Hefty cost of closed stadiums to hit hard
The closure of Hamilton’s three main sporting arenas during the coronavirus lockdown is set to result in a $1.6 million hit to ratepayers’ pockets.
Sean Murray, Hamilton City Council general manager of venues, tourism and major events, will detail the financial situation of the stadiums at a meeting of the council’s economic development committee tomorrow.
His report will provide a summary of the activity of H3 – the council’s business unit responsible for the city’s premier venues – during the third quarter of the
2019/20 financial year (JanuaryMarch), as well as outlining the projected repercussions of Covid19 on the business.
FMG Stadium Waikato, Seddon Park and Claudelands Arena are all sitting stagnant thanks to coronavirus putting the brakes on all kinds of events, and the venues are still burdened with fixed costs, such as depreciation and maintenance, whether the doors are open or not.
But during this unprecedented time, there is nothing to offset those costs, and H3’s budgeted year-end (June 30) revenue from activities has nosedived from
$7.874m to $6.273m due to a third quarter where the health pandemic swept into New Zealand.
While the cricket season escaped mostly undamaged and
H3 have a flat-fee retainer arrangement at Seddon Park, it’s the two other venues where there have been major effects.
With Super Rugby and the ANZ Premiership netball competition put on hold, FMG Stadium Waikato and Claudelands have had no action from the Chiefs or the Magic, while both venues have also been ravaged by the cancellation of bookings for various events and functions.
Under a move to level two restrictions, both sports competitions are planning a return as early as the middle of next month, and while the netball is set to be staged at just the one venue in Auckland, having rugby back will be big.
‘‘We’re just hanging in there and hoping,’’ Murray said of a potential return to action for FMG Stadium Waikato.
‘‘There’ll be some big changes, without a doubt. But we’re ready for them and we’ll do whatever we can to get events happening there.
‘‘We can get it back to normal operation in a matter of days.’’
Part of H3’s projected revenue loss also comes in the form of three months’ rent relief to their tenants, such as the Chiefs, until the end of June.
But thanks to a stronger than expected start to their year, H3 are still going to hit their original budgeted annual revenue – being
$1.545m above forecast over the first three quarters.
More than half – $842,000 – is from sport, with January’s NZ Sevens the major driver, having not been accounted for due to the event not being confirmed at the time of budget setting.
A revised draft budget for the next financial year (2020/21) paints a bleak picture, though.
It shows H3’s total revenue dropping from $6.067m to $3.789m, and hence direct operating costs being slashed from $12.304m to
$10.613m, in order to record an operating deficit of $6.824m – still
$587,000 worse than initially budgeted.
Murray said, however, that forecast was prepared on very much a worst-case scenario, excluding the likes of big conferences and exhibitions at Claudelands, and even any Super