction since the private sector funding is not forthcoming until after the damn thing is built.

    And, what deals have been made with the government to get their contribution?

    Also, why has the estimated revenue from the sale of Carisbrook (if/when we manage to sell it) been removed from the Awatea St Stadium accounts? How much did we pay for Carisbrook? Why did we buy Carisbrook, if it is not being off-set against the new stadium and we really are not ‘bailing out’ the ORFU?

    Wish we could get straight-forward answers!

  14. David

    Paul,
    Depreciation has to be paid for by local bodies by law – Wellington has to find $3m per year and their stadium only cost $122m.

    Jody, that brings to mind some more questions.

    Will the ORFU ever pay back the millions they owe to ratepayers?
    What happens if the ORFU goes bankrupt?
    Are they technically bankrupt already?
    What will the councillors do if the ORFU say they won’t pay back the money?

  15. Funny, such a high standard of scrutiny is expected of the DCC and CST (rightly so) yet the StS can get away with any old rubbish (and oh yeah baby they have for 18months or so now).

  16. “Depreciation has to be paid for by local bodies by law ”

    again depending on which method they choose, it’s an accounting thing. They might by law, but considering there are about 2o odd methods of accounting depreciation, how and why is completely up to the council. Did anyone ever think that there wasn’t going to be depreciation?

  17. Will the ORFU ever pay back the millions they owe to ratepayers?
    A matter between the DCC and ORFU – not of the stadium.

    What happens if the ORFU goes bankrupt?
    A matter between the ORFU and the NZRFU not of the stadium.

    Are they technically bankrupt already?
    You’re breaking all of the scoops recently, you tell us, are they? Doing a bloody good job of operating while they are, as can be the case, oh that’s right there is a massive difference between insolvency and bankruptcy, and of course this doesn’t always mean doom and gloom, in fact it can be very good, ie eliminating bad debts etc?

    What will the councillors do if the ORFU say they won’t pay back the money?
    ??? Could we wildly imagine that a legal contract has been signed, or would that seem like due process.

    What will the councillors do if war breaks out between Nth Korea and Australia, you really are playing by the StS song book now?

  18. Richard

    “Why do we have an average rates increase of $593 per house in the next four years (according to DCC) if the stadium is only $66 per year and we have been told we have low (sic) rates?” – David

    The answer is on page 4 of the Draft Community Plan recently sent to all households and available on Council’s website along with the detailed Plan.
    The water and wastewater upgrades coming to full charge are reflected in the increased UAC’s or targeted rates for those services.

    “How much will the average house be losing in rates subsidies from DCC companies, compared to if there was no stadium?” – David

    $66 – shown as Investment Income in the DCP. It is probable however that this will be offset by increased “subsidies” – I prefer to call them “dividends” over the term.

    “Where do the capital payments come from, who pays, and how much?” – Dave.

    Assuming you mean the “loan repayments”: $66.

    Some of your other questions are being addressed by The Mayor in response to questions put to him following the recent Town Hall meeting.

    Others I do not understand or confuse issues and/or are unrelated to the stadium proposal. Should the stadium go ahead, the City is, for example, not involved in “paying ticket rebates” to anyone let alone the ORFU.

    I have therefore confined my response to those immediately relevant.

  19. Jody

    Paul, a high standard of scrutiny IS expected of the Council rather than the STS – we are not forced to pay money to STS….

  20. Thank you very much Richard – happy David?

  21. Richard

    ”….. why has the estimated revenue from the sale of Carisbrook (if/when we manage to sell it) been removed from the Awatea St Stadium accounts? How much did we pay for Carisbrook? Why did we buy Carisbrook, if it is not being off-set against the new stadium and we really are not ‘bailing out’ the ORFU? Wish we could get straight-forward answers!” – Jody.

    As has been stated publicly, Council has entered into an agreement with the ORFU to buy Carisbrook if and when the new stadium proceeds.

    That decision effectively removed from the CST financials, the anticipated nett proceeds that were estimated to be realised from the sale of Carisbrook. This is the major part of the ‘extra ‘$10 million in the overall cost of the project that has been receiving attention of late.

