Roughan: Sky City want to kill the convention centre deal

Key, Eagleson and Joyce might as well take this on the chin.  Sky City wants the tax payer to pay for their privately owned convention centre, or they can talk a long walk off Princess Warf

SkyCity chief executive Nigel Morrison has just talked this taxpayer out of an Auckland convention centre.

“Absolutely,” he said when asked if he wanted taxpayers to contribute to the project now that the cost had blown out. “This is an unprecedented investment in tourism infrastructure in Auckland. If Auckland doesn’t want it, if New Zealand doesn’t want it, quite frankly that’s fine with SkyCity, we don’t have to do this.”

It Seems Sky City doesn’t want their new pokey licences.

And in that case, there genuinely isn’t a deal to get on with.

It never occurred to me that they were doing us a favour. As a participant in the New Zealand economy I don’t want favours from the board and management of SkyCity, I want profitable business decisions from them. I’m old enough to have seen how sick this economy became when too much of its activity hinged on public finance and favours.   

A $500 million convention centre is not Christmas in the Park or fireworks at New Year, it’s a significant economic investment. I had little confidence in it until SkyCity stepped up. Now that confidence is shot.

Not only has the estimated capital cost risen beyond SkyCity’s calculations, but it is believed to be now seeking an operating subsidy, too. Clearly the thing is not economic. In an attempt to justify a public subsidy Morrison has resorted to that old canard, “infrastructure”.

That’s new.  They want us to chuck money at them every year to run it.

Ok, it’s dead.

Dead.  Dead.  Dead.

Unless National try and find some way to keep it alive by spending tax payers money on it.   It would kill their fourth term, but clear judgement seems to have been absent since the election.

Let’s see what is more important to National:  A fourth term or avoiding the embarrassment of being played like a fish by Sky City.

 

– John Roughan, NZ Herald

 


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  • MaryLou

    Nope. If they can’t run it profitably, we don’t need it. Clearly.

    • Champagneshane

      My only caveat is that if the government take it over, turn it into a COE, and have an irrefutable argument back up with solid evidence showing that the economic benefit our economy will outweigh any operating loss that may be incurred in the first five years. I am confident a convention center of the scale anticipated will fly given our position in the Asia Pacific region. The capacity of 3000 will capture most of the potential we are missing out on…..but someone needs to think about where they will all sleep while they’re here

      • MaryLou

        I’m tempted to agree with you, except that I’m not convinced of their ability to do reliable cost/benefit analysis. Surely one must have been produced for Kiwirail? Surely??

        EDIT: And surely Sky City did one even before making the offer. What has changed? Or are they just trying it on?

        • Champagneshane

          probably trying it on……

      • OneTrack

        Sounds great. What else can the government take over and turn into a SOE? Are there any examples of countries who have operated like this that we can use as a template?

  • Hard1

    “SkyCity Entertainment Group profits have taken a big dive, its normalised net profit for the June 30 2014 year down 8.1 per cent to $123.1 million.’
    That was the news in August. They’ve got cold feet. Less customers and more oversight on the high-roller’s source of cash. It must be board decision to pull the plug.

  • Dairy_Flat

    “Clear judgement seems to have been absent since the election “. Never a truer word spoken. I don’t know what is going on in National these days but if they continue displaying the level of ineptitude that has been apparent since the election they will lose a lot of good will soon. They need to come out and make it clear to Sky City that the long suffering taxpayer will not be extending any further assistance to them and that they can forget any more pokie licenses. Call their bluff – there is political capital to be gained by doing so.

    • mommadog

      Well said. Prior to the election I would have bet on National making the right call and telling Sky City to take a hike. Today I would not be surprised in Joyce gave them a key to the tax payer bank vault. Joyce has to know how unpopular that would be but he seems to think he knows better than everyone else. It would give the opposition some genuine fodder to complain about instead of the fictional dirty politics.

      • Whafe

        Agree totally, what has come over Joyce on this? What do we not know?

        This is such a simple no way, take a hike. The NZ tax payer is not propping up a convention centre that was a private investment in return for more pokie licenses

      • Don W

        Maybe Joyce is lining up a well paid job for himself at Sky City after his political life is over.

  • Whafe

    National need to kill this so called convention centre off, and real fast, each day over the break this deal sits in the death throes of Sky City saying this and saying that is harming National…

    All those spending time with friends and families, having bbq’s etc, this is being discussed…

    Take the scalp and kill this off now…

    Tax payer subsidies each year, get real…

    • MaryLou

      Yep – I reckon even from Hawaii, a shot of JK on the golf course saying this new proposition is so far outside the original deal the govt won’t look to pursue the matter further.

      That’d make great prime time viewing.

