### dunedintv.co.nz February 24, 2014 – 7:16pm
Stadium proud of numbers despite opposition and projected losses
The Forsyth Barr Stadium is crowing over numbers through its gates, as the DCC debates a projected $1.4m loss for the facility.
Meanwhile, a stadium opponent is calling for reports from 2008 she says backed claims the stadium would run at a profit.
24 February 2014
Reports tabled at the meeting of the Dunedin City Council:
█ Report – Council – 24/02/2014 (PDF, 566.6 KB)
DVL Financials for the Six Months Ended 31 December 2013
█ Report – Council – 24/02/2014 (PDF, 638.8 KB)
DVML Financials for the Six Months Ended 31 December 2013
█ Report – Council – 24/02/2014 (PDF, 47.8 KB)
Statements of Intent – DCHL Group Plus DVL and DVML
█ Report – Council – 24/02/2014 (PDF, 276.4 KB)
Statements of Intent – Dunedin Venues Ltd
█ Report – Council – 24/02/2014 (PDF, 284.1 KB)
Statements of Intent – Dunedin Venues Management Ltd
Monday 24 February 2014
TIME FOR SOME PLAIN, HONEST ANSWERS
Dunedin ratepayers are being informed by Sir John Hansen, Chairman of both Dunedin Venues Management Ltd and Dunedin Venues Ltd, that the projected $10,000 operating profit forecast for 2014-15 is now forecast to be a $1,400,000 loss, with similar or even greater losses forecast in future years. He puts this staggering reversal in fortunes down to the reality of costs of running the stadium, and few events occurring at the stadium.
But even these revelations don’t tell the full story of this stadium debacle and financial scandal.
Accompanying the annual injection of well over $9 million to run the stadium, are all of the costs of servicing the debt to build the stadium. Because these costs reside within DVL, they are not reported on in the DVML forecasts.
However some very basic questions remain unanswered.
Readers of the Otago Daily Times will recall a full-page advertisement placed by the Carisbrook Stadium Trust on the 31st of May, 2008, at the time the stadium project was being considered. Headed up “The Facts about the new Stadium”, it said: “The stadium will be profitable. The funding target establishes a debt free stadium. On this basis the business plan for the stadium shows that it makes a profit. Unlike nearly all other Council owned facilities it will not need annual funding support. This assessment has been confirmed by two of New Zealand’s leading accountancy firms.”
These statements are unequivocal and cannot be misinterpreted.
Bev Butler has, for over a year, had an official request in to Mr Malcolm Farry, Chair of the Carisbrook Stadium Trust, to supply the names of those two leading accountancy firms and for the documentation supporting the validity of the claims to build a debt-free stadium and for it to run at an annual profit. Mr Farry has so far failed to deliver that information as required under the requirements of the LGOIMA.
“Mr Farry leaves me no choice but to submit an urgent complaint to the Office of the Ombudsman. There is no reason whatsoever why Mr Farry shouldn’t supply this information, if it exists. Mr Farry has breached the requirement under LGOIMA to supply this information,” said Bev Butler.
How much notice was taken by members of the public and those Councillors and others who were considering whether it made sense to build a new stadium? Perhaps hard to assess. But surely it must not be too hard for Mr Malcolm Farry to reveal to Dunedin ratepayers just how it was that they would have a debt-free stadium and an annual profit instead of a stadium that is millions in debt and costing ratepayers further millions in its staggering operational losses.
Related Posts and Comments:
22.2.14 Carisbrook Stadium Trust costs
2.2.14 Stadium: ODT editorial (1.2.14) —Garbutt debunks myths
1.2.14 Stadium: ODT editorial (1.2.14) —“Palpable claptrap” says Oaten
27.1.14 Stadium: No 4 at interest.co.nz
24.1.14 Stadium: It came to pass . . .
For more, enter *cst*, *carisbrook stadium charitable trust*, *carisbrook stadium trust*, or *dvml* in the search box at left.
Posted by Elizabeth Kerr
16 responses to “Carisbrook Stadium Trust: ‘Facts about the new Stadium’ (31.5.08)”
From the DVML report:
The financial statements have been prepared using the going concern assumption. The Company has recorded a net equity deficit of $3,987,046 and a net working capital deficit of $4,906,867 at 31 December 2013. This position is mitigated by the uncalled capital of $6,056,415 available to the Company.
So the only reason they are still a going concern (and not talking to the bankruptcy lawyers) is because they have a pile of worthless shares in themselves (worthless because they are losing money left right and centre) that they can “call on” (force the DCC to purchase) – now it seems to me that section 63 of the LGA applies here – the shares have to be valued correctly, in the same way as if the council were in a similar situation and selling them themselves.
The other interesting thing is the so called “private fundraising” – the money from CST’s presale of seats should show up as a line item on DVL’s budget to pay off the special loan the city made on CST’s behalf – it doesn’t appear to be there …. I wonder where that money goes?
I’d guess it’s now just part of the $4m rent that the rugby people think is so ‘unfair’ – but a $50m loan over 10 years should require $5m/year in principal repayments alone and maybe another $2m in interest …. as I said, I wonder where the money goes?
DVML is nearly $3 million under water after the nominal share capital is included. Sound familiar?
if they’re not a going concern I believe the Companies Act requires them to be wound up doesn’t it?