    The separate sale and purchase agreement that has been entered into between the ORFU and the DCC instead of between the ORFU and the CST means that, if the Awatea Street project goes ahead, Council will become the owner of Carisbrook and not the CST.

    If and when that happens, attention will turn to its future role in the post-new stadium area.

  22. David

    Richard, the projections show the owner of the stadium paying the ORFU $700,000 per year in ticket rebates. This is from the CST – not me.

    Richard, is it possible to clarify the following numbers, as from what I’ve seen they don’t seem to add up – perhaps they do. It just seems impossible to find them anywhere.
    1/ Total DCC loan for the stadium
    2/ Total annual interest payments.
    3/ Total annual capital repayments.
    4/ Total annual rates from residents and businesses going towards the stadium.

    Every Dunedin ratepayer should know these fugures, but they’re very difficult to come by.

  23. Elizabeth

    David’s questions and Richard’s answers suggest we need more public meetings in the council wards to process on the accountability (right Jody!) or not of the stadium project.

    There’s a lot to be said for getting public consultation cranking WAY before the Council signs such an expensive GMP contract and commits funds to the ‘hidden’ costs which are to be picked up in (in some places non-itemised) departmental budgets.

    Why the rush to build a building for Rugby, oh, a brief World Cup activity (3 pool games). Like that is a long-term sustainable thing to do with public funds.

    [Paul – I don’t mean to be unkind but your fixation with the outfall pipe is sounding anal.]

  24. Richard

    David asks:
    Will the ORFU ever pay back the millions they owe to ratepayers? What happens if the ORFU goes bankrupt? What will the councillors do if the ORFU say they won’t pay back the money?

    It has been stated publicly on several occasions, that the loan made to the ORFU by the DCC some years ago, is almost totally” secured by mortgage. All payments are up-to-date

  25. David

    David, on depreciation “Who will pay for it?

    Paul “Hmmm , how does one answer this?”

    David – “Not like that”.

    On ticket rebates, CST Operational Projections show that after the second year of operation venue hire to rugby for the whole year will total $474,170*. Ticket rebates for the same year will cost $702,901*.

    Assuming massive crowds, the overall “profit” for the stadium (not counting about -$5m in interest, and -$?m in depreciation) will be $193,121*.

    Rubbish these figures* as StS propaganda if you like, but it makes you look a bit silly, as they all come from CST’s own projections.

  26. David

    Paul, re crowd size.

    The trend I’m talking about, is the one that has seen plummeting numbers at every rugby stadium in the country for the best part of the last decade, whether the stadiums are new or not

    Perhaps that has escaped your attention. just like interest in rugby overall is dropping and dropping.

    There are so many different sports and interests that the current generation of students have grown up with, that rugby does not have nearly the support it did from past generations.

    And what about the current owner of rugby – Sky TV – they WANT people to stay home and watch it on tv.

    They’d rather have 20,000 people sitting at home paying them $50-$100 per month, than have them sitting at the stadium.

    It might have been financially feasible ten years ago when rubgy was at its peak. But then there were tens of millions spent on new stands, new terraces, new corporate boxes, new pitch, drainage, lighting etc. In fact over half of Carisbrook is pretty new.

    Rugby is now struggling to stay relevant. And $200m white elephant will not change that.

  27. David

    rugby crowds have not been plummeting across the nation, they are fluctuating, and are highly dependent on team performance.

    You say interest in rugby is declining, I would love to know where you have pulled figure from. From the public participation numbers at SPARC I see know plummeting.

    You have just answered the very reason we need a MULTI-PURPOSE stadium, yes participation (or actually) media attention of other sports is more widely spread. With 2011 RWC and then the possibility (very very real possibility) that NZ will host both the U23 men’s and U20 women’s football world cups the following years, Dunedin will be well positioned to take an active part in those spectacles.

    It will be rather comical looking back on these pages come 2011, when the country is in the wave of another Rugby frenzy, and player participation is up again. I remember the 1997 event and more recently how popular the Lions tour to this country was.

    SKY DOES NOT OWN RUGBY, cut that crap out.

    But once again you have answered the questions of why we need this multi-purpose indoor stadium, so that a multitude of other sports can be accommodated and hosted within this city.

    Rugby is struggling to stay relevant – make me laugh (and Rugby isn’t my fav sports).

