Why I supported Eden Park for a grant

Eden Park is not owned or managed by Auckland Council. Unlike other stadiums such as Western Springs and Mt Smart, Eden Park does not come under the suite of facilities managed by Regional Facilities ( a CCO or Council controlled organization tasked by the supercity legislation to  manage council owned facilities )

However, it’s an important stadium for Auckland and this Council has finally made the decision to include it when we get to discuss the final details of what our stadium strategy should look like for our region as a whole.

It has debt though. This debt has been historic with Council as the guarantor. The debt of $40 m arose from the redevelopment of the Park for the Rugby World Cup in 2011 which the former singular councils at the time agreed to contribute to and yet when contribution was called for, they reneged. ( note - some of the Councillors around todays table were Councillors of past Councils then)

So Eden Park was left to manage that debt, and as a result struggled to repay it. Council  ( as guarantor) had no choice but to take over the debt. In doing so we have saved Eden Park some money in interest, as our interest rates are more favourable. However Council resolved ( with my support) to continue to charge them interest and then a bit more ( still  better  for them than what they had with the  Bank). Why? It’s a lot of money and we need to be prudent too.

So why are they unable to pay off their debt?

The interest payments on their debt have been costly, about $15m since 2011. Council itself hasn’t helped either. We charge them rates ( Wellington based Westpac Stadium doesn’t pay rates) and these aren’t  insignificant . Thanks to Unitary Plan rules, they can only hold a maximum of 6 concerts a year as a discretionary activity.   Concerts make money for stadiums, but our rules and time around consenting for concerts they wish to host is long, costly, arduous and not at all guaranteed. This needs to change and there is work happening around that.

So why a grant and not, as the mayor suggested, a loan? ( noting nobody disagreed with  the actual amount)

First, trust and confidence. Up until a week before the Mayor and Councillors were to resolve on the issue, our staff had agreed with Eden Park representatives that there would be extra money in the form of a grant. This had been worked on for many, many months. To change our mind from grant to a loan at the ninth hour, wasn’t, in my opinion, working in good faith.

Second reason - It’s what we usually do with other organisations and groups. We give grants, they are supported with funding agreements which stipulate details around those grants, rules to follow, accountability etc… Some previous grant examples include those to the  Vodafone Events Centre, Trusts Stadium ( Waitakere City Stadium Trust), ASB Tennis Arena and even our Orakei Wards own Hyundai Marine Sports Centre ( newly built  Royal Akarana Yacht Club building)  by way of only a few examples. Why should Eden Park be treated differently?

Third reason, advice from the auditor general. The auditor General designed a good practice guide titled Principles to underpin management by public entities of funding non government organisations. This document clearly talks about grants not loans. In fact it specifically talks about sustainability of funding (remember Eden Park already has a big debt problem, it is not therefore helpful or good practice, to add to it) and the document also refers to fairness ( see second reason)

So was the grant a gift?

 No. Like all grants it comes with rules and stipulations which the Chief Executive through his staff compiles. It’s a grant UP TO $9.8m over three years. It’s not a set amount per year, it’s a funding envelope available to be applied for specific capital spend. ( I know one priority is turf replacement, which is twice its ideal 7 year age limit for use)

So in conclusion what I proposed was fair, was based on months of understanding and aligned with guidelines from the auditor general. It is only for 3 years, and whilst adding Eden Park into our stadium portfolio potentially saves ratepayers hundreds of millions in refurbishment of our own venues, it doesn’t preclude a bigger discussion sometime in the future around building a new stadium somewhere else.