Daily Archives: November 2, 2012

Stadium financials: Calvin Oaten on DVML, DVL and DCHL

### ODT Online Fri, 2 Nov 2012
Opinion
DCHL covering DVL and DVML losses
By Calvin Oaten
Stadium finances dismay, says the headline (ODT, 31.10.12). The story states Dunedin Venues Management Ltd (DVML) as posting a loss of $3.214 million. Mayor Dave Cull says “it is not sustainable”.

But let’s look at the combined performance of DVML and Dunedin Venues Ltd (DVL) and we see a fuller picture. Let’s face it, these two entities are joined at the hip and are no more than an arrangement of convenience, for the dispersion of liabilities attached to the stadium. DVML’s loss at $3.214 million is arrived at after receiving revenue of $6.093 million, offset by expenses of $6.395 million.

It then pays DVL $3.667 million rental for the use of the stadium. This is offset by receiving a (subvention) payment of $782,000 from Aurora. Net loss $3.214 million. But we then need to add the carried forward loss of $3.256 million from the previous period to disclose the consolidated loss at $6.470 million.

Turning now to DVL, we find the declared position is: Revenue $3.672 million, expenses $16.051 million for a loss of $12.379 million. This is offset by a (subvention) payment from Aurora of $7.292 million leaving a loss of $5.087 million.

This is offset by a tax credit of what could be $775,000 for a net loss of $4.312 million To this is added interest rate swap losses (a totally incomprehensible concept) of $8.579 million for a total consolidated loss of $12.891 million.

So combining the two scenarios we have a total consolidated loss attributable to the stadium of $19.361 million. This, Mr Cull, is really what is not sustainable.

Interestingly, nowhere in either set of accounts can one find any evidence of income derived from the much vaunted private funding. Why? Is it because as the PwC report says, it can only be treated as operational revenue, and therefore goes direct to the events promoters such as the ORFU?

Looks like it. They in turn simply pay – or not – a rental to DVML for the use of the stadium by event. This is what is expressed in DVML’s revenue statement. All this raises the question: what happens if DCHL is unable to produce those subvention payments?

It has already served notice that since July 1, 2012, it will no longer borrow to provide payments of $23.2 million to the DCC which consisted of, $10.450 million dividend, $5.25 million capital repayment of stadium debt, and subvention payments to DVL and DVML. As can be seen this amounts to $17.25 million offsetting the already considerable losses incurred.

There is no doubt but that the stadium will figure very largely in the city’s future funding difficulties, which are so manifest.
ODT Link

Posted by Elizabeth Kerr

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Filed under Business, Concerts, DCC, DCHL, DVL, DVML, Economics, Events, Media, ORFU, People, Politics, Project management, Property, Site, Sport, Stadiums

Stadium financials: JimmyJones v Peter Hutchison (DVML) on accounting method

### ODT Online Wed, 31 Oct 2012
Stadium finances dismay
By Chris Morris
Dunedin Mayor Dave Cull says the Forsyth Barr Stadium’s finances are “not sustainable”, after confirmation the company running the venue lost nearly $1 million more than expected in its first year of operation. The result was contained in Dunedin Venues Management Ltd’s 2011-12 annual report, released to the Otago Daily Times yesterday, which showed the company lost $3.2 million in its first year. […]A copy of Dunedin Venues Ltd’s annual report was also released yesterday, and showed the company that owned the stadium – and received rent from DVML – recorded a $4.312 million loss for the same period.
Mr Hutchison cautioned against adding the two losses together, as they overlapped, and because DVL’s results were largely accounting losses – not cash – and expected. “It [DVL] is behaving exactly as it should do.”
Read more

More ‘fallout’ stories at the Otago Daily Times:
● Wed, 31 Oct 2012 – Report about stadium loss slips under radar
● Thu, 1 Nov 2012 – Councillors blindsided by DVML results
● Thu, 1 Nov 2012 – Stadium loss rates fears
● Fri, 2 Nov 2012 – Stadium rate ‘tax on being busy’

The following comments appear at ODT Online, in reply:

DVL loss not as expected
Submitted by JimmyJones on Thu, 01/11/2012 – 2:56pm.

DVL and DVML director Peter Hutchison says that the size of DVML’s $4.3 million loss was as expected. This statement does not match with the official forecast in DVL’s Statement of Intent which predicted that the year’s result for 2012 would be $6.5 million (before the ratepayer subsidy). This latest result is a loss of $11.6 million (before ratepayer subsidy) – so this is much worse than expected.
The loss of $11.6 million is much bigger than the official $4.3 million loss because this doesn’t include the $7.3 million DCC subsidy. It is wrong to exclude the DCC subsidy when considering the overall effect on the finances of the DCC and the ratepayers. Both DVL and DVML are paid a subsidy that doesn’t show-up in their net profit/loss figures.