    I rather guess that your opinions of this so called ‘rugby’ stadium are somewhat tainted by perceptions of the sport of rugby itself.

  28. Elizabeth,

    my fascination with the poo on the beaches at St Clair is borne of the fact that so much weight of opposition was thrown against the stadium on the back of this issue, despite the fact that every sane person knew that this issue was being addressed. Then despite the fact that this issue is now 90% resolved, it is continually being used. It only goes to illustrate just how fantastically wrong the StS has been on a number of issues. Further if that was where it stopped, that would be fine, but the mere fact that it’s being bought up in the media and in conversation still bears weight to my impression that lies and myths perpetrated by the STS hold weight, regardless of their validity.

    That and the global warming doom and gloom issue are about as perfect an example of disinformation sidling debate as could be. Hell I’d be more than happy for people to stop bringing it up, but if there is the slim possibility that people are reading this blog and finally realise that some of the red hearings posed by the StS (amongst their very valid concerns) are nothing more than Bev Little running up the streets claiming the sky is falling.

  29. David

    Rugby numbers have not been plummeting for the best part of a decade? Where have you been?

    See “Rugby: Ground membership in freefall at ‘Brook”
    http://www.odt.co.nz/sport/rugby/43636/rugby-ground-membership-freefall-039brook

    Crowd numbers sad tale
    http://www.stuff.co.nz/sport/rugby/super-14/features/348842

    What about the big local derby last year vs the Crusaders – they didn’t even get 3000 (and it wasn’t raining). In fact has anybody even bothered to work out how often it rains. My guess is one game in 20 (Dunedin has lower rainfall in winter than any other time of the year).

    And so you think it’s multi purpose. All these other sports that are attracting students – are you going to now put them in the the stadium? Like downhill mountain biking, rowing, multisport, motor racing, yachting, cricket (as rubgy is now played on top of the cricket season), hang gliding, someone even suggested land yachting (in a windless indoor venue).

    Less than 10% of income for the stadium is projected (by the CST) to come from venue hire to events other than rugby.

    The word “multi-purpose” in Dunedin has come to mean “really only rugby but we want it to sound much more than that”.

    It is ridiculous to talk about events where the false floor will cost more than a year’s income for all non-rugby events put together, where they will get three spectators, and where the floor will cover the pitch for more then a few days and kill the grass.

    Basketball floors, false tennis pitches, swimming pools – it’s all so laughable.

    And Sky does not own rugby? Their money pays the unions, pays the players, their hotels, their travel, dictates whether they play at 2pm or 7.30pm, makes sure that no two games are played at the same time….. you think the unions, players or spectators have a say in that anymore?

    It’s pretty obvious that Sky bought and owns rugby. There’s nothing you can do about it.

    The world has changed. Rugby, racing and beer is dead. NZ is far more diversified now.

  30. I do not need to defend the place and role of rugby in New Zealand. The 140,000 registered players in NZ is pretty constant.

    Quoting one off crowd story from CHCH early season last year is hardly an indication of a trend. The reason for season tickets etc at Carisbrook could easily be numerous, I thought there was a recession on, the team last year was average, people are waiting to see what the new stadium will cost etc etc.

    I do not disagree that other sports participation is increasing, but then they are also getting more media attention.

    SANZAR schedules games, this also isn’t a new thing, and will continue to evolve while the majority of the revenue comes from more diverse sources, take for instance the kick off times for RWC2011.

    It’s also pretty clear from the rest of your comments that you have no interest in rational debate about the validity of hosting other events. The model for multiplicity of use within stadia world wide is well known, your head in the sand over it doesn’t make it any less so.

    Yippie we are taking your money to build a stadium that when the crusty deamons are in town will host three spectators (better tell my friends not to come along) and there isn’t a thing you can do about it.

    How’s that for rational debate.

  31. David

    Paul, I can see and hear Carisbrook from my place. In the late 90s and early 2000s the terraces used to be full, every game. I could hear when a try had been scored.

    Now days I sometimes look at the terraces and wonder if there is a game on at all, and it’s been many years since there’s been enough of a crowd to actually hear them.

