Council bid lacks cost/benefit analysis: Fifa under-20 World Cup 2015

Interesting. DCC and DVML aren’t sharing information on the cup bid. General manager Sue Bidrose looks like a fool again (perhaps she is), and Darren is Darren. Nevertheless, all councillors are responsible for the lack of a full cost/benefit analysis.

### ODT Online Thu, 25 Oct 2012
Code clash with cash implications
By Chris Morris
The Highlanders could be kicked for touch, and the company running the Forsyth Barr Stadium left out of pocket, if Dunedin secures a share of hosting rights for the Fifa under-20 World Cup in 2015. That was because Fifa required exclusive use of all tournament venues, beginning 10 days before each venue’s first match and continuing until a day after the last match, tournament organising committee interim project manager Peter O’Hara said. That could mean a clash between Fifa’s tournament and the Super 15 rugby competition at stadiums around New Zealand, as the two tournaments would overlap.

[Dunedin Venues Management Ltd chief executive Darren Burden] did not yet know the details of Dunedin’s bid, which was being handled by the Dunedin City Council, but hoped “sensible solutions could be found”.

The council was expected to contribute up to $450,000 towards Fifa’s tournament costs if its bid was successful, but council city strategy and development manager Sue Bidrose said that was if the city won the right to host a number of matches, including the final. The cost could be reduced if the city’s bid was only partially successful, but the true cost – including lost revenue if other stadium events were disrupted – was not known, she said.
Read more

Posted by Elizabeth Kerr

77 Comments

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

77 responses to “Council bid lacks cost/benefit analysis: Fifa under-20 World Cup 2015

  1. Rob Hamlin

    Hmm.. Looks like I got my answer from McPravda faster than I expected ‘Highlanders could be kicked for touch” they say. To where I wonder? But I don’t wonder for long.

  2. Rob Hamlin

    Further to my previous comment, one of the more interesting items within this article is the statement that apparently a ‘contract’ now exists between the Highlanders and DVML.

    Now I was under the impression that one of the less impressive things to emerge from the ORFU insolvency debacle earlier this year was that the Highlanders had avoided any contractual commitment to occupy the Stadium by becoming a separate organisation.

    Now apparently we do have a contract with them, and the impression given by this article is that it extends at least to the end of the next Super rugby season.

    I would not be in the least surprised to learn that this contract carries with it a cast-iron requirement for DVML to provide an ‘apprpriate’ venue for scheduled Highlanders matches next year.

    I would be even less surprised if a contract was entered into with FIFA to supply an appropriate venue for the soccer event next year that is the subject of this article.

    I would then be totally unsurprised if after the ink was thoroughly dry on both contracts, that an ‘OOPS! moment’ was then announced in McPravda, showing that DVML had ‘accidentally’ double booked the venue.

    I would then be utterly and completely unsurprised if we were then informed that it would be cheaper to install the lights, seats, swanky corporate boxes and players’ marble baths of warm asses milk that would make Carisbrook into an ‘appropriate’ venue for the Highlanders, than to break the carefully negotiated DVML contract with them.

    The Highlandes would not actually have to make the semi-finals to trigger the upgrade, because the week or so’s lead time to prepare Carisbrook, even in its current rugby ready status would simply be too short if marble baths of asses milk and the other plushy things are a stipulated requirement.for an ‘appropriate venue’ withitn the contract – and I would be gobsmackedly surprised if they weren’t.

    I would then be horizontally knocked out cold with surprise if pro-rugby and its required but oh-so-difficult-to-supply-under-a-roof natural turf ever returned to the Foobar.

    Let’s see if I’m going to be surprised.

  3. Calvin Oaten

    Rob; I think the only flaw in your reasoning is the doubtful supply of asses’ milk. But I guess this could be assuaged somewhat with liberal quantities of ‘Speights’

  4. Mike

    Calvin: I think you’ll find there are more than enough asses to go around

  5. Phil

    Let’s ignore for the moment the slight mistake from Darren about the 10 days zero activity requirement pre-tournament. It’s actually one month, but maybe he’s referring only to potential playing days. He’s new in the job so I’ll cut him some slack.

    The one to watch out for, which nearly slipped in under the radar, is the $450k being contributed by DCC towards “tournament costs”. Maybe the author didn’t understand, or maybe they didn’t want anyone else to understand. The so called “tournament cost” is not the cost for running the tournament, it’s the purchase price for the buying of the hosting rights for that one stadium. It’s just buying the rights from FIFA, not paying any costs for running any matches. Those costs are over and above the $450k. Which brings up the next point. The purchase price is not $450k, it’s $810k. Just for Dunedin. Overall there is a national purchase price paid to FIFA by, presumably, central government. Then each city has to front up with $810 to be allowed to have matches played in their city. Matches which FIFA will take all the gatetakings for, pay no ground hire fee, and control all advertising (for which they will also receive all the revenue from). The venue will be liable for all costs associated with the event, including lost revenue for existing advertisers, product suppliers, and seat holders.

    If they continue with their bid, Dunedin will be awarded a set number of matches. This is because the national organising group are struggling to find a sufficient number of cities and towns who are willing to justify the expense. Hamilton is the latest city to pull out after deciding that the losses incurred would be too great. A government report released earlier this year stated that the boost to the national economy overall would be somewhere in the region of about $4 million. Without any expenses being accounted for. Unlike the bigger brother football tournament, this junior tournament is not one which fans travel to. Tourists are likely to be limited to the teams themselves, and associated family members.

