Baypark needs $5million from Tauranga City Council or it will go broke and have to be bailed out by ratepayers.
That's the gist of the report considered by councillors this week as part of its annual plan process. The councillors have asked for another report to be considered in January.
Baypark Stadium.
In a report from the council's deputy CEO, Christine Jones, councillors heard that as of June 30, 2011, Baypark owed the council $7 million which will increase to over $9 million by June 30, 2012.
In 2012/13 another $2 million, plus $101 000 in dividends, is payable under the purchase agreement.
In the 2013/14 financial year the stadium will be paid off by payment of the last $2 million.
Tauranga City Venues Ltd, the council controlled organisation that operates Baypark, will have debt of about $14 million by June 30 2014, requiring nearly $1 million in interest payments each year. TCVL does not produce $1 million in profits.
Debt and interest will continue to grow until either the overall business earns enough to pay interest and start to reduce debt, or interest payments decrease to a manageable level by way of debt reduction – or a combination of the above.
TCVL previously presented a long term sustainability strategy to the council workshops based around taking control of existing revenue streams at Baypark, and reducing the overall debt position created by the capital payments regime to purchase the stadium.
The first steps were taken in the last six months with TCVL taking control of the venue's major cash flows.
As the overall Baypark business grows, these activities will provide increased returns.
'It is extremely encouraging to consider that with due diligence and careful management. Baypark could in fact become a financially sustainable organisation in the medium term future,” says the TCVL business case presented by Baypark manager Irvin McSweeny.
'This potential is greatly enhanced should the elected members agree to take the suggested capital position.
'There seems little risk in this decision from a financial perspective. To continue to prolong this inequitable position is a risk to the business operation and TCC.”
TCVL is technically insolvent and Audit New Zealand has relied on a letter of comfort from TCC to achieve its ‘sign off' in the annual audit process, says TCVL.
'The injection of capital will ensure a much healthier balance sheet as well as providing a safety net should any major capital requirements emerge which would be regarded as untenable in the current financial position.”
Baypark Stadium was purchased by and for the city in 2007 at what can only be described as the favourable cost of $12 million.
It provides for 20-25 events annually and can host a crowd of 18000, and more if in concert mode.
It is nationally recognised as a high quality motorsport venue and through the Speedway programme attracts many visitors to the region in the summer months as well as providing family entertainment for the local community.
It also provides for Super Rugby, which would otherwise be unlikely to be offered in the Western Bay of Plenty.
Council controlled organisation TCVL operates Baypark, but cannot make a profit.
Assumptions that led councillors to believe that the purchase could be wholly funded through trading revenues proved difficult to deliver.
Stadium revenues when the council purchased it in 2006/7 were higher than at present because of the general economic situation and also the ability of the then owner to leverage business arrangements in favour of the stadium.
It needed a positive and expanding local economy to repay $12 million plus interest over five years solely from trading profits.
Doing so would have required total trading revenues well above what had been previously achieved, and which was predicated on an expansion in corporate box revenues and sponsorships up to the value of around $1 million per annum, which didn't happen.
The TCVL board is also asking the council to consider including in its draft 10 Year Plan $1.7 million for a new pavilion at Baypark for indoor sports.
The three existing pavilions, which a year ago were empty or subject to the speedway
Agreement, are now under permanent or semi-permanent occupation, and the TECT Arena is soon going to be under pressure.
The proposal is to build a 2500sqm building with a 50 metre clear span in both directions ie width and length to maximise usage options.
It would have a concrete floor covered by appropriate sports surfaces, and include an amenities area, storage for gear and equipment and possibly kiosk space.
