Stadium: Forsyth Barr naming rights

From: Bev Butler
To: Craig Page [ODT]; Murray Kirkness [ODT]
CC: Chris Morris [ODT]
Subject: FW: Press Release: Forsyth Barr naming rights subsidised by Dunedin ratepayers
Date: Tue, 8 May 2012 09:00:01 +1200

Press Release:
Forsyth Barr naming rights subsidised by Dunedin ratepayers

Yet another revelation has popped out of the woodwork in the troubled Dunedin rugby stadium saga. This time, the much heralded head naming rights deal has been revealed as another non-event with the ratepayers again footing the bill.

In the original revenue forecasts for the stadium it was assumed that Forsyth Barr would pay the naming rights in full before completion of construction. This then changed to two years upfront in the revised forecasts peer reviewed by PricewaterhouseCoopers. The Carisbrook Stadium Trust (CST) provided the forecast figures and negotiated the naming rights deal with Forsyth Barr. It is now revealed Forsyth Barr signed up to their naming rights deal for annual payments NOT in advance but in arrears. Their contract was recently changed again to monthly payments in arrears. So at the time of voting in February 2009 the city and regional councillors were led to believe that the naming rights contract was for two years upfront. This is the normal commercial practice for naming rights contracts and is called “front end loading”.

The naming rights were [jointly announced] in a statement by Carisbrook Stadium Trust and Forsyth Barr on January 29, 2009; along with an announcement from Sir Eion Edgar that Forsyth Barr had paid “a significant sum”, but “certainly not” as much as the CST would have hoped, but “probably more than what Forsyth Barr would have liked to pay”.

However Bev Butler, stadium critic, was “shocked to discover that Forsyth Barr made absolutely no payments whatsoever until September 1, 2011 and then it was for one month in arrears. Forsyth Barr have had the advantage of over two and a half years of advertising locally, nationally and internationally without digging into their own pockets. Furthermore, the Dunedin ratepayers are guarantors for Forsyth Barr not paying up. The Dunedin ratepayers borrowed money to cover the naming rights and are paying interest on this loan,” she said. The information was revealed in documents received under the provisions of the Local Government Official Information and Meetings Act.

The deal struck is against the background of the so-called independent Carisbrook Stadium Trust, chaired by Malcolm Farry. Farry was the chair of the Highlanders at the time they were part of the ORFU. Sir Eion Edgar is president of the ORFU and is also a member of the Carisbrook Stadium Trust, being appointed to this position many months before the signing of the Forsyth Barr naming rights deal. Sir Eion Edgar is also of course a Director of Forsyth Barr.

“This shaky, shady, stadium project has been riddled with conflicts of interest right from the start and Forsyth Barr naming rights is no exception,” Bev Butler said. “It is now plain that the much heralded millions of dollars promised upfront in 2009 by Forsyth Barr for the naming rights to the new Dunedin stadium just never happened.”

Bev Butler

Further background:

PricewaterhouseCoopers (PwC) were contracted to peer review the stadium forecasts and produced a report on January 30, 2009. This is the same date that the ODT reported the announcement that Forsyth Barr were the naming rights sponsor. Early February 2009 both DCC and ORC councils voted to proceed with the stadium.
I recently again read through the PwC peer review of these forecasts. The relevant extracts are copied below. It appears from the PwC report that the Original Forecasts were based on receiving the naming rights “in full before the beginning of the forecast period” (see page 9 extract below). Then when PwC peer reviewed the Revised Forecasts (30/01/09) it was “assumed that there are two years of pre-payments for the first ten year contract” (see page 6 extract below).
The naming rights were expected to originally be paid in full upfront – this then changed to being two years upfront (during 2009/2010) before the completion of the stadium. This PwC peer review was presented to DCC councillors on February 7, 2009 when they made their final decision and after it was announced on January 30, 2009 that Forsyth Barr were the naming rights sponsor.
The situation now is that Forsyth Barr made their first payment on the September 1, 2011 (information obtained under LGOIMA). I had a phone conversation with Neville Frost (financial officer of DVML and former financial officer of ORFU) on September 16, 2011 where he said that Forsyth Barr had recently changed/amended their contract from annual payments in arrears to monthly payments in arrears – hence the first payment on September 1, 2011 (note the stadium opened 1/8/11). I suspect the change in the contract was because I had requested under LGOIMA whether Forsyth Barr had made any payments.
It appears that this ‘private funding’ naming rights contract has been amended after the final vote occurred. These amendments clearly disadvantage the ratepayers of Dunedin. The councillors and public at large were led to believe by The Marketing Bureau (contracted by CST) that the naming rights were for $10 million.
It is also relevant that Sir Eion Edgar (director of Forsyth Barr Ltd) was chosen and appointed by Malcolm Farry as trustee of the Carisbrook Stadium Trust (CST) sometime before the August 13, 2008 – at least five months before the announcement of the naming rights. So Forsyth Barr negotiated with the CST the naming rights contract at the time when Sir Eion Edgar was a trustee. Clearly, a conflict of interest.