  6. Phil

    You had family silver ? You’ve been holding out on us.

    • Elizabeth

      I think a serious letter to the ODT editor (not the ODT Online editor) is required, requesting the Mayor and or DCC chief executive provide accurate information on what exactly this event ENTAILS, in black and white.

      After all, slippage, GM Sue Bidrose ‘forgot’ to budget +$1m worth of fitout (exhibition display) for the Otago Settlers Museum redevelopment project… surprising councillors at the last Annual Plan round. Her academic expertise, psychology.

  7. Calvin Oaten

    Phil, if all you say is correct, then it is a given that council will push for it. After all, it is so long since they ever considered anything which was financially viable that I doubt they would know how.

  8. Phil

    I stand corrected. It appears that Hamilton has since changed its mind and has asked to be reconsidered as a bidding venue, after local business agreed to fund half of the $800k purchase price. Those who have registered an interest are: Auckland, Christchurch, Dunedin, Hamilton, Invercargill, Napier, Nelson, New Plymouth, Palmerston North, Rotorua, Wellington and Whangarei. Now given that the requirement from FIFA is a minimum of 12 venues and a maximum of 16 venues, it appears that all venues who apply, will be awarded match packages. Providing they can front up with their $800k, clean stadia, etc.

  9. Peter

    If I was the Hamilton Council I’d want this half share upfront. Certainly what would be required down here.

  10. Phil

    Quite right, Peter. Even the Hamilton businesses concerned have said that they don’t “exactly” have that cash at the moment. But they’re good for it.

    That got me to thinking. Central government has already signed a binding agreement with FIFA. So they need to find a minimum of 12 stadia, otherwise it’s the big “see you in court, son” from FIFA. And there’s not a lot of stadia chasing the “opportunity of a lifetime”. If I was a town considering bidding, I’d be sitting back and doing precisely nothing right now. I’d wait for the knock on my door, and then I’d start asking about exactly how much money I was going to be paid for the loan of my stadium. The last thing I would be doing would be “bidding”.

  11. Phil

    I forgot to add the the $810K Buy In stake money is just for a Base Package deal, consisting of a number of pool matches and an early round Play-Off match. If you want to host a semi-final or the final, the purchase price jumps considerably. Given that the total cost for the purchasing, operating, stadium rebranding, ticket compensation etc, for a base package, is likely to be approaching $2 million for the event, with zero income, I doubt that even this council would be so stupid as to apply for anything larger.

  12. Calvin Oaten

    $800K will be no trouble to the DCC. It’ll just put it on the tab. Unless of course they ask Forsyth Barr to underwrite it. That should be a ‘doddle’. Hamish Saxton will get all orgasmic over the prospects of many $millions in economic benefits largely brought about by the huge numbers of visitors he will expect, and he will predict how much per day they will each spend then he will apply the right ‘multiple’ and ‘bingo!’ a windfall for the city. Quite simple really, and boy will we be grateful.

    • Elizabeth

      I’m with Calvin and wirehunt, Phil. With this pending $outrage I’m afraid my sense of humour is all but dispersed. Not sure how much more I can take from the frigging DCC without my presenting arms, I say.

  13. Hype O'Thermia

    Um, Phil, “each city has to front up with $810k to be allowed to have matches played in their city. Matches which FIFA will take all the gatetakings for, pay no ground hire fee, and control all advertising ” – and the incentive for parting with all this money is, excuse my ignorance, what? Fly-buys? Steak knives? Go in the draw for Innumeratest Dimbulb Of The Year badge?

  14. Phil

    The incentive is to show that people are using the stadium. The small fact that no user is paying for anything, and that it costs more than 2 new pensioner flats everytime it’s opened, is mere detail. See, build it and they will come.

  15. Elizabeth

    Marshalling and Shut-down Note:
    Just when we haven’t heard from Cr Syd Brown in weeks we hear a little of what might be entertaining him. Being an old rugby boy, with racing interests, it’s always nice to keep the full share of the pie for one’s own hobbies. The DCC pie, that is. You can imagine Syd’s chagrin at having to share that $having cream pie with the likes of those sissy football players, that god awful Fifa bunch. The only thing to do is steer off the Fifa under-20 World Cup 2015 bid, right off those Dunedin City Council books. Busy old Syd.

    [Intel: Cr Brown has had the Fifa bid scuttled from the start and they are just playing at getting them]

    • Elizabeth

      Syd got his way (note muted tones on this).

      BUT “Liability Cull” says:
      “We are in an unusual situation in that we are not submitting a formal bid, but we have a world-class facility and we would welcome Fifa’s use of the stadium as a venue.” FML

      ### ODT Online Sat, 19 Jan 2013
      Dunedin drops world cup bid
      By Chris Morris
      Dunedin’s formal bid for a slice of the 2015 Fifa Under-20 World Cup and its global television audience has been quietly scrapped because of concerns about the cost. However, a seven-strong Fifa delegation from Switzerland will visit Dunedin next week anyway, amid hopes the Forsyth Barr Stadium could yet host some tournament matches.
      Read more

      “Dunedin was the only one of the nine major centres vying for hosting rights to pull out.”

  16. Hype O'Thermia

    Swamp the council with praise for being sensible!
    As for the TV audience of bazillions, they see a match in a city, does that mean the city with an empty stadium, or even with a Bill Acklin concert scheduled, goes on their must-visit list? Which cargo-cultist came up with that “vision”?