      Ed – spelling

      • Whafe

        Yep, would be a hole in one for JK, there can be no way that good spin can be put on this crazy change of plan…

        If so, there is loads we are not being told

        • MaryLou

          Interesting you say that. I often wonder now, what we’re not being told. Not just from govt over these deals, but also land settlements, media picking and choosing their stories etc. I have such high hopes for Freed

          • Whafe

            Agree, FREED me, FREED me real soon please……

            Each and every day exposed to the MSM is like being exposed to tripe.

  • Monito

    Yeap if its a big loss maker already we can all do without it. Since when did these big players have countries build their premises and financially share their operating expenses. Is $123.1 million profit not enough for them?

    • Hard1

      A new player is arriving soon. Profit will drop even further. Skycity will have trouble filling the pokie chairs that it has, let alone the new ones…

      Casino development

      Repeka Nasiko
      Thursday, September 25, 2014

      CONSTRUCTION work on the $290million casino near Denarau Island is expected to pick up now that Fiji has entered a stable political climate, says One Hundred Sands Ltd president Tim Manning.

      Speaking from New Zealand yesterday, Mr Manning said he was pleased with Prime Minister Rear Admiral (Ret) Voreqe Bainimarama’s victory.

      “We were very nervous about the elections because Mr Bainimarama’s closest rivals had said they would not allow the casino development to go ahead if they won the elections,” he said.

      “So we are quite pleased that Mr Bainimarama and his government are returning because now work at the casino can continue and we expect work to go full steam ahead over the next three to four months.”

      • Hard1

        Additional information. Very worrying for Skycity…
        Fiji Gaming License
         Allows up to 20,000 Slot machines
         Allows up to 5,000 Table Games
         Numerous other Las Vegas, Asian, Australian, and South Pacific type
        games – race and sport book, pari-mutuel wagering, etc.
         Table Game Wager Limits
         Multiple Gaming Locations – Denarau Island first casino site
         Internet Gaming allowed
         One Hundred Sands may develop and execute a slot machine and table
        game leasing agreement to transfer a portion of its’ rights to the 20,000
        slot machines and 5,000 table games to any future gaming operations
        conducted in Fiji
         Includes approval of Gaming Regulations, Code, and Minimum Internal
        Control Standards (MICs)
         Twenty year exclusive Casino license

        http://www.fijileaks.com/uploads/1/3/7/5/13759434/larry_claunchs_condensed_presentation_to_bainimarama__9-13-11-3.pdf

  • Reid

    Trouble is I guess the Sky City public poll results haven’t yet produced a clear answer to inform the govt as to what to think about this particular issue. Perhaps it’s all a bit too complicated even for those who are still wealthy enough to afford a landline and Curia despite trying very hard indeed just can’t get any statistically significant results.

    Of course the fact it was a no-brainer response since when Sky first came out with its “suggestion” is neither here nor there, to our ninth-floor political mastermind.

    He’s a bit like Captain Kirk when the shields are up and the siren’s blaring and Sulu is yelling something very hard is approaching at warp speed and Spock’s stroking his chin and explaining to everyone how extraordinarily illogical the whole thing is.

  • JAFA Gazza

    Dear Nigel Morrison.
    The fact that you are unable to make a commercial decision and invest your shareholders money into a convention centre is fine with me.

    If such a decion is not commercially viable – and doesnt provide the appropriate return…then DONT do it. Simple.

    But to suggest that the NZ taxpayer should underwrite your dreams is a step too far.

    You made a deal.You got concessions. Now build the damn thing and keep a cosh over your contractors. We are paying nothing.

    Business is business. You made a deal – now live up to it. Pfft.

    • Alright

      JG – well said (as usual). If this govt gives one more cent to this BS, I’ll vote for Dotcom.

      Here’s the thing…the jury remains out on whether NZ even needs Casinos. Whenever I (infrequently) go to Sky City the “punters” look so despondent I immediately want to leave.

      Mr Morrison (and his shareholders) can cancel their dreams of taxpayer welfare.

      One more dollar Mr Morrison and you’ll bring a government down.

  • Bart67

    Well, if they really want to go up against the NZ taxpayer, let them take their best shot! First question that needs to be asked is how much would Auckland and New Zealand suffer if they didn’t have a casino? How much would Sky City suffer if Auckland didn’t have a casino? I know who would lose the most in that situation! Let’s bottom line it, Sky City have everything to lose here, the rest of us will only gain more money in the economy, less self inflicted poverty, a reduction in idiot tax, more money in the economy, and we can sell the facilities to pay for Len Browns legacy! I say, screw em!

    • Alright

      Bart67, totally agree (see below).