37 comments
Bay Park and the swimming pool
Posted on 07-12-2011 13:08 | By Tony
Come on please someone at TCC put their hands up and admitt......You guys know nothing about these running these thing Stick to your knitting ya fools the rate payer will not bail these white elephants out forever. The reason noone with any commercial knowledge wont touch these venues all over the world is becuase if they have high debt they dont work....turn the lights out if need be and Walk away. Bay Park would have more wages in a week then The Sebal. Its time for a conffession TCC and quickly
Posted on 07-12-2011 13:25 | By whatsinaname
as far as speedway is concerned if they lowered there general meeting prices and just put it up for the special meetings, and made it more user friendly they may get more bums on seats so to speak. the crowd at the huge meeting last saturday was pathetic. could count the number of people there on two hands. big dissapointment. May be the food issue may have something to do with it. The caterers need to lower there prices. Hopefully something has to be done and i am dissapointed that me being a rate payer will have to foot the bill which is so unfair......
What a colossal load of BS
Posted on 07-12-2011 13:41 | By SpeakUp
I'm gonna say it: The STUPID people of Tauranga DESERVE what they voted for. What gets me upset is that our following generations had NO chance. They have to pay off debt levels that, if people would know about exponential functions, would leave them utterly shocked. Baypark was purchased by TCC for $12 million in an air of secrecy and now it develops into a bottomless financial filth pit. But there is, as always when dealing with TCC derivatives, more to the story: Baypark original caterer Colin Davis has followed speedway promoter Willie Kay and has been ‘sacked' by TCVL. It is said that Kay was paid $ 850000 to drop his contract that had NINE more years to run. Now TCVL (Mayor Stuart Crosby has a cosy well-paid seat on the TCVL board) is running their own apparatus with their own speedway manager, their own group of speedway officials, security staff, and their own catering service. The whole TCVL smells of dictatorship: Many volunteers have left or were told that they are not welcome amongst the new bunch of TCVL employees; spectators are not allowed to bring any picnic basket to the races/events, no drinks either; you are not allowed anymore into the ‘pits' behind the stadium (for many youngsters THE attraction); you are not anymore allowed to smoke in the stands notwithstanding the clouds of exhaust fumes and dust clouds; the drivers have to line up now to have their vehicles checked before the races instead of being visited by volunteers who had years of experience for their generous free service and knew each driver/car; a new and controversial drug testing regime has been introduced of which Willie Kay rightly thought to be too invasive (could that be the reason for the dwindling race participation, especially for events like demo darby?); the spectator numbers are of course dwindling because of the meddling by ‘administrators'; many sporting officials, led by netball, basketball and volleyball, have said that the high rents will make many sport events too expensive and they'll go somewhere else;...gee, I could go on and on and on. Typically (similar to the Jazz festival) bureaucracy is killing something that was created by volunteers and private enterprise, has functioned beautifully for decades, but has now been usurped by a brigade of USELESS know-it-all sociopaths who need a job and who think the community needs them and their ‘management'. These parasites help themselves to precious rate monies and if they fail (many of them have failed before in private enterprise), hey, they extort the ratepayer to bail them out. My family used to love speedway and other events. Now we don't care anymore. Anything TCC touches is doomed. TCVL will be no exception.
Morons and Idiots.
Posted on 07-12-2011 14:05 | By Zara
I guess it will take more than confiscating old ladies water bottles to get this puppy back to profit, but never mind the ratepayers have bottomless pockets just put it on the (rates) tab. Maybe the new C.E.O could earn some of his salary and come up with some ideas....Like selling it along with the other Council land.
important
Posted on 07-12-2011 14:39 | By Capt_Kaveman
that when the rugby world cup was on someone missed the boat at getting games here to help pay for it but i guess were to busy lapping up the ratepayers payroll instead
sack em
Posted on 07-12-2011 14:43 | By friendee
the hamilton council were nearly all dumped for wasting huge sums of money
Should have the direction of the flow first
Posted on 07-12-2011 14:48 | By Openknee8ted
"The first steps were taken in the last six months with TCVL taking control of the venue's major cash flows."
Letter of comfort, who signed it?