    If you’re not willing to believe actual facts that rugby attendance numbers have dropped significantly over the last ten years, then perhaps it’s no surprise that you think spending $200m to get a 1/1000 return is a really good deal.

    And multi-purpose – yippeee – we may get an irrelevant pre-season game from a Wellington soccer team, and another irrelevant pre-season game from the warriors.

    And TOTAL income from ALL uses other than rugby is predicted by CST to be just $250,000 per year (BEFORE costs).

    And interest costs alone average $300,000 per major event.

  32. Richard

    Jody asks: “I would be very interested to know if there has been (or will be) any projects that have been ’shelved’ or delayed, due to our money being tied up in the stadium.”

    Well, all I can say in response is to suggest a perusal of the Draft Community Plan 2009-2019 which is on-line on the DCC Website and make up your own mind. Council has not “thrown out” or sidelined any of the identified major capital projects, nor has it cut expenditure on core operating activities “to pay for the stadium” as some trumpeted before we even sat down to consider the draft and who, despite denials before and since, keep on “playing the same old tune”!!

    What I can predict with certainty is that, come the Hearings, we will have the usual queue of submissions for people (albeit well-intentioned)wanting money for this and that “pet project” and no worry about whether that is a “core council function”, incurs debt etc etc.

    There will, of course, be expected objections on some of “the big ticket items” like the Stadium as there have been in the past (remember the Dunedin Centre?) but no-one, I repeat no-one, will come along and specifically propose cutting services or identify areas of ‘unnecessary operating expenditure”. I would be delighted to be proven wrong on the latter!

    No problem with it all! Balancing competing interests etc is part of the job.

    T’was ever thus!

  33. David

    Paul wrote “Quoting one off crowd story from CHCH early season last year is hardly an indication of a trend. ”

    Hows this for a ten year trend – Carisbrook Super Rugby average attendance
    1998 – 20,813
    1999 – 19,207
    2000 – 15,923
    2001 – 17,195
    2002 – 17,162
    2003 – 16,811
    2004 – 12,110
    2005 – 13,865
    2006 – 11,674
    2007 ?
    2008 7000 (as reported in news report)

  34. Richard

    David asked:
    “Is it possible to clarify the following …Total DCC Loan loan for the Stadium”.

    The answer:
    $137 million.

    $108 million will stay in DCVL when it it takes ownership of the Stadium.

    The balance of $29 million stays with Council to cover the bridging loan. That is paid off over 10 years as the installment payments on the subscribed seats come through.

  35. David

    Richard,
    Thanks for that. It’s a lot more than I thought.

    I thought it was to be either $91m or $85m, or possibly even $20m less than that as they were looking to cut that from what they put in.

    So leaving out the $29, assuming that all the memberships actually cover that (if they don’t who pays?), we have $108, and using an interest rate of 7% we need $7.5m per year in interest, plus I presume some capital payments in the order of around $5m or perhaps a little less, per year.

    So assuming no over runs, interest rate increases, running losses, the city needs to provide approximately $12.5m per year just to service this loan.

    With around $5m per year coming from rates, do you know where the other $7.5m will come from each year?

  36. Richard

    “I come back.”

    In response to David:

    (1) The ‘memberships’ are all contracted.
    (2) Interest in Year 1: $7.459m. Year 5: $5,293m
    (3) Principal Repayments in Year 1 (on a table loan): $2.6 million. Year 5: $4.86 million.
    (4) Depreciation @ $2.83 is on a straight line basis, this is, of course, an operating expense.

    The city will not be funding any of this through rates.

    As previously noted and commented upon by Athol Stephens, DCC General Manager, Finance and Corporate, a CCO (Dunedin City Venues Ltd DCVL) is proposed to own the stadium and other council properties such as the Edgar Centre etc. A ‘sister’ management company will be the operator of the facility.

    These companies make no call on rates. Indeed I do not believe they can legally do so other than through shareholder advances, capital placement etc. Not like “the old days” when hundreds of thousands of dollars went into prop up gas and the like! That would be millions in today’s dollars!