    • Zeal23

      Excellent write Bart, but need to add- reduction in child abuse-the story of the kids locked in the car while their loving parents gambled comes to mind.

    • exactchange

      That makes no sense. There is no talk of not having a casino in Auckland. Not for the forseeable future anyway.

      The question is – who would lose if Auckland does not have an international conference centre. And the answer is not Sky City.

  • Aucky

    I still maintain that this is just hardball brinkmanship negotiating by Morrison. Sky City has nothing to lose and everything to gain by putting the hard word on the Government. Just say no Steven and after the obligatory harrumphing from Morrison we can get on with building this thing.

    • Alright

      Well he (Mr Morrison) can take his hardball and bowl it at other mugs.

      • Aucky

        He won’t though, he’ll back down. Joyce just has to prove himself to be the better poker player.

    • JAFA Gazza

      Of course it is. When was the last time a CEO looked at a project costed at $400m…decided it was a good investment…then suddenlt…and I mean “suddenly” the costs blew out buy over 30%???? I’d fire the contracts manager…re-let the project and tell the CFO to pull his head in.

  • Ratchette

    To quote Nigel Morrison ‘This is an unprecedented investment in tourism infrastructure in Auckland’ …… & Mr Morrison, to quote you once again ‘If Auckland doesn’t want it, if New Zealand doesn’t want it, quite frankly that’s fine with SkyCity, we don’t have to do this.” And that is Sky City’s choice.

    However I point out that if Auckland has never had it, then Auckland and New Zealand will never miss it.

    So, Nigel Morrison, to put it succinctly either get on with the job or take a hike. Goodbye.

    • Aucky

      We will miss it though Ratchette. We will miss the new jobs, the large conferences that we have not been able to bid for previously and all of the downstream investment in infrastructure that this project will bring with it. It will impact on other tourist centres as well because from a typical international conference of say 3000 people in Auckland a significant proportion will tour NZ using a multitude of small owner-operated businesses. Oh yes, if this does not proceed it would impact our future tourism very significantly.

      • Sailor Sam

        I doubt if there would be any 3000 person conventions come to NZ. They would have to come from the USA and the yanks will not travel all the way to NZ just to have a convention.
        I have been a member of Toastmasters for along time and their conventions have only twice been outside of the USA.
        Can you enlighten us as to who would come and bring 10 plane loads of conventioneers?

        • JAFA Gazza

          Agree. If it was such a sound decision, Sky City would be all over it like white on rice. If its not a commercially viable option….why should the tax payer fund it? If Joyce thinks its a brilliant idea…then let the government own and build it…So angry that Sky City wants us to underwrite their profit and shareholder dividends.

          • Hard1

            Maybe Skycity can’t finance it.

        • Aucky

          They are being booked as we speak Sailor. We aren’t talking solely about Americans here, we are talking about Asia where the real conference business is to be sourced. No conferences for our neck of the woods? You have to be joking – Sydney, Melbourne and Brisbane’s conference venues are so much in demand that they are planning additional ones.

        • Champagneshane

          A helluva big chunk of Asia Pacific business…believe me, 3000 is not a big convention…it’s moderately sized…you have to get up to 10 to 12,000 to slip into the big convention category and I’ve been to many of them. The planeloads arrive over several days…my concern is in the accommodation and where you sleep them all

          • Bluemanning

            European international companies with involvement in Asia would give their preference to NZ however there isn’t a venue available that has the facilities, ‘entertainment’ and capacity located in Auckland. NZ is a favored destination for European and Asian business people they just love the idea of NZ, and would jump at the chance of a business paid trip particularly if they can bring their spouse.

      • Champagneshane

        If you get a chance try and work the numbers and see how long it takes to recoup the governments investment and very probable on going running costs. Your argument is very clear and I support it, but only if the numbers work

      • Ratchette

        Actually I agree with you.

        In my opinion Morrison is a poor negotiator. He should know that if he succeeds with getting government funding from this National Government, then New Zealand would most certainly have a coalition from hell elected 2017. This would not be good for the Sky City operation and certainly not good for Sky City shares. He should have taken the very difficult option and negotiated with Joyce. Also there are numerous other options to raise funds to build the conference centre. Instead he took the easy option & thinks going public will put pressure on Joyce for the $100 million. How dumb. Sky City have not won any support from Aucklanders or Kiwis over this clumsy episode.

        Sky City board should sack Morrison and elect a Chief Executive that can get the job done.

  • Sailor Sam

    If the government does not tell Skycity to take a jump, then this country will have a Green/NZFirst/Labour government in 2017.

    • JAFA Gazza

      God no. Please say it wont be so……….

    • The Accountant

      In that order of prominence?

