Tag Archives: The Marketing Bureau

Stadium: Ombudsman investigation confirms private funding

Register to read DScene online at http://fairfaxmedia.newspaperdirect.com/

### DScene 20 Mar 2013
Raw deal alleged on stadium rights (page 5)
By Wilma McCorkindale
Dunedin’s flash new stadium gets $7 million every 10 years in private funding, an Ombudsman investigation reveals. Newly released documents show the stadium receives $715,000 annually – $7,150,000 over 10 years.
D Scene has learned from an informed source that $5m of that funding comes from investment advisory firm Forsyth Barr in return for naming rights of the new $200m-plus state-of-the-art arena.
Stadium lobbyist Bev Butler said the new figures showed ratepayers got a raw deal on private funding. ‘‘In December 2007, Brian Meredith of The Marketing Bureau, commissioned by the Carisbrook Stadium Trust, addressed the council stating that the head naming rights were worth more than $10m,’’ Butler said in a statement.
‘‘This has been reported twice in the media. The mayor, councillors and public were left with the perception that Forsyth Barr had signed up for the rights for $10m. This latest revelation shows that this was not the case and that Forsyth Barr ended up paying no more than $5m for the naming rights.’’
Butler, who initiated the latest investigation, said the rest of the annual $715,000 in private funding came from other companies who had a high profile in the stadium.
{continues} #bookmark

Posted by Elizabeth Kerr

4 Comments

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

Ombudsman assists release of CST file information

Media Release 7 September 2012
By Bev Butler

Fourteen month fight to expose CST Marketing Contract Fiasco

New DVML CEO Darren Burden Signatory – raises question is he really best person for the job?

It has taken fourteen months but Malcolm Farry, chairman of the Carisbrook Stadium Trust (CST), has finally released information to the Dunedin City Council (DCC) revealing further serious shortcomings in the competence of the CST and the last council. The release of these papers has been rigorously resisted by Malcolm Farry and he only agreed when it was made clear to him that under section 30 of the Ombudsmen Act he could be prosecuted for obstructing the release of official information.

The papers reveal the CST contracted an Auckland company, The Marketing Bureau Ltd (TMB) to raise private funds for the construction of the new rugby stadium. The CST agreed to pay:

● the Director/Manager and shareholder of TMB, Brian Meredith a $15,000 monthly retainer;
● another TMB employee a $5,000 monthly retainer;
● additional claims for “expenses” of approximately $5,000 per month;
● further claims of extra monthly work charged out at $350 per hour totalling an additional $5,000;
● a 2% commission on any private funding raised.

The amount paid out to The Marketing Bureau Ltd came close to half a million dollars.

However, the payments to The Marketing Bureau Ltd continued when the CST decided to terminate the contract thus opening up the CST to a termination payment of $222,187. This payment was approved by the CST Board and signed by Malcolm Farry, chairman, after legal advice for closing the deal was received from Farry and Co. Barristers and Solicitors.

The Marketing Bureau Ltd thus received a total of $652,809 and the question then arises just what have the DCC ratepayers received for this princely sum? It appears that “a few” reports were written suggesting uses for the new rugby stadium including papal visits, Royal Tours, major stock auctions, and Highland Tattoos as examples. Brian Meredith also reported that naming rights to the new stadium were worth “over $10m” when reality tells us all that Forsyth Barr not only paid a small fraction of this amount but only started making their first monthly payments in September 2011 after inferring in January 2009 that they had paid up front with a substantial amount.

But it is the failure of The Marketing Bureau Ltd in raising genuine private funding that reinforces the findings of the PricewaterhouseCoopers report. DCC ratepayers were consistently told that $45m would be raised by the private sector for construction. This simply didn’t happen, and as the PwC report confirmed, advance money for services is nothing other than advance revenue and just over half a million was used for private construction.

Ratepayers were consistently told that they would be liable for $91.4m for construction, but sadly for Dunedin’s sake this figure was woefully inaccurate with ratepayers being liable for $170m.

The Carisbrook Stadium Trust was acting as an agent for the DCC in this project and ratepayers were told that the Board and its Chair in particular, were “sweating over every dollar spent”. However, it seems that the CST entered into a contract which ended up costing over $650,000 for little or no benefit, and equally it seemed that the previous CEO of the DCC, Jim Harland, approved these payments to The Marketing Bureau Ltd while being party at all times to their outputs.

Read in conjunction with the full PwC report on stadium construction, these papers reveal a sorry level of business competence from the person that signed off the contract, newly announced CEO of DVML Darren Burden, the Board of the CST, the previous CEO of the DCC, Jim Harland and those City Councillors of the last Council who were determined not to ask any questions.

Further information available on request:
1. Letter from DCC cc to Ombudsman
2. TMB contract signed by Darren Burden
3. Invoice from Anderson Lloyd
4. Invoice from Farry & Co Barristers and solicitors
5. Letter relating to the settlement paid to TMB and associated invoice
6. Original LGOIMA Request
7. Settlement invoice
8. Invoices from the TMB signed by Malcolm Farry
9. Spreadsheet summary of TMB invoices
10. TMB report dated Dec 2007

Note:
1. DVML – Dunedin Venues Management Ltd
2. CST trustees are: Malcolm Farry (Chair), Eion Edgar, Kereyn Smith, Ron Anderson, Bill Baylis, Stewart Barnett, John Ward

[ends]

TMB/CST contract which the CST board approved and Darren Burden signed (with no legal advice) leaving Dunedin ratepayers exposed to hefty payments. S042000033_1208221011000  
(PDF, 647 KB)

Posted by Elizabeth Kerr

77 Comments

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

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.

[ends]

Posted by Elizabeth Kerr

31 Comments

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