Auckland councillors have voted to approve a $63.3 million dollar bail-out package for Eden Park.
The agreement was hammered out in a protracted, and sometimes heated, meeting on Tuesday by the council’s Finance and Performance Committee.
The deal includes the council taking over a $40 million loan from ASB Bank to the Eden Park Trust, which it had previously been a guarantor for. The loan will be over 10 years and will include interest and will be secured against the trust’s assets.
The package also includes a $9.8 million grant for maintenance and upgrade work, including replacing the stadium's playing surface. While a $7 million working capital facility currently between the Eden Park Trust and ASB Bank will be consolidated with an existing loan of $6.5 million owed to the Auckland Council by the Eden Park Trust which predates the creation of the super city.
Mayor Phil Goff is keen to emphasise that the council’s offer is generous.
“We’re offering a package worth $63.3 million to Eden Park Trust, this is a huge sum of money,” Goff says. “We have two obligations here. One is to help Eden Park Trust, but our other obligation is to our ratepayers and residents.”
Goff had supported giving the trust a $9.8 million interest free limited recourse loan, instead of giving the money to the trust as a grant, which was finally agreed to by councillors.
He said it wouldn’t have had any impact on the upgrade works Eden Park has planned.
“If the trust does go under or they realise their assets we get our money back. The ratepayers’ interests will be protected.”
But councillor Desley Simpson had instead recommended giving the trust a $9.8 million grant and this was the final form that was approved.
Finance and Performance Committee chairman Ross Clow says he pleased to have reached an agreement to help the stadium.
“We are pleased to have reached a resolution for the Eden Park Trust Board which will allow them to carry out crucial maintenance work and enable the stadium to continue to host major international sporting events, concerts and community events," Clow says.
But he says he would have preferred to have given the trust a limited recourse loan, instead of a grant as it would have allowed council to recover the costs if Eden Park was sold at a later date.
“I just don’t think it’s very responsible for us to give it as a grant in this case. We don’t have any interest in the Eden Park Trust,” Clow says. “But where’s the government in all this? We’ve been left holding the baby again.”
The trust’s financial predicament can be traced back to a historic $40 million loan it received from ASB in 2010 which it secured after the former Auckland City Council agreed to act as a guarantor.
The now defunct Auckland City Council entered into the agreement under former Mayor John Banks in the lead up to the 2011 World Cup.
According to the Eden Park website, most of the costs involved in redeveloping the stadium for the 2011 Rugby World Cup were funded out of a $190 million grant from the government. But the now defunct Auckland Regional Council and the region’s other city and district councils were expected to contribute a further $50 million towards the works.
However, aside from $10 million from the Auckland Regional Council, the other local authorities refused to pay and the Auckland Council was forced to act as a guarantor on the remaining $40 million dollar construction contract to ensure the works, which included the redevelopment of the Southern Stand, were completed in time for the 2011 Rugby World Cup. The loan has a fixed repayment date of September 30, 2019.
But according to the Eden Park Trust’s 2018 Annual Report last year the Auckland Council refused to continue as guarantor after that date.
According to this week’s Finance and Performance Committee agenda the council was left with few options, aside from taking over the loan.
“If the loan were not taken over by council in an orderly manner, there is high likelihood of the guarantee being called and council needing to try and recover the amount owed through its guarantee security, likely to be a long and expensive exercise.”
And despite the latest financial fiasco Auckland Council still has no ownership rights or control over the stadium.
14 Comments
Rugby turned itself into a multi million business over the last 30 years and still demands locals provide them free stadiums. That's the big con. Their actions have essentially destroyed rugby as a wonderful local activity participated in by New Zealanders at all levels. It's a fraction of what it once was. Except on TV.
There is absolutely no need for ratepayers (or taxpayers) to contribute one cent.
Following the American model of stadium investment.
https://news.stanford.edu/2015/07/30/stadium-economics-noll-073015/
Another pet project for Phil Goff and a bunch of council paper pushers. Auckland ratepayers don't want this added to the burden they already carry of funding the councils wasteful ways. The council already has too much debt, they need to work to decrease it not take on more liability, how can this decision be right. Five years from now we will be baling them out again, time to cut losses and make them responsible for bad management and decision making. Makes me wonder why this chap is the Mayor, he has no loyalty to the ratepayers of Auckland.
Council needs to implement a long term strategy here as opposed to kicking the can down the road. This facility is massively underutilised. Either they need to commit to buying up all the surrounding properties, thereby changing the resource consent enabling them to use the stadium to its full affect. Or cut and run. There is a massive development potential there should they decide to sell the land to a developer. The proceeds of which could be channelled into any future facility. As a ratepayer the current scenario is untenable
... not sure why we keep bailing out or upgrading Eden Park ...
Where's the big Vision from our leaders ?
... a stadium near ( not in ! ) the waterfront would set up the downtown area nicely ... multipurposed for other events ... including a mall , cafes , hotel accomodation , a direct transport link through to the airport ....
Get with it guys , this is the 21'st century ... time to kick ass and just do it !
Poor council decision-making is a key part of their DNA. It is a pre-requisite feature for all governance (it seems) but especially local governance. The city fathers (& mothers) have lost the respect of the local populace & it would not surprise me to see some more councils fold under increasing debt pressure.
We are living beyond our means, whilst not providing the basic infrastructure to continue functioning as a going concern, at the same time paying hundreds of people way beyond their actual value to the wider community to continue to lead us.
It is lucky that this can all be financed by the Awkland Petrol Tax for idling in Traffic.
It is lucky Awklanders are willing to pay endless money to live there. park there, commute their sentence...there.
It is a worry though that the Awklanders may be stuck in traffic for a kick-off and maybe never even see a bunch of over paid, but under funded laddies score a goal......if they ever do.
Stick to TV, Stick it to the Tax wanabees, hiving off your sport fanatisism munny spending up large. You can even see action replay.......but do not use Sky as the Sky is the limit these days......Old hat, passed around...begging for coin....poor barstewards.
This never ending spending of other peoples munny is beyond a joke...even though it is Friday...
Pause for thought...1:30 I believe is the time....think of others who came here for peace and quiet..
nuff said for one day...
Friday....is now beyond a Joke.
Well, maybe in future...but we shall have to see...how things...Turn Out.
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