Eden Park’s grim future aired in finance report
The country’s premier stadium, Eden Park, could run up losses of nearly $80 million in the next decade.
It also can’t afford an estimated $62m of maintenance and upgrades needed over the next 10 years.
The grim financial future for the central Auckland stadium was laid bare in a report by consultants Ernst and Young, obtained by Stuff.
EY said the stadium’s trust board probably wouldn’t be able to pay even the interest bill on its almost $50m of loans in 2019 and the future hosting of major events could be at risk.
The bleak assessment was commissioned by Auckland Council which has been considering, behind closed doors, whether to bail out the venue that hosted the 2011 Rugby World Cup final.
The council guarantees the repayment of Eden Park’s $40m loan from ASB Bank, which is due to expire in October and which the trust has no means to pay. Eden Park’s annual deficit was forecast to deepen this year to $8.2m from $6.8m, and EY did not see an upswing likely in the future.
The EY assessment of Eden Park’s finances highlighted a cocktail of worsening factors which posed both financial and political challenges for the council. The most immediate was the financial hit, due this year, from a big cut in major sporting events at Eden Park.
The stadium will host only one All Blacks test instead of two due to the Rugby World Cup in Japan, losing an estimated $1.4m in revenue.
Only two cricket internationals will be hosted instead of the usual four, and there will be one less Super Rugby match.
The partially one-off dip in major sporting clashes was just the tip of a financial iceberg which included the risk of declining revenue from other sources.
The report said Eden Park management thought up to eight of 18 corporate suites may not be renewed after leases expired last October, with revenue forecast to fall to $3.6m in 2019 from $4.3m two years ago.
Membership numbers are picked to fall by 99, with revenue falling $1.2m over two years.
The cumulative effect is the stadium’s revenue falling 14.7 per cent next year to $14.1m – 62 per cent lower than two years earlier.
The evaporating cash flow is expected to hit ‘‘business-critical’’ maintenance such as replacing the turf at Eden Park, floodlighting and big video screens.
‘‘Should major capital expenditure projects remain unfunded, it may result in an inability for Eden Park to host major events,’’ said EY.
The floodlighting failed during testing prior to a day/night cricket match last March, and EY said management believed failure could recur without replacement, costing $5.6m.
EY said the 15-year-old turf should be replaced every seven years, with an estimated bill of $1.5m.
Some commercially-sensitive figures have been deleted from the report obtained by Stuff, but there is considerable detail highlighting the quandary facing Eden Park.
The stadium is owned by a trust board. Five of its nine members are appointed by the Government, with others appointed by the Auckland Rugby Union and Auckland Cricket Association.
The five additional appointees were created when taxpayers pumped in $190m to revamp the stadium for the 2011 Rugby World Cup but there is no ongoing Government involvement.
At the time of the RWC revamp, seven of Auckland’s then-eight local bodies declined to contribute, forcing the trust board to raise the $40m loan which Auckland Council now guarantees.
Eden Park also borrowed $6.5m from the council, which has no payback date.
The council is understood to be close to considering paying off the trust’s bank loan but how it would then exercise influence or control over Eden Park’s future is not yet clear.