Posted on 07-12-2011 15:19 | By Openknee8ted
If it starts with TC its a dog - TCAL, TCVL or TCC. Why did the council pour money into an insolvent venture? to quote TCVL "TCVL is technically insolvent and Audit New Zealand has relied on a letter of comfort from TCC to achieve its ‘sign off' in the annual audit process, says TCVL."
14GK
Posted on 07-12-2011 15:39 | By 14GK
The new Chair of TCVL has clearly taken little time to discover that the Company, without help is a candidate for the old wastewater plant that used to be nearby! Good on Mr Elvin for telling it like it is rather than concealing it in the hope the problem will fix itself. If we don't get it sorted TCVL might have to pay someone to take it off their hands - which of course will merely compound the problem. C'mon TCC - you bought into this on the back of some dodgy forecasts. What's the next contingency plan then?
Jesus!!!
Posted on 07-12-2011 16:09 | By wreck1080
.
speak up
Posted on 07-12-2011 16:23 | By whatsinaname
wow. you said it all..............so true and all the others that put comments on here. agree with the no smoking thing . shite,, some of those exhaust fumes are more dangerous to the health than cigarete smoke........... guess tcc will learn the hard way expecially when no one goes to the speedway meetings............
Posted on 07-12-2011 16:28 | By crazysteed
well im glade i walked away from that place, TCC greedy how about you guys not accept a payrise and that money goes to sorting this issue out because the rate payers arent going to cover the cost of TCC balls up
IT WAS PROMISED THAT:
Posted on 07-12-2011 16:37 | By MISS ADVENTURE
"Baypark would never cost ratepayers ... it will be self funding." Well these statements were wrong before and they are wrong afterwards to. It has taken 4-5 years for the truth to ooze out and now in the table to see. I guess the most important factor here is that the interest bill of $1 million pa. is actually higher than the gross income, even with speedway in there now. No hope really is there, ratepayer RORT yet again and the muffin brains who signed this deal all walk away with a pat on the back.
Stacks on the Mill.
Posted on 07-12-2011 16:51 | By Zara
Hey, have you guys ever heard of the law of diminishing returns ? It goes like this.You lie about the possible returns in some anonymous report prepared by/for the council. the councillors all vote in agreement. All the council staff give jobs to their mates at huge rates.The returns the whole case was based on evaporate due to unforeseen circumstances.The poor ratepayer gets left holding the baby. Dont believe me ? What about Baywave, TCAL, Mount hot pools, The Art Gallery, Route K, The Museum,(oops getting ahead of myself there) but by now you must notice a pattern of some sort.All concerned will stand in a circle and blame all and sundry then say oh well we are in too deep now to do anything about it so we will just have to carry on , toss more money at the problem, employ more staff make bigger losses etc. etc. etc.
Huge mess
Posted on 07-12-2011 17:04 | By dgk
The opening sentence says it all - "Baypark needs $5million from Tauranga City Council or it will go broke and have to be bailed out by ratepayers." So, either the taxpayer pays, or the taxpayer ends up paying. Sounds like it needs to be closed down while they find somebody who knows what they're doing....
OMG
Posted on 07-12-2011 17:58 | By tonyb1
Will the TCVL bucket ever stop leaking Mr Towns has certainly made a mess Why should the rate payers be expected to bail out a council owned company when they will not even disclose what TCVL General Manager and board are spending the money on ? mainly speedway rights, why would you buy somethink that is loosing money ? sorry thats right it is what the TCC do If there is not enough revenue to pay its way why did large amounts of money get spent on new promotional staff and managment? it is about time a public forum was held where all of these clowns can be put before the rate payers and made to answer for their actions, we have seen TCVL staff travelling overseas to look at possible options for baypark which lead to nothing, pie in the sky, get down to basic's and if the security staff carry on the way they have been TCVL will be in bigger trouble, nothing short of disgusting, next your rates will increase
lets go
Posted on 07-12-2011 18:31 | By tonyb1
Challenge out to the public and ratepayers, lets push for a public forum in which the rate payers can demand to know the answers to the questions one on one, let the general manager of TCVL explain why he should remain at the helm and not sent back to Wellington to play cricket People in numbers challenging these decisions have to be taken seriously The last thing all of, and I quote from tony "ya fools" it is easy to play director, chairman and general manager when the rates will bank roll you when you stuff up again and again and again
How much did Council spend to buy the Speedway?