    • Elizabeth

      ### ch9.co.nz January 21, 2013 – 6:04pm
      FIFA officials in Dunedin tomorrow
      FIFA officials will be in Dunedin tomorrow, as they select host cities for the 2015 under 20 World Cup in New Zealand.
      Video

  17. Phil

    By not submitting a formal bid, they avoid having to pay the bidding fee of half a million dollars. That was why Hamilton pulled out. Hamilton re-entered the process only when private businesses agreed to pay the bidding fee cost. Maybe Dunedin is playing victim here, already knowing that the same will happen here. Maybe. Either way, aside from the bidding price, any match played at the stadium will still be subjected to the FIFA “zero cost” policy, together with the clean stadium/area requirements. With the same minimal benefit to the city as we saw during the RWC. No-one spent any more money, and no new tourists came rushing in after the RWC. They have possibly avoided a million dollar loss, and that’s a good thing. The only remaining question now is how many $100k losses will be incurred in hosting matches.

    • Elizabeth

      !!!!!!

      ### ch9.co.nz January 22, 2013 – 6:08pm
      FIFA officials hope for change in decision
      Despite the fact Dunedin has dropped its bid to host the FIFA 2015 Under 20 World Cup, officials say they hope the city will change its mind. A group from FIFA is in Dunedin as part of a nationwide tour, inspecting facilities for the Cup.
      Video [to be uploaded]

      • Elizabeth

        Woodlouse was turned into a Minister outside Cabinet yesterday (Tuesday), and yet he of the brains trust thinks an investment by DCC in Fifa will reap rewards for ratepayers. What a jumped up little twerp.

        ### DScene 23 Jan 2013
        Fifa study stadium’s turf (page 3)
        The DCC’s decision [not to bid to be a tournament host city] has horrified Dunedin-based National list MP Michael Woodhouse, who in his column in this week’s DScene has called on the council to reverse it. “Invest a small amount of money so … ratepayers can enjoy the games and reap the economic benefit,” he said.
        {read full article} #bookmark

        ****

        ### DScene 23 Jan 2013
        Opinion
        Party Scene by Michael Woodhouse
        Stadium is fit for World Cup (page 7)
        The 2015 FIFA Under-20 World Cup is one of the largest sporting events on the planet.[…]An estimated 10,000-15,000 overseas visitors will spend tens of thousands of visitor nights and millions of tourist dollars during the tournament. Dunedin has a spectacular venue in which to host key tournament games. So it makes sense to invest a small amount of money so that its ratepayers can enjoy the games and reap the economic benefit that will accrue, right? Apparently not, according to the Dunedin City Council, who decided (on the quiet, before Christmas) not to do so.[…]The details so far released by Mayor Dave Cull are scratchy. Dunedinites, well used to demanding details about the reasons for council decisions, deserve details about the basis on which this decision was made. Mayor Cull refers to a “dispassionate look at the business case”. Perhaps more passion is required. I call on the council to reconsider the decision and take the opportunity to once again showcase the city and its fantastic sporting assets.
        {read full article} #bookmark

  18. Russell Garbutt

    The argument for spending up ratepayer’s money seems to be that a large number of people overseas will see the stadium when shown on TV. OK, the world’s biggest sporting event is the World Cup Soccer cup. Many many people in NZ watched that final. What was the economic benefit to the host city of someone in Milton watching it on TV? The supposed economic benefits for these events are simply mythical and based upon rubbish statistics gathered by some amateur, non peer-reviewed individual. The Council made a good call on this one.

  19. amanda

    Woodhouse belongs to the party that believes in the the trickle down fairy so no surprise he wants Dunedin people to take a gamble on FIFA, after all, it will only be average small business owners who will suffer when none of those benefits trickle down. Oh and the ratepayers, who will have to fund it.

  20. Calvin Oaten

    FIFA wants Dunedin to change its mind. No problem Fifa, just pay your proper dues for use and the Stadium’s yours. Not hard.

  21. Calvin Oaten

    Our illustrious non elected National Party member Michael Woodhouse, implores Dunedin to get behind and pay whatever it takes to get FIFA’s tournament to include Dunedin. Bully for him, the spin-off likely would be about as valuable as the closure of Hillside. I didn’t hear him protesting about the benefits to Dunedin of keeping it in business. If he quacks like a duck and waddles like a duck, odds are he is a duck. That is what he looks like on TV right behind Key, sucking up as hard as he can. Looks like it paid off. The man has neither scruples nor brains.

    • Elizabeth

      Calvin, more ducks and drakes in Brent Edwards’ sports column at ODT today (page 24) –
      Dunedin has to think big about its stadium‘.

      “The stadium can only succeed if the public accept that it its not going to go away and it is marketed aggressively and innovatively.”

      “If Dunedin is perceived as divided and tentative about the stadium, it lessens the chances of securing major events.”

      Interlaced with rave about securing the stadium as a venue for the 2015 under-20 football World Cup. Not an accountant obviously, he didn’t learn nothin’ during RWC 2011.

  22. Anonymous

    It has taken the FIFA crowd to go from being the new darlings of national sport to lowering themselves to the same threats and expectations of professional rugby. It is a sad reflection on soccer in general which has received significant attention in recent years but is now going to be lumped in the same category as those fronting FIFA’s public presentation.