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Stadium losses add up
Submitted by JimmyJones on Thu, 01/11/2012 – 11:47pm.

Mr Hutchison, the director of the stadium owning company DVL, says that the losses of DVL and DVML can’t be added together because they overlap. This is misleading and seems to go against the basic principles of accounting. Each of the companies is a separate entity and they have separately audited accounts. To say that the losses overlap is to claim that one or both full year results are wrongly stated. As a director, Peter Hutchison did however vote that these accounts were true and correct; Their auditor has agreed with this. There is no overlap, and they can be added together.

Adding the two losses gives $3.2m + $4.3m = $7.5 million. The real loss is, however, a lot more than $7.5 million because this figure does not include a number of disclosed and undisclosed subsidies, paid either directly or indirectly by Dunedin’s renters and ratepayers. The DCC has so far actively avoided providing the total of all the ongoing losses and costs of their stadium.

****

Big, real, ugly, stadium loss
Submitted by JimmyJones on Thu, 01/11/2012 – 11:57pm.

Mr Hutchison says that “DVL’s results were largely accounting losses – not cash – and expected”. In saying this he is implying that the year’s loss is mostly not a real loss. Our accounting system has evolved over a few thousand years to provide the most “real” measure of profit/loss. This is about the best we can do, and that means that both cash and non-cash items are included. If Mr Hutchison thinks he has a better way, he should write a book about it, but in the mean time he needs to stick to the standard NZIFRS method. His statement is in fact wrong, because most of DVL’s expenses are actually cash expenses and because the loss is a real, authentic, auditor certified loss. DVL’s finances are a sensitive area for the DCC, and Mr Hutchison should not be seen to be promoting any particular viewpoint.

Posted by Elizabeth Kerr

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Community halls of small-town New Zealand

Michele Frey and Sara Newman
Photographs John Maillard and John O’Malley

November 2012
RRP $45
Paperback, 260pp, 235 x 235mm Full Colour
ISBN 978-1-927145-37-1

Canterbury University Press
http://www.cup.canterbury.ac.nz/catalogue/saturday_night.shtml

Yeah, it’s great being out with the jokers
When the jokers are sparking and bright,
And its great giving cheek to the sheilas
Down the hall on a Saturday night …

Peter Cape, 1958

On a Saturday Night is a warm and colourful celebration of the strength and spirit of small towns all around New Zealand. From Whakapara in the north to Mossburn in the South, community halls have been the focal point of small towns for as long as the towns have been on the map.

These halls have hosted school classrooms, general elections, stag parties, birthday parties, film screenings, Rabbiters’ Balls, flag euchre evenings, farewells and welcome-home parties for servicemen from both world wars, memorial events for those who did not return, farm auctions, clearing sales, weddings, Christmas parties, Civil Defence teams, mayoral celebrations, church services …

Some halls have been demolished and rebuilt over the decades, other have been lovingly restored several times and are still going strong. Some halls have been transported on the backs of trucks to new locations as towns have grown and changed. Fires and floods have taken their toll in more than a few cases.

Michele Frey and Sara Newman visited these halls with photographers John Maillard (North Island) and John O’Malley (South Island) to talk to the locals and try to capture the essence of what each hall has meant – and means – to its community. In these stories and pictures they have recorded an aspect of New Zealand’s unique culture that seems to be passing into history.

Michele Frey is a Strategic Planner (Natural Environment and Recreation) for Opus International Consultants Ltd in Napier. She has always had a strong affinity with the notion of community, and seized eagerly upon the idea of producing a book on small-town halls, with the opportunity it offered to gain insights into the dynamics of small New Zealand communities. Along the way she developed some lifelong friendships. This is Michele’s third book for Canterbury University Press.

Sara Newman grew up in a small town and knew all about the importance of community halls. She has had articles published in magazines in New Zealand and abroad, including Takahe and New Zealand Memories. While a member of the South Island Writers’ Group she won the Ngaio Marsh Trophy for fiction in 2009. Her work is included in several anthologies and her family history Living Between the Lines has been read on National Radio. She loved visiting the halls and meeting the people involved with them.

### radionz.co.nz Friday 26 October 2012
Country Life
with Carol Stiles, Susan Murray, Cosmo Kentish-Barnes & Duncan Smith
http://www.radionz.co.nz/national/programmes/countrylife/20121026

21:18 On a Saturday Night
Sara Newman talks about a new book she has co-written with Michelle Frey about the community halls of small town New Zealand. (10′08″)
Audio | Download: Ogg Vorbis MP3 | Embed

Posted by Elizabeth Kerr

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