Posted on 07-12-2011 18:36 | By Gee Really
Surely we're entitled to know. How much does it cost to run the place? Why is it that large expenses usually follow anything council touches? This is very disappointing and it's about time Baypark delivered. Goodness knows what costs we'll be in for with the new sports and events centre.
Nuff Said
Posted on 07-12-2011 19:35 | By Jitter
When I read about the $5 million that TCVL want a TCC bail for, I thought "No way", let them work it out themselves. Then I read these idiots have asked TCC for a further $1.7 million for a new indoor sports stadium. Unbelievable bloody cheek ! TCVL is run by a pack of clowns with absolutely no business acumen. The whole origional purchase of the stadium by TCC was an underhand deal as the true financial situation was kept hidden away from councillors eyes. This result was predictable but at the time TCC would not listen to any warnings from those in the know. Whatever happens it will be ratepayers bailing TCVL out as it is a council owned company. I'm afraid I have to agree with many of the prior comments. There is one way to solve the problem and that is sack all the higly paid staff employed by TCVL and sell off the whole caboodle at cost. TCC must get out of running any business and get back to it's core responsibilities.
Maybe
Posted on 08-12-2011 10:36 | By Capt_Kaveman
time for the speedway uses help pay it off, ive seen thier race car n truck setups and some are worth over a Mil so whats 20-50k from each of them to bail it out
WHY
Posted on 08-12-2011 11:00 | By 0800mymechanic
Is there no form of accountability for our council. Everything they touch cost sooo much money and they are happy to spend it because it's not their money!!! WHEN will it stop?? Sack the lot for mis management and put some people in there with some forsight and excitment.
Make it happen!
Posted on 08-12-2011 12:24 | By nerak
It is well past time for a change of council. Someone in this city must be more able to do the job? Out on their ears, the lot of them. The rot starts at the top. Fill council inboxes with your angry comments!
No No No No
Posted on 08-12-2011 16:24 | By The author of this comment has been removed.
Nearly all of Tauranga does not use the stadium..its just the petrol heads. Tauranga CC didnt even bid for the world cup games so its a giant pink elephant. GET RID OF IT -- DONT bail it out.
HOW MUCH DID SPEEDWAY COST
Posted on 08-12-2011 21:16 | By blindside192
OMG!!!! how do we find out if there is any truth to the rumour that the old speedway promoter got $850,000.00 this should be public knowledge what the heck are they playing at!!!! isn't TCVL supposed to rent the stadium out or are they now becoming promoters go Tonyb1
YES YES YES YES
Posted on 09-12-2011 14:52 | By PLONKER
Sell it, yes to buy out the speedway contract cost about $850,000, that only happened becasue TCVL forgot to buy it at the start.