Which was kind of my point – the $6m odd in ‘on call’ assumes that their shares continue to have the same value they had when they were created – but section 63 the LGA says that the DCC can’t treat them at anything other than market rate and at this point no-one would invest in DVML because they are losing money and expect to lose money for the forseeable future, their shares are effectively worthless and section 63 of the LGA doesn’t allow the DCC to pretend otherwise.
By the way if you happen to be owed money by DVML now would be a great time to pop on by and demand a cheque, and put them on cash-in-advance for future transactions ….. I can’t see how they will be able to pay their debts in the long term given the constraints they have to operate under
Oh and a related question – anyone know who the contracts for the box seats are with? DVML? DCC? CST? – in particular: do the contracts become moot if DVML goes under? that would solve one particular problem the DCC has.
The full post at the top of this thread has now been restored. An error occurred early morning with an autosave that went undetected. -Site Admin
### ODT Online Tue, 25 Feb 2014
Vandervis raises issue of DVML spending
By Chris Morris
The fundamental review of Dunedin’s Forsyth Barr Stadium operation will consider claims of unauthorised spending on im provements by the company running the troubled venue, it has been confirmed.
Cr Lee Vandervis told yesterday’s meeting he wanted to know how such a cash-strapped company could spend ”significant” sums on improvements without council approval and then come to the council with a budget shortfall.
Mike; you ask, “I wonder where the money goes”. There “IS NO MONEY”, not now, not ever, it is the swindle of the century in this little town.
What is it in the fuckwit political brain at DCC (yes, Cr Vandervis is exempt from this statement) that keeps pouring OUR MONEY into the coffers of PROFESSIONAL RUGBY by any vehicle and means possible, relentlessly.
Dave Cull’s council continues the rort, the corruption, the (organised) white collar crime – it is sealed by his robe and chains.
Big week at the stadium
Seven major events in seven days at the Forsyth Barr Stadium during the past week have injected hundreds of thousands of dollars into the local economy and set the city ”fizzing” with activity. And Dunedin Venues Management Ltd is hoping to provide more of the same throughout this year.
And these activities (let’s count the PROFIT, oh dear, let’s not, it’s better to go Lalalalalalalala as usual) prove the stadium is a multi-use facility. Just like the wool stores were. Remember the wool store hops that were a big feature of the university students’ year?
How many activities take place in the average church hall? Dances, concerts, jumble sales, building scenery for a local group’s play, yoga and music lessons………………
Mike, I’m not too sure about this, but if you look on page 21 of DVML’s 2013 annual report you will see that it has uncalled capital of $9,800,000 with the company having the ability to make calls on this uncalled capital. Then, on page 19 we see that since balance date the company has made calls on 4,106,065 shares at $1 each.
So correct me if I am wrong, but that looks awfully like a “slush fund” which was set up at the outset in anticipation of what is happening. Again, the ratepayer underwrites the losses. The question here is, was the $9.8m balance before or after the draw down of $4.106m? Either way it looks to me like there is a fair amount of fat to be poured on the fire yet before it goes out.
Calvin: in general I think you’re right – it’s a way to create a slush fund, a way to quietly funnel money from the ratepayers.
However, I think that it doesn’t bear public scrutiny under the LGA:
– section 61 really requires this to be done as a contract rather than a slush fund
– section 62 says that the council can’t indemnify DVML, this is in essence a limited form of indemnity
– section 63 essentially says that transactions between the DCC and DVML must be at market rates, DVML as a perpetually loss making company has no market value (or rather it probably has a negative one, in fact with a negative value one might expect DVML might have to pay the DCC if it exercises its options – in essence paying the DCC to take its shares).
Cr Vandervis questioned why the budget listed the level of uncertainty surrounding Forsyth Barr Stadium’s debt servicing plan as ”low”. New information – including larger-than-expected losses by Dunedin Venues Management Ltd – suggested that should be increased to ”medium”, he said.
Received from Lee Vandervis
Tuesday, 25 February 2014 6:21 p.m.
Thank you for picking up on the the Risk/Level of Uncertainty issues that I raised in our Draft Annual Plan yesterday.
ODT’s Chris Morris correctly reported:
“However, Cr Vandervis also also questioned why the budget listed the level of uncertainty surrounding Forsyth Barr Stadium’s debt servicing plan as ”low”. New information – including larger-than-expected losses by Dunedin Venues Management Ltd – suggested that should be increased to ”medium”, he said.”
What Mr Morris forgot to report was that CEO Bidrose promptly accepted my argument that recent negative DVL information warranted an increased level of uncertainty to ‘medium’ rather than ‘low’ regarding the Debt Servicing Plan, and she agreed to amend the Plan accordingly, with Mayor Cull then characterising the change as ‘aligning’ the DVL and DVML uncertainty levels. [both to medium]
The Annual Plan has more relevant information in it than the last 10 years of Plans I have studied, but with accessibility still having plenty of room for improvement. P5 for instance opens with some seriously sobering Economic Development statistics for Dunedin.
See comment at another thread:
Caught The Wash.
According to a family from out of town… Dunedin Venues haven’t got the place at Fubar to buy ‘rugby tickets’ clearly signed and marked.
DVML’s Kim Barnes says “We are in the process of upgrading our box office decor and signage…”
I guess there’s plenty in the Slush Fund to pretty things up, um to make ticket sales fly. Like this wasn’t a priority since the stadium was commissioned. Fuck.