Latest News

Back to Latest News back

 

Risks of local government investment in major venues highlighted in Forsyth Barr stadium study

Risks of local government investment in major venues highlighted in Forsyth Barr stadium study
May 25, 2019

Funding and development of Dunedin’s Forsyth Barr Stadium was shrouded in a lack of financial clarity, creating “dangerous” potential consequences from the significant debt created, according to newly published research from the University of Otago.

In the opening abstract of his newly published study, Big Stadium, Small City: A Catalyst for Turbulence and Governance Reforms, Associate Professor Mike Sam from the University of Otago explains “sport stadia are among the most contentious of public expenditures for local government.”

The research, published today in the journal Urban Policy and Research , focuses on the decisions by local government officials in the city of Dunedin - with a population of 130,000 - to approve and finance the city’s covered stadium - now known as the Forsyth Barr Stadium - which was completed in 2011.

Associate Professor Sam, who specialises in research on sports policy, says the paper draws on Dunedin’s case to investigate the “turbulence” for a small city arising from public-private arrangements used to establish the project’s feasibility and financing.

According to Associate Professor Sam, these arrangements particularly refer to “the outsourcing of advice, communication and fundraising to a charitable trust - Carisbrook Stadium Trust, and the formation of council-owned companies into a complex financing apparatus to place liabilities off-balance sheets and obfuscate costs.”

He notes that the ‘small city’ aspect is key to the study. The stadium cost $1,540 for every urban resident - proportionately equivalent to a city of one million people spending one and a half billion dollars on a sport entertainment facility.

Dunedin’s project cost $224 million with the bulk coming from the Dunedin City Council ($163 million) Otago Regional Council ($38 million) and central Government ($15 million).

Associate Professor Sam explained “getting this approved was a difficult sell for the local government officials of the day, and while the financial mechanisms were not corrupt, my research found the funding schemes effectively muted public opposition by way of being so complex and impenetrable.”

Associate Professor Sam highlights that along with the general public, few of Dunedin’s City Councillors fully understood the relationships between the Council Controlled Trade Organisations (CCTOs) and the City’s finances, with the study revealing a DCC manager boasting “there are only three or four of us who actually understand it,” in an interview with study researchers.

The study also outlines how, responding to public opposition, the High Court could not make sense of the financing scheme either, ultimately agreeing with DCC lawyers that taxpayer contributions (and not total debt) were the yardstick for evaluating the project.  

Associate Professor Sam says the consequences of this debt would include stadium bailouts, the deferment of community projects such as playgrounds and walkways, and selling-off of assets such as Citibus. One high-profile consequence was the council owned utility company Aurora Energy being found negligent in upgrading its electricity network. A potentially dangerous result of what the company’s Chief Executive explained was born out a need to pay $30million towards the stadium.

Dunedin City Council governance structures of its companies changed as a result.

Associate Professor Sam continues “there was a City Councillor supporting the stadium to go ahead, who also sat on the boards of a number of council owned companies through which stadium debt was spread. This prompted the eventual expelling of the Councillor from his role as chairman of Dunedin City Holdings Limited, and a much-needed review of the policies around governance of council-owned companies.”

The DCC also had to change the often brick-wall approach to requests from opponents for access to information held by the Carisbrook Stadium Trust who essentially built the business case for the stadium that was approved by the DCC.

Associate Professor Sam hopes the lessons learned from Dunedin’s case will help inform other centres such as Christchurch - another New Zealand city investigating the building of a new stadium.

Associate Professor Sam added “other small centres should take note of what happened in Dunedin, and pay particularly close attention to private-public partnerships and the outsourcing of key planning work to consultants.”

He concludes that the study ultimately shows that public-private partnerships are not inherently good or cost effective. They need citizen and local government literacy and oversight to make them so - small cities can learn from each other and perhaps be better at this than larger urban centres.

Images: Associate Professor Mike Sam (top) and Forsyth Barr Stadium hosting Super Rugby's Highlanders (below).