they didnt forget
Posted on 09-12-2011 15:23 | By tonyb1
The promoter was signed into a new long term user friendly contract just prior to the sale, this was done to stick it to TCC, and stick it they did
TCC WARNED MANY TIMES SINCE 2007
Posted on 09-12-2011 16:54 | By ROB PATERSON
TCVL have now hit the wall, reporting that it is technically insolvent so it comes whinging and griping, to Council about the $5 million debt (or whatever the correct figure is) and scrounging for a capital injection of TCC ratepayer funds, based on financial premises that are unintelligible. The Sports & Expo Centre lemon is not even in this equation. On 15th February 2007, I wrote to all 11 TCC Councillors individually and Mayor Crosby and subsequently to the 5 new Councillors elected in Council at the October 2007 Local Body Elections providing them with copies of the previous correspondence. Incidentally, this was not the only letter sent. The warning given was loud and clear, yet Councillors didn't take the slightest bit of notice nor for that matter have the media, who were also given copies of that correspondence. Few people, if any, have ever shown any interest in the Baypark purchase debacle so it is strange to see so many critics appearing now it has all turned to custard. The deed is done and surely it is now time to hold to account those responsible for the financial mess. The text of the 2007 letter was as follows: - To the Mayor & Councillors Tauranga City Council 'Re: BAYPARK 'BLUECHIP” STADIUM, TE MAUNGA JUNCTION - COUNCIL PURCHASE / PROPOSED EVENTS CENTRE It is with the utmost reluctance that I feel constrained to write to Councillors personally, regarding the above matters. As a ratepayer, I am seriously concerned with what I perceive to be Council's current intentions regarding the above site. Council have as I understand it, had recent confidential meetings on the proposals, the last being on Thursday, 14th December 2006 to consider a report which I believe dealt with the purchase proposal. The financial implications of buying the Baypark Stadium will not stand scrutiny and if it was purchased at the 2006 improved Rating Value of $22 million (final figure was $12 million) then the annual interest alone would be $2.2 million and if a further $35 million is spent on a proposed Events Centre, that will add a further $3.5 million - a total of $5.7 million a year in interest with operating costs of at least the same amount plus ongoing maintenance on top of this probably resulting in $300 a year being added to everybody's rates bill. This Stadium can't make a profit, no Stadium in New Zealand does and the substantial losses will have to be funded by ratepayers. Currently, inexplicably, no general rates are paid on this site, only limited sewage rates. I am also disturbed by the fact that, when I specifically questioned the Mayor Stuart Crosby at our meeting on 21st September 2006 on this very point, he advised me that Council would not be directly involved in purchasing the Stadium, which no longer seems to be the case and that the whole Events Centre proposal for the Baypark site was being reassessed. It is worth recalling the Stadium lease terminates in 2020, the Stadium is already in place and available for public use without any financial input by Council, which has absolutely no experience in running Stadiums. There is no need for Council to purchase or develop the Stadium any further as Council will bear the full brunt of operating a Stadium and Events Centre without any subsidized help. Currently, Speedway holds a maximum of 19 meetings a season and with small attendances of about 4,000 people, the annual gross takings would be say $1.5 million less operating and maintenance costs and as it seems no interest is allowed for and no rates charged, these normal business expenses, as far as I can see, are not presently taken into account in the current running costs. Speedway itself may possibly not be there much longer anyway, leaving concerts and rugby, plus the usual non-paying activities to provide the income. This paints a very sorry picture financially. If these incongruous proposals ever get off the ground, ratepayers will suffer substantial and continuing losses. Having regard to this, Councillors should be fully aware of the provisions of Sections 44, 45 46 and 47 of the Local Government Act, 2002 (enclosed) and that the collective Council and Councillors personally may well be liable for any losses suffered by ratepayers from the investment which is of a wasting nature and funds applied in any purchase may well be deemed to have been unlawfully expended. The warning signs are there and Council and Councillors will, in my opinion, be negligent if they become involved with any financial commitment in respect of this site, to ratepayers detriment. Council, despite its continual denials, does have serious conflict of interest issues in respect of the Baypark site, its development Resource Consents and its operations generally. In my opinion, there is no current or existing Resource Consent in place for the proposed Events/Exhibition Centre, because it is radically different from and larger than the one envisaged in 2004/2005. The above is of course in addition to the cost blowouts that have already been or will be experienced with Baywave, the Art Gallery and the absurd Museum proposal, all of which could well come back to haunt Council. I can only guess where Council is getting its advice on the financial implications from and I suggest that Councillors subject this to rigorous scrutiny and get proper independent, forensic accounting advice. Three years ago it was said, when Council was looking at a joint venture Events Centre with the Stadium owner, involving an input of around $3 million with a subsidy of $275,000 per annum, that this would involve a substantial ratepayer contribution. The current proposals will be 10-20 times worse. Enclosed are copies of Council's Evaluation and Monitoring report, dated 22nd September 2003 and Key Research evaluation, dated 9th September 2003. It is my understanding the lessee and sub-lessee have not provided regular specific, full annual audited accounts as required by the Council lease, so how Council could even start to undertake a due diligence programme is anyone's guess. I would like to make it clear that I have no financial interest in this matter other than as a ratepayer but I do have real concern for the older ratepayers on fixed incomes and young first homeowners and their ability to fund these extravagant schemes. P.S. The following is a list (which is by no means exhaustive) of non-performing, over-priced projects - both existing and proposed: - • ROUTE K $45 million • BAYWAVE $16 million • ART GALLERY $10 million • MUSEUM $25 million • BAYPARK purchase $22 million (Final price was $12 million) • EVENTS CENTRE $35 million ESTIMATED TOTAL: $153 million!! __________ Yours sincerely” I HATE TO SAY I TOLD TCC SO, BUT I DID!