  23. Hype O'Thermia

    “The stadium can only succeed if the public accept that it its not going to go away and it is marketed aggressively and innovatively.” Jeezzz-zzzz-zz, who’s been having a Nana-nap at his keyboard, eh?

    What are these elements going to do to make the stadium succeed – public acceptance that it is not going to go away? Does someone think we think we’ll wake up one morning and say “look – no stadium, it was only a bad dream”? Does someone, looking at you Brent Edwards, believe that? Do you have any grounds for that belief or is it one of those slick phrases that pop into lazy minds and amble out unchallenged?
    Secondly – if it is marketed aggressively it will succeed. A faith-based position, classic cargo-cultism Mk2. “If we build it they will come” not having resulted in the gods sending planes of Hershey bars and other exotic delights, “Market till you drop” moves up the list to become 1st Commandment .
    Thirdly – market innovatively. This could work if legal considerations are ignored. Using blackmail, violence and drugs in conjunction with forged signatures there is for once a real possibility of success. Not, I predict, very long term success, though seeing how long people have been trying to interest DIA and other regulatory bodies in various stadium-associated matters, it might work for long enough to get the debt well down into sensible proportions. Worth a go. Well done Brent Edwards for suggesting it.

  24. Russell Garbutt

    Dear Readers of the Otago Daily Times and of this site.

    After the news that Dunedin City faced an austerity budget, there was a weak editorial in the ODT to which I responded. The letter I submitted is printed below, but in today’s issue there was a message from the Editorial staff of the ODT saying that my letter had been received, but they didn’t agree with it. This is the first time that I can recollect that the ODT has acknowledged that it will not publish criticism of itself.

    I leave it up to you to see if you agree with what I had to say, and if you agree with the stance of the ODT:

    The Editor
    Otago Daily Times
    Dunedin

    Dear Sir

    Your editorial on the urgent need for an austerity budget for Dunedin is too little too late.

    For years now at Council Plan consultation meetings also attended by your reporters, the financial stupidity of the Council’s decisions have been graphically pointed out by a long line of submitters. The practice of Council owned companies being forced to borrow to pay dividends which you now describe as being “worse than poor” was emphasised by a large number of submitters, but largely ignored by the ODT for many years.

    While ultimately all of the spending decisions made by the Council are those of the Councillors – many clearly out of their depth – the weight of public opinion assisted by informed and investigative stories by the City’s only daily paper, has no small part to play in what has happened in this town over recent years. It is hard to see why the ODT has failed to meet its obligations or role in this regard. Many believe that it is because the ODT is a strong supporter of the stadium which has caused a major part of this debt, and of its proponents and major user.

    While the ODT has adopted a position of supporting the new rugby stadium, even now that the full costs of the stadium are more or less known, your position is that you appear to be supporting the establishment of a significant fund to subsidise the use of the stadium – despite your reluctant acknowledgement that while the fund will cost the ratepayers dearly, there is no believable data that shows any tangible benefit.

    I look forward to the ODT being part of the process in holding those that have made the decisions that have put Dunedin into these astronomical levels of debt responsible and accountable – but I’m not holding my breath.

    Russell Garbutt

  25. Robert Hamlin

    This DCC decision may well be more important than is realised. Cash to the value of the full costs of the event (plus some) are are being demanded and nothing other than vague assurances of ‘economic benefits’ are being offered in return. This seems to be a proposal to act as the host in a parasitic relationship.

    However, a targeted local bidder has told a major international sports event organiser of this type to ‘get lost’ before it has even reached first base – Not even so much as a free jolly or hotel room has been extracted from Dunedin as far as I know.

    Parasite removal has happened before, but only after a large amount of financial bodily fluids have been drawn off from the victim and said victim is visibly debilitated. An act of complete local parasite avoidance before the Government endorsed blood funnel is inserted will be seen as a dangerous precedent, and I am not surprised that our lovable National Party representative is ‘horrified’ at the prospect. Exactly how he squares his party’s position of supposedly fiscally responsible management of the Nation’s accounts with his ‘passionate’ recommendation to this fiscally highly stressed community to abandon dispassionate analysis in response to this proposal – and presumably any other one like it – I do not know.

    Pressure will be applied from Wellington I am sure. Since the Montreal Olympics debacle and Los Angeles’ steely negotiations with a cornered IOC after that event – (negotiations that led to a unique host rather than IOC and hangers on profit on an Olympics in 1984), organisations of this persuasion have learnt to deal with national governments directly to ensure that the locals are whipped into line when the fiscal depredations, demolitions and even forced mass deportations of local populations are desired. Oh yes all that has happened in Delhi, London and Beijing to make way for sports mega events. The miserable citizens of certain poorer suburbs of Rio, Brazil are the next to experience the sports mega event dream – twice over – the poor sods.

    As activities such as organised looting and forced mass deportation of civilians are treated as war crimes for which national premieres and other senior politicos do not have immunity, perhaps a second international tribunal needs to be set up in the Hague to deal with those who initiate and those who connive with the commission of ‘sports crimes’ against humanity and local civilian populations of a similar scale and nature. Local communities and individuals who have been the victims of such ‘sports crimes’ should be allowed to apply directly to the The tribunal for arrest warrants to be issued against the national and international perpetrators of such acts. The last three premieres of the United Kingdom might be the first stars of such a show – Now that really would be global TV entertainment.