Related Articles

24th May 2019 - Taranaki Regional Council agrees to fund Yarrow Stadium renovations

7th May 2019 - Forsyth Barr Stadium welcomes strong start to year

11th January 2019 - Report suggests grim financial future for Auckland’s Eden Park

12th November 2018 - Dunedin to host 2022 World Leisure Congress

14th September 2018 - Christchurch City Council agrees to allocate $220 million for new roofed stadium

2nd August 2018 - Report shows community sport Infrastructure delivers $16 billion of benefits

25th March 2018 - Otago researchers reveal childhood predictors of becoming overweight or obese

6th September 2017 - Boom period for concerts at Dunedin’s Forsyth Barr Stadium

3rd August 2015 - Forsyth Barr Stadium looks for first annual profit

17th March 2014 - Gosford City Council’s new approach to management of Central Coast Stadium

4th July 2012 - Audit NZ warns Dunedin City Council over Forsyth Barr Stadium costs


Asking a small favour
We hope that you value the news that we publish so while you're here can we ask for your support?

The news we publish at www.ausleisure.com.au is independent, credible (we hope) and free for you to access, with no pay walls and no annoying pop-up ads.

However, as an independent publisher, can we ask for you to support us by subscribing to the printed Australasian Leisure Management magazine - if you don't already do so.

Published bi-monthly since 1997, the printed Australasian Leisure Management differs from this website in that it publishes longer, in-depth and analytical features covering aquatics, attractions, entertainment, events, fitness, parks, recreation, sport, tourism and venues management.

Subscriptions cost just $90 a year.

Click here to subscribe.

 

supplier directory

The Complete Guide to Leisure Industry Products & Services.

See the directory see all

SENtag

Developed in Europe, this innovative system offers a safety management solution for swimming pools that checks individual swimmers via their wristband - monitoring their depth and time. Sensors…

read more

Aquatics / Hospitality / Safety / Technology / Waterparks

 
 

BODY BIKE AUSTRALIA

BODY BIKE® International is a leading manufacturer of indoor bikes with a 20-year track record of creating the best indoor bikes. Stay connected with Body Bike Australia…

read more

Fitness / Recreation / Sport / Technology / Wellness

 
 

HTS Group Ltd

HTS Group Ltd provides a complete design, system integration, installation and maintenance package to the transportation, traffic engineering, parking and sports timing industries in New Zealand,…

read more

Aquatics / Events / Sport / Technology

 
 

Ecoline

Ecoline is a highly experienced and skilled company that offers world-first technology in safety, protects the environment and provides a unique and challenging custom-made adventure and educational…

read more

Attractions / Environment / Safety / Tourism

 
 

LINKS MODULAR SOLUTIONS

Links Modular Solutions are a leading provider of high-quality, innovative software solutions for leisure facilities. Our software suite includes modules such as POS, Classes, Members, Facility…

read more

Access / Billing / Finance / Fitness / Technology

 
 

GEOFF NINNES FONG AND PARTNERS

Geoff Ninnes Fong & Partners (GNFP) is a structural, aquatic and civil engineering consultancy with broad experience in the design of new municipal and institutional swimming pools, hydrotherapy…

read more

Aquatics / Consultants / Design / Venues

 
 

AIS Water

AIS Water, the trading name of Australian Innovative Systems, is a multi-award winning, Australian owned leader in the design, production and supply of commercial and residential chlorine generators…

read more

Aquatics / Safety / Technology

 
 

Tim Batt Water Solutions

Tim Batt Water Solutions are at the very forefront of the commercial aquatic business in Australia, with over 30 years specific experience supplying and installing chemical control and dosing…

read more

Aquatics / Environment / Recreation / Technology / Venues

 
 
 
 

get listed with our suppliers directory

Get your business noticed in our targeted directory. Viewed by 10,000 industry professionals per week!

list your business