From PricewaterhouseCoopers Peer Review of the Proposed New Otago Stadium Forecasts report (dated 30 January 2009):
Link to full document (PDF 7.1 MB)

Relevant extracts:

Page 6 “There are no cash inflows for Lounge Memberships and naming rights in 2019 and 2020 as it is assumed that there are two years of pre-payments for the first ten year contract period ending in 2020 but no pre-payments for the subsequent ten year contract period.”

Page 9 The variance between licence fees/premiums in the Revised Forecasts and the Original Forecasts is primarily a result of changes to:

● Naming Rights – the inclusion of revenues from the sale of the naming rights for the first ten years of operation. Under the Original Forecasts, this was expected to be received in full before the beginning of the forecast period.

Note in the NBR news item below it states that “it hasn’t stopped local broking house Forsyth Barr from writing a “substantial” cheque to secure the naming rights to the new Otago stadium.”
This implies or rather states that Forsyth Barr wrote a cheque back in Jan 2009. Obviously, untrue! Forsyth Barr made their first monthly payment on September 1, 2011.

National Business Review
7:59PM Wednesday 11 April 2012

Forsyth Barr ignores recession to buy Otago stadium naming rights
By Lucy Craymer | Friday January 30, 2009
A global economic downturn might make other corporate sponsors think twice but it hasn’t stopped local broking house Forsyth Barr from writing a “substantial” cheque to secure the naming rights to the new Otago stadium.
The new 30,000-capacity stadium, which is due to be completed in time for the 2011 Rugby World Cup, will be called Forsyth Barr Stadium at University Plaza.
Forsyth Barr chairman Eion Edgar refused to say how much the naming rights of the stadium had cost the company but did describe it as “substantial”.
“This will raise our profile as we expand around the country. The Stadium adds another dimension to Dunedin and Otago and is something our people will use and be proud of,” he adds.
Stadium Trust chairman Malcolm Farry says: “This is a very significant milestone in the community’s progress towards achieving the private sector funding target set by councils of $27.3 million.”
The naming right deal comes at a time when other large corporate sponsors have pulled out of deals. Philips withdrew as a sponsor from the All Blacks last year while ING have cut back on their Formula 1 spending.
The University of Otago has secured the naming rights to the Stadium Plaza.


Posted by Elizabeth Kerr


Filed under Business, Construction, CST, DCC, DVML, Economics, Events, Media, ORFU, People, Politics, Project management, Property, Site, Sport, Stadiums

31 responses to “Stadium: Forsyth Barr naming rights

  1. Phil

    Why is Bev wasting her time sending this information to the ODT ? She should know by now that they will fight tooth and nail to avoid having to publish such damning press. Is this not better to go national ? That seems to be the only way to stir up any genuine jouralism interest in the stadium from the local rag.

    • Elizabeth

      It’s OK Phil, Bev now blind copies national media – it’s a way of irking the local rag. Tonight this went to Stuff news, care of What if? at Bev’s request.

  2. Phil

    That’s good news, Elizabeth. Personally, I wouldn’t blind copy, I’d make damned sure that the ODT knew that media outside of the region were aware of the release. Given the SST article, this site is possibly followed by a few more media sources today, which can only be good (although I’ll have to make sure my teeth are brushed every time I post).