    Dunedin will not be allowed to get away with this unchallenged, if only to avoid inconvenient after-the-event comparisons with those cities who do get burnt to a crisp in the normal manner. The international, national and local backers of this profitable (for them) extravaganza need a ‘full set’, and I predict that one way or another, and with our local National boy and his mates’ assistance, they will get it. That is unless Dave and his mates really have acquired a spine from some book somewhere – I believe that the DCC do have majority support here with regard to this decision not to shell out, but we will see.

    • Elizabeth

      ### ch9.co.nz January 23, 2013 – 7:37pm
      Discussions on hosting the Under 20 World Cup continuing
      Mayor Dave Cull says discussions between Fifa and the DCC on hosting the Under 20 World Cup are continuing. Mr Cull responded this afternoon to a newspaper opinion piece by National MP Michael Woodhouse, asking the council to reconsider dropping its bid for games. The council pulled out because it said the cost was not worth the financial results of hosting games. But Mr Cull said today world cup representatives liked what they saw in Dunedin. It was possible Fifa would come back to the council with a revised proposal.
      Ch9 Link [no video]

      • Elizabeth

        ### ODT Online Fri, 25 Jan 2013
        Trust to take Fifa donations
        By Shawn McAvinue
        Football South has set up a trust for private and corporate donations to get the 2015 Fifa Under-20 World Cup to Dunedin but the Otago Chamber of Commerce doubts enough southern businesses will get behind the event. Chamber chief executive John Christie said Otago businesses were not contacting him about donating money to ensure the tournament came to Dunedin.
        Read more

  26. Calvin Oaten

    Football South Is working really hard, DVML staff are working really really hard and the DCC people are also working really hard, to help make this FIFA rort happen. I would be keen to know what all this hard work represents. Does it mean taking coats off? Does it mean ringing people/businesses cadging for money? Does it mean city staff are scratching their heads working out how they can do something without any money? There must be some really sweaty, tired, worn out people, exhausted with all this hard work. Pity it is just a waste of effort as even if it happens, a couple of thousand people (on a fine day with a following wind) will be about the number who will turn up.

  27. Rob Hamlin

    A predictable outcome. Economic impact analyses are a routine tool in the selling process when Government or government owned pseudo-businesses (eg DVML) are involved. However, they are completely ineffective as a tool for selling to real industry and commerce. The local business boys and girls have had a look and are keeping their hands in their pockets – Sensible fellows!

    There are a variety of reasons for this lack of ‘poke’ in private industry, but foremost is the lack of real rigour in most economic impact analysis. Benefits are included and headlined, but associated costs are routinely left out. Among these costs are:

    1) Opportunity costs – What would the outcome have been if the money (investment) requested/demanded had been spent elsewhere or not at all? At an investment of $250 million, the opportunity costs of the Foobar to this community are in the order of $20 million annually (minimum).

    2) Displacement – What activities and revenue will be displaced by the proposed event? This is a biggie. Sure people came to the RWC, but others heard about the boozing and gouging and decided not to. Retail and other business activities in London and elsewhere in the UK were well down in many areas over the Olympics. Ditto in Queenstown over the RWC. It is a common pattern.

    3) Leakage – These economic impacts are puffed up by what is known as a ‘multiplier’. What these multipliers assume is that if $5 bucks is spent on a coffee by a Foobar visitor, the cafe owner will spend $3 of that on a new bathroom, the plumber will spend $1.50 of that on a new wrench in Mitre 10. The owner of Mitre 10 will spend 50c of that on a new Porsche etc etc etc. In this case $10 of ‘economic impact’ is claimed for the $5 visitor spend on the basis of a multiplier of 2 – and that would be a conservative one.

    Where do these multilpiers come from? Well believe it or not, they come from an ‘economic impact multiplier shop’. These are companies that specialise in producing these numbers, and for a stiff fee they will look wise and burp a number for you. These figues are not publicly tabulated and there appears to be no accepted norm for any one community – or universally accepted way of calculating them out there in the public domain. The methods used are thus usually proprietary. One of these figures usually lurks in the depths of any report that is based on economic impact ‘analysis’.

    The last time I was professionally involved in preparing such an analysis, we requested some form of methodology/justification from the economic impact multiplier shop to include in our report. It was not forthcoming, so we refused to buy amd just presented an analysis of direct visitor spend for the event concerned. I suppose that this reticence may explain why I have never seen a justification for a specific multiplier factor in any economic impact report – Has anyone else?

    Multipliers tend to assume that the locale concerned is economically quite watertight. In reality, leakage from any one local economy can be severe – especially if local capaciities are put under stress, which is common for one-off ‘mega’ and even ‘not-so-mega’ sports/entertainment events.

    Even longer term projects ‘leak’. The Foobar is a case in point yet again. How much of fhe stadium’s capital spend by the community actually remained in Dunedin? Much direct spending went out of town – eg the roof. A good deal of the secondary indirect spending of the proceeds from what did get spent in town may well have been spent on new bathrooms in Wanaka rather than here for instance. Economic leakage with regard to this particular project is still an ongoing problem – as Mr Taylor pointed out in his recent open letter to the Directors of DVML.

    All these negatives also are subject to the muliplier effect as well – but in this case it is of course a negative one. Multipliers are enthusiatically applied to monies coming into a community as a result of the revenues related to a proposed project, but rarely to monies going out as a consequence of its costs. So, for example as the Foobar sucks the rates out of my bank account at the rate of c. $600 bucks a year, I will buy approximately 120 fewer cups of coffee in the town. This not only affects the cafes, but if the economic muiltiplier reasoning is to be kept consistent, it also has a negative economic ‘knock on’ effect for other businesses that is exactly analogous to the positive one decribed above – Ergo, the Porsche may well not get bought!