    At Year 2 when the ownership is planned to pass from Council to DCVL, the dividend from the overall COUNCIL GROUP is – as has previously been noted – reduced by $5 million. This relates back to the $57 levy on a median residential property with a rateable value (or $66 on a property @ $291,000) proposed to start in the 2009-10 Financial Year. That has been discussed ad nauseum here and elsewhere, was set out in the 2008-09 Annual Plan and again in the current draft Community Plan 2009-19.

    I won’t add any more to that other than to observe that the way that it is being levied in 2009-10 and again in 2010-11 year before the change in two years is ratepayer “neutral” as you have previously observed.

    You were pretty much on target on the interest. I suppose you want today’s prize – always a chocolate fish. No quotas on those!

    I go!

  37. David

    So effectively to cover interest and principal, we’ll need around $10m per year i.e. yr 1 $7.5m interest and $2.6m principal, and year 5 $5.3m interest and $4.8m principal.

    So I’m presuming this is paid for by $5m rates PLUS $5m city company dividends?

    In addition we have $2.8m depreciation, but in the CST projections I saw, there was only a $200,000 operational profit, and $2.8m depreciation was missing from the figures (there was no depreciation at all).

    If this was included, it would mean approx $2.5m loss every year, in addition to the $10m per year we are paying for the loan.

  38. Richard

    “I come back”.

    David:

    “So I’m presuming this is paid for by $5m rates PLUS $5m city company dividends?”

    No. There is only one $5m rates which makes up for the reduction in dividends from DCL, Property Endowment and Waipori Funds. The information on p4 of this morning’s ODT explains how the $108 million is serviced and repaid. (I think $105m must be a typo).

    The CST figures you are looking at and trying to work around do not necessarily relate to the cash flows etc of the two CCO’s that will respectively own and manage the stadium.

    Incidentally, as I have mentioned on this blog before, interest incurred during construction is to be capitalised. This is, of course, normal commercial practice.

    “I go!”

  39. David

    Richard,
    Do you know if there are recent projections for the running costs of the stadium? The ones I’ve seen don’t have depreciation included anywhere.

    On the loan –
    If it only costs us $5m per year, I don’t understand how we can service the interest and capital on a loan that costs $10m per year?

    You say explaination of how the $108m /$105m loan will be repaid is in todays ODT. But with interest over 20 years, the total repayment with interest will be around $198m.

    Twenty years of payments at $5, as per Mr Chin’s answer, is only $100m – that’s $98m short.

    Again, we’re only covering half. Where does the rest come from?

  40. Richard

    David

    My focus – and that of my colleagues – is “governance”, not management. It is getting into too much detail to cover here.

    I suggest you do as others with similar questions have done, canvass them directly with Athol Stephens, DCC General Manager, Corporate and Finance. You can make an appointment to see him by phoning his PA at DCC.

  41. David

    Richard – surely whether the city is paying $100m or $198m is a little more than mere detail.

    It’s fundamental to whether we can afford it, or if it will be a massive vortex sucking in ratepayers money.

  42. Richard

    David:
    “Richard – surely whether the city is paying $100m or $198m is a little more than mere detail”.

    Response:
    I never said it was. The $5 million (totalling $100 million over 20 years) simply offsets the shortfall in the “dividend” that council will receive from DCHL, Property Endowment and the Waipori Funds over that 20 years. That is the extent of the council/ratepayer contribution.

    The repayment of the loan, interest etc is transacted within DCVL once it takes over ownership, i.e following completion. The model for this is Christchurch’s V-BASE.

    This has been stated on several occasions. I cannot put it any more simply.

    What I was inviting you to do, is to go and discuss the detail with Athol rather than dealing with “bits here and bits there”. If you do, please then come back and tell us how you then see things.

  43. David

    Richard – there is a fairly major shortfall of $5m per year. No one seems to know where this is coming from.

    CST optimistic projections (without several million depreciation) show the stadium will barely get to break even.

    Hence, an additional $5m per year is coming from somewhere, but nobody knows where.

    This isn’t a minor detail that we should have to investigate – it should be something that every Dunedin citizen is fully aware and fully informed of.

    And this should be known at the START of any debate – not still unknown just days before a final decision.

    Your own figures show $10 per year to service the loans, but only $5m per year in payments.

    How the council make ANY decision on this, when it is unknown where HALF ($100m or $5m per year) of the DCC commitment comes from?

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