    • Elizabeth

      I think where Bev has got to is she says to ODT that she is blind copying which of various media, but doesn’t disclose which of their investigative journalists. We can simulate that ring of confidence Phil :)

  3. Peter

    The ODT have pretty well made themselves irrelevant. Now the whole country knows about the stadium/ORFU/pokies rort. They know something is rotten in the state of Denmark….Dunedin. Hamish McNeilly’s piece on the pokies rort a week ago was very good, but then they just go to ground again. All possibly part of filtering the news and keeping the mates ‘safe’. Either that – or the editorial team just haven’t got the balls to tackle this stuff.
    It has long been the case, from early on in the stadium saga, that we have had to reach out of the province to break the news here, ie the land interests and some of the conflicts of interest associated, the ‘piss off’ story, etc.
    It is a terrible indictment of the paper. They have brought contempt on themselves from other media and, of course, the local community. It is no accident the ODT is commonly referred to as ‘The Oddity’ or the ‘Otago Rugby Times’. Bev keeps sending them the information at the same time as other media so they can’t say they didn’t know and didn’t have an opportunity to publish (note the date of the press release is May 12 – a month ago). (Wilma McCorkingdale of D Scene did a brief story on this by the way and, from memory, NBR). Of course it needed front page treatment, but the ODT tends to go for ‘cat up a tree’ stories by and large.
    It is also a good way of keeping tabs on what they are really sensitive about publishing-particularly whom they give the appearance of protecting.
    I feel sorry for the good journalists at the ODT who must feel frustrated by their management. They will know – probably intuitively – what they can’t get past them. For their own careers they should get out, but I guess personal circumstances don’t always allow for this. It is a shame someone of Simon Cunliffe’s calibre is now lost and you can see it in the Opinion Pages which is getting scrappier.

  4. Hype O'Thermia

    You’re right, Peter. Yesterday I heard a mention of Dunedin in the kind of comment you make when you know everyone listening knows what you mean cf Victoria Beckham typifying extremely thin, fashionable. This was an interview with a big boy in the present pokie distribution trusts fighting to leave control in their hands vs given to elected bodies such as councils, and the remark was about elected councils wasting money somefink chronic, which is where the word “Dunedin” dropped with no need for elaboration into the discussion.

  5. Peter

    Yes, Hype, I heard part of that interview as well. The mention of Dunedin, as you say, needed none of the usual elaboration. Indicative of the sleeping Dunedin situation awakening in the national consciousness. All good and about time. Greater troubles are brewing and the ODT will be further left behind, I suspect.
    Did people notice the ODT’s Forsyth Barr ‘report’ yesterday with a photo caption of FB investors at the stadium being left, with only a ‘free lunch’, after two speakers couldn’t make it due to bad weather? I wonder who paid for the ‘free’ lunch? Us or them? Would the ODT ask the questions? Of course not.

    {See earlier comment on another thread here -Eds}

    • Elizabeth

      Peter and Hype – can you provide the link to the interview audio or at least tell us which station, thanks. It didn’t look to be RNZ National (Mora’s show), was it Radio Live? And what time approx. did it air?

  6. Jody

    This is very interesting in light Mr Farry’s claim in the SST article that PwC must have got their facts wrong regarding there being only $700,000 in PSF at November 2011: “After all, [Farry] argues, if the figure was only $700,000, how would you explain a substantial 10-year naming rights sponsorship with Forsyth Barr?”

  7. Hype O'Thermia

    Might be like free naming rights all the way through the maximum exposure period of the RWC. Time for a poll again:
    () Private Funding Malcamoise a la Rort served on a bed of slivered IOUs
    () Tooth farry
    () Ratepayers as usual

  8. I think Kathryn Ryan on Wednesday morning. It was just a casual mention in passing:

  9. ormk

    Thanks to Bev for doing this research. This confirms that there was no actual financial support whatsoever for the stadium project – not even naming rights. I don’t know why the ODT don’t pick up on this.