    For these three reasons and others, decision makers in private imdustry, who are immediately answerable to their spouses or shareholders for the outcomes of their fiscal decisions are rarely the purchasers of items that are backed up by economic impact analyses. If the costs as well as the benefits of many of these proposals are incorporated in an even-handed manner, the outcome is often a negative number, and it can be a very large one.

    It’s a pity that the same can’t usually be said for ‘Gimmint’ at any level.

    • Elizabeth

      Further to Rob’s comment, here we go again…

      “Dunedin Mayor Dave Cull welcomed the ”wonderful news”, saying the concert would attract thousands of fans and pour millions of dollars into the Dunedin economy.” -ODT

      ### ODT Online Sat, 26 Jan 2013
      Paul Simon for stadium
      By Chris Morris
      Paul Simon is bringing his guitar and hits from several decades to Forsyth Barr Stadium. It was confirmed yesterday the 12-time Grammy Award-winning writer of songs like Bridge over Troubled Water and The Sound of Silence will perform inside Dunedin’s roofed stadium on the evening of April 6.
      Read more

      ****

      Peter Piper picked a peck of pickled peppers.
      A peck of pickled peppers Peter Piper picked.
      If Peter Piper picked a peck of pickled peppers,
      Where’s the peck of pickled peppers that Peter Piper picked?

      ### ODT Online Sat, 26 Jan 2013
      Assurances given on sound quality
      By Nigel Benson
      The promoter organising the Paul Simon concert has promised the sound quality in Forsyth Barr Stadium will be music to the ears. ”We’ve checked everything out and we’re very happy with it,” Chugg Entertainment chief executive Michael Chugg said from Sydney yesterday. Mr Chugg (65) said he was aware of some criticism of the sound system at the Elton John concert at the stadium in November 2011.
      Read more

      • Elizabeth

        How dull does it get, tired performers for the aged and Liability Cull to dance to.

        ### ODT Online Sat, 26 Jan 2013
        DVML in talks about another international concert act
        By Chris Morris
        Forsyth Barr Stadium could host its third major international concert later this year, just months after Paul Simon appears on stage. Dunedin Venues Management Ltd chief executive Darren Burden confirmed he was in talks aimed at securing another major international act to follow Paul Simon’s April 6 show.
        Read more

  28. Calvin Oaten

    Rob, an excellent precis’ of the ‘multiple effect’. I am always intrigued by our Hamish Saxton (Tourism something or other) who slavishly continues to extol the economic returns of the current ‘cruise ship’ phenomenon. Only this week we saw him comparing benefits of the ships over campervans and the economic benefits of the two. Why not do cyclists and hitchhikers as well while he is at it. I am sure those two categories would provide interesting analogies if he put his mind to it. Might have to stretch his ‘multiples’ a bit though. Arguably, the most imaginative use of multiples was used by Peter Brown and Kate Styles when attempting to justify to council the expenditure of close to $60 million on the creation of an international conference centre, centred on the Town Hall/Glenroy complex.Absolutely staggering they were, and constantly reviewed and upgraded in line with the escalation of the development budget.
    At the end of the day, any economic benefits substantiated should surely, be reflected in an uptick within the community. Anyone noticed an appreciation of their wellbeing lately?

  29. Hype O'Thermia

    I second Calvin. Rob has explained economic analysis fuzzy edges and the thorough fluffball that has somehow gained respectability: the multiplier effect.
    Many spends, retail spends for sure, send money out of Dunedin to Wellington (government) as GST, then there’s the plastic which charges hideous interest if people do not pay it off each month, and doesn’t that all leave not only Dunedin but NZ? There needs to be a “divisifier effect” to put beside the multiplier effect for compare-and-contrast evaluation.

    • Elizabeth

      Liability Cull and the hook, line and sinker. A fishing tale.

      ### ODT Online Sat, 26 Jan 2013
      ‘Prudent’ council in talks over U-20 World Cup
      By Shawn McAvinue
      Dunedin Mayor Dave Cull wants Fifa Under-20 World Cup matches at the stadium but is keeping a tight hold on the purse strings, saying a Dunedin MP’s call to spend is inconsistent with Government legislation. Mr Cull said the Fifa report on costs and benefits of hosting the event was confidential.
      Read more

  30. Hype O'Thermia

    Bacon and eggs; words and music; dead wood and the Woodlouse.

  31. Hype O'Thermia

    “MILLIONS of dollars”? Dave’s been getting his bumps read by Mystic Meg again. Not on our rates funds, I hope.

  32. Rob Hamlin

    “Mr Cull said the Fifa report on costs and benefits of hosting the event was confidential.”

    Why? If it’s supposed to be such an obviously good investment let’s be seeing the numbers and the support/evidence for same. What’s the exact purpose/justification for the confidentiality? Are there other U20 Soccer World Cups and New Zealand cities with covered stadia who might steal their wondrous proposal if its details became public? I don’t think so.

    As an individual who teaches commercial feasibility analysis at graduate level, I will be happy to peer review (a routine requirement for reputable proposals) this FIFA proposal for free as part of my public service activity – on condition that my report on same is made public, in one piece and un-snipped before any decisions on uptake are made. That’s a formal offer Dave…..