rob
Posted on 10-12-2011 07:34 | By tonyb1
Hi Rob I know that you have been very active for some years with regards to the council and their failure to perform, I am sure that the highly paid elected power's to be do not run their own finances in this manner, If the company is insolvent then under normal circumstances it should be wound up I love your commitment to the situation and would,nt it be great to have people with your passion at a public forum getting the answer's
GO ROB
Posted on 10-12-2011 11:46 | By YOGI
I agree with TONYB1, the real issue is Councillors are unable to make a decision to remedy this situation so Rtaepayers continue to bleed millions a year, that is the core problem.
AND PIGS MIGHT FLY TOO
Posted on 11-12-2011 11:13 | By Hebegeebies
By placing people at the helm more adept at nasal gazing picking the hooter scratching the artz or adjusting the box it is little wonder you come up with unsolvable financial conundrums. With howlers like TCVL are broke give us some more toys and money and we can dig our way out of the mire- honestly what chance do we TCC ratepayers have with this hogwash mentality.TCAL overstaffing overpaying underachieving and under working nurtures this sort of logic !!! As they say idle hands breeds contempt.
love it
Posted on 11-12-2011 17:44 | By tonyb1
Dont you just like this forum, makes you relise that you are not alone
IDIOT BRIGADE
Posted on 11-12-2011 22:18 | By SCARLET PIMPINEL
I guess that TCVL are just figuring out why they were able to buy Baypark so "cheap" at least that was the idea at the time. Sadly for his lot did not realise then and are barely spotting it now five years on.
HAVING TROUBLE SEEIGN THE DIFFERENCE
Posted on 11-12-2011 22:26 | By WARTS N ALL
Baypark wanting $5m "Bailout" when you look at it all that is of course is the losses accummulated to date, pretty bad really. Then have a look at TCAL where more than that is paid from TCC annually, like spot the rotten apple between the rotten apples ....
STRANGE COMMENTS
Posted on 12-12-2011 08:22 | By ANNA KISSED
The previous owner would not have sold it if it was making money, so the fact that TCC trundled along and took it over was like all the christmas's arriving at once. There was a big hint x2 about it of course, the ticket sales for Speedway were not included and little money had to be paid over. Normally when a sale occurs all the money is paid over, TCC is still paying it off even now. IT DON'T FIGURE!
FLIP FLOPPERS
Posted on 13-12-2011 17:15 | By MISS ADVENTURE
TCVL then TCAL then TCVL then TCAL then TCVL then TCAL then TCVL then TCAL then TCVL ... when does it ever end.
WHERE HAS IT ALL GONE
Posted on 14-12-2011 14:57 | By YOGI
Seems that all teh good excuse are found after the event, yet sadly for everyone else no excuse are found, seen or anything before . Now wouldn't that be a better idea!
RORT OF RATEPAYERS
Posted on 17-12-2011 09:48 | By ANNA KISSED
Cant believe that it is loosing that much, almostly leads one to the conclusion that TCC was shafted at the time of buying it?
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