    • Last updated 09:14 11/05/2013
      How much is sport sponsorship worth?
      By Hamish McNicol
      New Zealanders are likely to be as familiar with the name Richie McCaw as they are with the name Westpac Stadium.
      AMI, Forsyth Barr, and Yarrow Stadiums. Investec Super Rugby, the Hertz Sevens – corporate presence seems as inherent to sport as the handball rule is to football.
      Previous sporting no-goes are even starting to succumb to the sounds of sponsors’ tills ringing. Recently the logo of multination insurance company AIG was emblazoned across the front of the sacred All Blacks jersey – a previously untouched icon.
      At last month’s NZRU annual general meeting, chairman Mike Eagle said between adidas and AIG, the union now had the “two most valuable rugby sponsorships in the world.” Reported to be worth $80 million over five years, the financial benefit of the sponsorship is obvious – a $3.2 million profit for 2012, the first surplus following three years of losses. Chief executive Steve Tew attributed this to AIG’s investment.
      On a global scale, some of the more lucrative sports’ sponsorship deals are those of naming rights for stadiums. In New Zealand, however, the value of naming rights sponsorship for stadiums is less clear.

      New Zealand has a number of stadiums which feature naming rights sponsors. Fairfax asked asked Westpac, AMI and Forsyth Barr what the value of these were to the respective companies.

      Forsyth Barr, a New Zealand-owned investment firm, was more forthcoming in their appraisal of their naming rights deal with Dunedin’s stadium. It was reported last month the stadium would receive $7.15 million a decade in private funding, of which $5 million was rumoured to be from Forsyth Barr’s naming rights agreement. Forsyth Barr head of product development and marketing Trish Oakley said the company’s naming rights deal followed the expiration of its principal sponsorship with The Arts Foundation. “As this partnership fell due, the opportunity to participate in a significant development in our founding city presented itself. “The opportunity to embark on a high profile partnership supported our broader business strategy.” She said the high visibility and unique appeal of a covered stadium was crucial to Forsyth Barr’s decision to seek naming rights. “This partnership is designed to lift our profile and provide New Zealanders with an understanding of our business and its operations.” The stadium was also used to host and thank clients and staff, she said. Forsyth Barr Stadium was the company’s major sponsorship commitment, and the company was pleased with its performance.
      Read more

      • Forsyth Barr’s reputation – via the Credit SaILS failure – is less assured.

        “Credit SaILS were sophisticated debt securities marketed and sold to the New Zealand public in 2006 with the prospect of 8.5% interest income and capital protection. $91.5 million was raised through the offer. Credit SaILS failed in 2008 and the notes are now virtually worthless.” –NBR

        • The settlement fund was a diversionary tactic.
          It saw off Eion and the FB boys from the go-to-jail hotlist?

          Credit Sails were issued in 2006, raising $91.5m from investors. They were marketed as high-yielding capital-protected notes, but their complex structure based on bond insurance derivatives led to virtually total losses.

          ### Last updated 17:42 09/12/2013
          Record settlement over failed product
          By Tim Hunter
          A record $60 million settlement fund has been almost completely paid out to investors in a failed financial product called Credit Sails. Of 2218 investors owed money, just one person owed $17,000 could not be tracked down and repaid.
          The money was obtained by the Commerce Commission from the firms involved in marketing Credit Sails – sharebroker Forsyth Barr and multinational bank Credit Agricole – who agreed to pay $60m to settle a claim they had engaged in misleading and deceptive conduct in breach of the Fair Trading Act.
          The firms have never admitted liability.
          Read more

  10. Anonymous

    Oh, they know. They damn well know.

    • Elizabeth

      A wee bit hard when Allied Press and Mr Ed occupy the same loose boxes/corporate suite world at Stadyum.

      • Elizabeth

        See comment at another thread, copied here:

        Submitted on 2012/06/07 at 11:36 pm

        Forsyth Barr failing to honour their contract and pay up in advance means they got all the recognition before handing over one dollar of their own private money. Dunedin Ratepayers were not given that option.

        Forsyth Barr byline is… “Investors have put their trust in Forsyth Barr for investment advice for over 75 years” so hopefully some FB investors may also be ratepayers and may wish to reconsider with whom they invest.

        If FB could not afford the upfront payment and are now drip feeding it perhaps you should be even more worried about your investments.

        • Elizabeth

          May 2012 – highest monthly views at What if? since the site began in March 2007.
          11 May 2012 – highest daily views since site began (proposal for Dunedin Hotel announced).

          Thanks All.

  11. Hype O'Thermia

    And thanks to you Elizabeth for keeping on searching out links and articles that I for one would have missed and keeping the flow of topics rolling in. You’re not the only one but you certainly lead the pack in this.