    Watch this space for a whole heap of inaction – Apart from Council accepting the secret proposal on our joyous behalves that is. We do seem to be slowly slithering that way McPravda article by McPravda article don’t we – Pity.

  33. amanda

    So really the question is do we trust Burden and Cull when they tell us to smile and not worry our little wee heads about the cost of the Simon concert for Dunedin people. We are supposed to ‘trust him’ just like we were demanded to trust Farry and Hudson’s Stadium Cabal. The ‘economic benefits’ will be just as it has been thus far in the stadium debacle; benefitting a few while the rest of the community will have to stump up to pay Paul Simon to come here. They have no right to ask us to ‘trust them’ again.

    • Elizabeth

      It’s the momentary pause while they work out how to rough up the ratepayers for Fifa another way, hiding in their use of other budgets we can’t see, that irritates. Or how much of the $750,000 per year passed to DVML they can use without the public beheading councillors and Darren babe, the BIGGEST event of all time to be held at the stadium!

      It’s not even the real Fifa. Right now, Syd Brown will be trying to keep the cash for ORFU, not football, as well as looking like he has a Fifa win-win for all councillors to vote on ‘in public’ (the scripted pantomime we’re so used to from Mr Brown).

  34. ### ODT Online Wed, 30 Jan 2013
    Trust to fund bid for Fifa cup games in Dunedin
    By Shawn McAvinue
    A trust to fund a Dunedin bid for the 2015 Fifa Under-20 World Cup is being filled with corporate donations and leftover money to bring five pool games and a quarterfinal to Dunedin, Football South says.

    Football South chairman Dougal McGowan said Queenstown businessman Sir Eion Edgar would give $5000 to the 2015 trust annually for the next three years.

    Up to $10,000 was left in a 1999 Fifa Under-17 World Cup trust that could be transferred to the 2015 Under-20 bid. A potential bid of $125,000, to be paid over the next three years to Fifa, would be enough for Dunedin to make a bid, Mr McGowan said.
    Read more

    • Dunedin City Council communications and marketing manager Graham McKerracher said the Fifa bid would go before the council on Monday. The meeting would be closed to the public.

      ### ODT Online Tue, 5 Feb 2013
      Under-20 Fifa bid efforts extended
      By Shawn McAvinue
      Fundraising to get the ”next generation of superstars” to Dunedin for the Fifa Under-20 World Cup continues but the council controls the bid, Football South says. Football South chairman Dougal McGowan said he expected an update on a possible Fifa Under-20 World Cup bid from Dunedin City Council chief executive Paul Orders later this week. Chamber of Commerce chief executive John Christie was supporting the Football South trust collecting private and corporate donations, Mr McGowan said.
      Read more

      • ### ODT Online Wed, 13 Feb 2013
        Talks on Fifa bid continue
        By Chris Morris
        Talks are continuing that could yet see Dunedin secure a slice of the 2015 Fifa Under-20 World Cup. Dunedin city councillors debated the bid again during a marathon three-hour session held behind closed doors at the end of the public part of the full council meeting yesterday. The ODT understands there were signs of progress at the meeting that could yet result in a deal for some games to be played in the city.
        Read more

  35. Hype O'Thermia

    “[P]rogress at the meeting that could yet result in a deal for some games.” Deal eh. How come I’m getting an eerie feeling that I can best describe as resembling spooky fingers delving into my pockets?

  36. Ok. My first question is how much are we spending on these ‘talks’??????

    Second question. I assume the players will be billeted out to councillors?????

    • wirehunt, nope can’t have that – billeting by councillors would upset Tourism Dunedin in ways we can only imagine as havoc for their multiplier untruths on visitor spending
      we’ll be spending way too much, of course – on stupid under20s, not even fully fledged football stars

  37. ### ODT Online Sun, 24 Feb 2013
    Hopes still high for Fifa tournament games
    By Shawn McAvinue
    The Dunedin football community still hopes the city will get a shot at hosting some 2015 Fifa Under-20 World Cup games. Football South chairman Dougal McGowan said Football South was working hard to get the tournament to Dunedin. Mr McGowan said he was in the ”question and answer time” when Dunedin city councillors debated the bid behind closed doors last week. After the meeting, he remained positive that the tournament could be hosted in Dunedin.
    Read more

    • Mr Cull would not discuss details of any revised match package yesterday, and nor would he say if the council – and city ratepayers – could yet be presented with a bill for hosting matches.

      ### ODT Online Thu, 30 May 2013
      City still in running for Fifa events
      By Chris Morris
      Dunedin remains in the running to host matches during the 2015 Fifa Under-20 World Cup as an announcement by tournament organisers approaches, Mayor Dave Cull has confirmed. Mr Cull told the Otago Daily Times there had been ”a lot of goodwill” on display during discussions with Fifa, tournament officials and Football South representatives in recent months. As a result, an announcement by Fifa expected in ”a week or so” could still result in matches allocated to Forsyth Barr Stadium in Dunedin, Mr Cull said.
      Read more

      • ### ODT Online Sat, 13 Jul 2013
        Waiting for word of Fifa hosting rights continues
        By Chris Morris
        Football fans will have to wait a little longer to hear if Dunedin has secured hosting rights for the 2015 Fifa Under-20 World Cup, organisers say. Tournament organising committee chief executive Dave Beeche told the Otago Daily Times from Turkey an announcement on match hosting rights was now expected by the end of the month.
        Read more

  38. Robert Hamlin

    I presume that Mr McGowan is a ‘pro’ Fifa tournament bod, and that he was behind these closed doors to push the Fifa case – using only God knows what data??? and statistics??? I would expect that the ‘economic impact’ has grown like a bamboo shoot since the first effort to screw out a quick half million of ratepayer money (astonishingly) failed.

    I would be interested to know who was behind these closed doors to challenge his assertions on behalf of the ‘no’ position in the interests of balanced debate and even handed delivery of information to Councillors.

    It wasn’t me. Would the person the Council invited to do this important task please identify themselves?

  39. So even though public opinion is no they have gone ahead anyway. That makes sense.

    A good reason they are still paying for that lawn mowing at the brook. I think you know.

  40. Hype O'Thermia

    “Mr Cull would not discuss details of any revised match package yesterday, and nor would he say if the council – and city ratepayers – could yet be presented with a bill for hosting matches.”
    Transparent as a snakes belly.
    Greater-rater, Dunedin, don’t make the same mistake again.

  41. The reason he doesn’t say is cause he’s trying to work out how to break it to everyone without starting a riot or the financial crash of DCC.

    But we all know that.

    • Cull is rather diminutive in the media just now; I guess the Spooks will lever him up or down with how the HOTEL decision goes (decision due by 4 June… no letters of decision in the post today…)…….

  42. Hype O'Thermia

    I’d say that Those Who Decide These Things have come to the conclusion Cull’s more like a horse than a dog. A good many 3-legged dogs have long successful lives, hell’s teeth people even compete to adopt them. Horses, not so much.

  43. Calvin Oaten

    Basically Dave Cull’s problem is that he can’t say ‘No!” It has got him into all sorts of compromised positions. Just take the ORFU ‘dogs’ and the defamation case. If he had done the right thing in the first place (as he hinted in his campaign) he would not have entangled the city and stadium with unreal promises to the ORFU/Highlanders. Then he goes on public radio and basically blames the ORFU people for the debacle he finds himself in. No wonder they turned on him. Then, when he had the opportunity to hold them out for full disclosure in the court system he buckles with an ‘abject’ groveling letter of public apology conceding he was wrong. This is the “Mayor” of our city for God’s sake!
    That of course sealed it for good and all. Ever since, ‘rugby’ and the stadium has had him on toast, hence the vast amounts of additional seeding monies (ratepayers) committed to making rugby and the stadium safe for a while longer. Basically ‘kicking the can down the road’. Altogether, a “gutless” performance over his three year term. Let’s sincerely hope it is fixed come October.
    Lee Vandervis – if elected – and Paul Orders (assuming his is still on board) have the task of salvaging the position and turning things around. That, of course will require some very strong decisions which won’t necessarily be popular, again partially due to Cull’s legacy, ably supported by his ‘lack lustre’ ‘Greater Dunedin’ sycophants and the ‘geriatric’ old guard.
    Roll on October.

  44. Rob Hamlin

    From McPravda’s article….

    Mr Cull would not discuss details of any revised match package yesterday, and nor would he say if the council – and city ratepayers – could yet be presented with a bill for hosting matches.

    ”I’m not going to go into that now, but that will all be made public when, and if, Fifa make an announcement.”

    Why not? Note that the statement identifies that if the ratepayers’ wallets are raided, we will only hear about this from FIFA, not from our elected representatives, and then only if FIFA feel like it. So we may never know how much we have been taken for this time – it will be buried in the accounts of DVML or some other entity – possibly this private trust that has been set up to raise various ‘undisclosed’ amounts of private funding for this FIFA event – Now haven’t we been badly burnt by something very similar to this latest ‘lads group’ manifestation quite recently?

    On a related council cockup note, I went to have a gawk at the St Clair sinkholes today. It appeared that another one was in the process of emerging behind our ‘wall of integrity’. This one was not near the ramp, but about fifty yards further up, right next to where the road turns right to go along the front of the Esplanade. It was also a good deal further back, maybe twenty to twentyfive feet inland – about five feet away from the blacktop carriageway itself.

    It was only a little fella when I saw it, may be about two feet across and about one deep, but the pavers around it were beginning to open up ominously.

    What absolutely blew me away was the utter lack of any sense of self-preservation the citizenry were showing. This thing looked exactly like the one in the very first photo last week. The one that a few minutes after swallowed the bench next to it. Today, people were walking up and standing right next to it looking in, and when I arrived (God help us all), were even letting their toddlers play in it. Most of these people appeared to be coming from the direction of the massive sinkholes next to the ramp. One would have thought that they could have made the connection.

    I notified the relevant people and left. One supposes that this mass lack of capacity to make the connection, and lack of sense of danger explains the consistent re-election of the vegetables to Council term-in-term-out.

  45. Hype O'Thermia

    In view of that, Rob, don’t you think it would have been wiser to leave the hole and its human buddies to their own devices without calling for interference from the orange netting chaps?

  46. Interesting thing Hype, the netting dudes probably cost us way over $100 an hour each, plus travel plus mileage. Oh, then the debrief later.

  47. Hype O'Thermia

    Holy batteryacid, wirehunt. This is adding another level of pain to the injury caused by incompetent engineers and a gutless council.

  48. Hype O'Thermia

    How much bribe money does Fifa demand?

  49. Hype O'Thermia

    Does a bear………. ?

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