  12. Anonymous

    Thank you Elizabeth.

    As a side note, the clean design and lack of advertising is very much appreciated. It makes sites like Stuff and ODT Online with intrusive and often appalling associations less appealing in comparison.

  13. Hype O'Thermia

    Ad blockers for browsers are a great invention, Anonymous. They don’t take out everything but they sure do clear a lot of clutter.

  14. Anonymous

    From time to time the ODT gets a little risque, especially if there’s naked people playing rugby involved and the opportunity to write about someone’s “big hairy fella”. On its site today there are two pictures, one with bare-chested women protesting and another of bare-chested men celebrating. The breast shot is probably going to top its Most Popular lists again but I suspect the true reason both of those international photos have been published is each includes the word STADIUM. And that is the sort of thing to get a rise out of this paper.

    Show us your stadium!

  15. Anonymous

    “pro stadium … were smart enough to realise the council would turn a deaf ear to the anti brigade”. –

    The poster stepped right into it there. Couldn’t quantify followers still caught up in the hype as being ‘smart enough’ but likely well attuned to the Stadium Councillors doing just that on behalf of their stakeholders.

    HOT (?) – dundeeboy’s reply is too funny. You have a knack for dragging their funny sides out.

  16. Amanda

    Ha. Just sent this off to the ODT in response to dundeeboy …Well, dundeeboy if the pro stadium councillors are proud of their ratefunded stadium vision for Dunedin why do they never utter a word about their support for the stadium ? Odd, don’t you think?. Usually politicians just love to crow about their popular successes. Gosh. Now that I think about it, the stadium councillors did not even mention their support for the stadium on the run up to the last election. Why? Because they knew the stadium was a vote killer, the three loudest stadium supporters on council who did not know this were removed from council. The other stadium councillors have learnt that to speak of their stadium ‘vision’ will win them nothing at the ballot box. SO much for them being proud of their stadium stance… This is why the media, our sleepy stakeholder and corporate rugby media, are a big part of the whole con. And poor old dundeeboy will have to face the sad fact that his corporate bludger gods are responsible for bringing shame and disrepute to our noble national game.

  17. Hype O'Thermia

    Anonymous, it’s a mixture of laziness and a warped sense of humour … watching people seize the opportunity to put a petard on the plastic in their haste to hoist themselves with it.

  18. Anonymous

    One News ran a brief news item about some councils having a deep division with its ratepayers over its debt. It referred to Dunedin in its short list. It then went on to suggest this was related to low funding from central government to their operational budgets. The only thing they got right in the Dunedin segment is the deep division. The lack of funding had NOTHING to do with the Stadium Councillors and Stakeholders rorting this city and little to do with the abysmal financial management within the companies.

    Dunedin city debt increased from $30M to $360M within 10 years! And that didn’t factor in DCHL debt and other debt this council has shuffled off to the side of the public awareness.

    Deep division was a very tactful way of putting it on national news.

    • Elizabeth

      Taupo joins a growing list of communities disgruntled by recent rates hikes tagged to large infrastructure projects.

      ### 6:49PM Monday June 11, 2012 updated 19:04
      Source: ONE News
      Taupo ratepayers enraged at proposed increases
      Taupo residents have joined a growing number of angry ratepayers around the country frustrated over proposed rate hikes. A group of Taupo residents protested at the local council chambers this morning, with the intention of fighting a hefty increase that could cause some homeowner’s rates bill to rise up to 300%. The Taupo District Council plans to introduce a capital value rating system next year which will affecting residential properties. This new scheme, based on a property’s freehold value, would see residential rates shoot up, while commercial rates would be cut.
      Read more + Video

  19. Anonymous

    Nice, they’ve put up a “resign” picture from Dunedin City Council.

  20. Peter

    The $5m naming rights is not a rumour. Somewhat different to the tantalising $10m prospect, given to the DCC councillors, before the so-called final decision was made, from the CST’s man, Brian Meridith, of The Marketing Bureau. (Remember the story that the ODT tried to squash?)
    But, hell, it served the purpose, didn’t it?

    {See related post and comments. –Eds}

    7.9.12 Ombudsman assists release of CST file information

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