  • caochladh

    Morrison must know that he needs to keep his shareholders happy and to do that he needs to provide leadership that equates to putting money in their pockets. He needs a convention centre and the additional gaming licences more than the city does to keep the casino cash flowing. If the government digs in and keeps to the original deal and Morrison walks away, I’d say Morrison will be thrown under the bus. If Morrison is as astute as he pretends to be, he will go back to the drawing board and cut his cloth to suit his own purse, not ours.

    • Champagneshane

      Brilliant comment…This sums the whole fiasco up in a nutshell. If a MOD is reading this may be a candidate for the featured comment….and hopefully cabinet’s inner sanctum will take notice…..but they’re smart guys aren’t they?…they would have all this figured out by now won’t they?

    • exactchange

      Sky City already operates outside NZ, and will just turn its focus away from Auckland. That’s a lot of jobs lost.

      Some of the people who want the deal gone probably were agin it in the first place, for whatever reason.

      • caochladh

        Yes, Adelaide and Darwin, but Auckland is the largest of all their casino’s and generates the best cash flow. With 90% of the gambling profit generated by local patrons and Auckland showing the best growth potential, I would say he would be stupid to walk away.

        • exactchange

          If Sky City can’t make a decent profit from a conference centre and the additional pokies why wouldn’t they walk away.

          The company knows how to run casinos. They can invest outside NZ.

          • caochladh

            Why would they have put it on the table in the first place then?

  • symgardiner

    Conferences are like airlines. It’s virtually impossible to run them profitably for any period of time. They are more about status and showing off. So for heaven’s sake Steven, let it die gracefully.

    • Cadwallader

      Yes; akin to an Olympic Games bid which too, are often cited as creating infrastructure and long-term improvements in tourist numbers. I say BS on conferences and yes to SKYPE!

      • LabTested

        I don’t Skype anymore as it is pretty rubbish these days (since Microsoft paid $8B for it it has gone down hill), but I do VIBER if I need to talk business. However I think Conferences are for the Trougher element. UN Climate change meeting to discuss where their next meeting will be, etc.

  • JAFA Gazza

    Even Pants Down Brown say that the ACC cant cover the shortfall. REALLY? So we have lets spend 2.1 Billion on an “infrastructure” project ” that will benefit 0.1% of the Auckland populace…but we cant afford $150million to cover the shortfall in a convention centre…..Really? REALLY? Seems like the lunatics have finally got control of the asylum. And they have crayons…….

  • Disinfectant

    There will come a time when most people will learn that conferences are a waste of time and resources.
    I have never been to one and learn’t something new. Most are deadpan boring with boring speakers one after the other who take an hour to say something which could be said in 15-20 minutes.
    Consequently I haven’t been to one since I was about 25.

    • exactchange

      People don’t go to conferences to learn stuff.

    • Aucky

      Hardly relevant. MICE (meetings, incentive, conference, exhibitions) business is the fastest growing sector of tourism. One of the main target markets will be Chinese incentive business. Do you know that the Avon ladies who achieved their sales targets were rewarded with an all expenses seven day package to I think Singapore – there were ten thousand of them and the programme had to be run in shifts. That’s the sort of business we are talking about and we need the conference centre so that they can have their rah rah sessions. That incentive is run every year in China and thats the sort of business we need this facility for.

      • Hard1

        That’s right, about a third of all travelers in China are govt. employees off to a meeting, convention etc., almost always held at a tourist destination.
        I would make it mandatory that all NZ conventions be held at Skycity for free, if Joyce deems taxpayer cash a necessary input to getting this monolith built.

  • Keanne Lawrence

    This would seem to be a real solution for the blown cost of the convention center. Time for a roll back. No more additional porkies and no white elephant structures. Happy, happy, joy, joy all around.Lol

  • Mine it,Drill it,Sell it.

    The best result for Sky City is National support this deal and then get thrown out in 2017

    With a Labour led government dishing out welfare to the help fight poverty Sky City shareholders would be rolling in it.Key and Joyce need to kill this deal NOW !!!!!!

  • Excitedly awaiting Whodunnit

    Maybe Chch can build a big centre instead using their current backers and maybe a new casino would sweeten the deal too.

    We have direct air travel here from asia and we have the tourist stuff just down the road too so maybe it will be a nice injection fin the arm for Canterbury (and the Sth island).

    Sick of the big fish in NZ laying out the terms of their involvement in anything they do

  • Champagneshane

    My only caveat is that if the government take it over, turn it into a COE, they must have an irrefutable argument backed up with solid evidence showing that the economic benefit our economy will outweigh any operating loss that may be incurred in the first five years. I am confident a convention center of the scale anticipated will fly given our position in the Asia Pacific region. The capacity of 3000 will capture most of the potential we are missing out on…..but someone needs to think about where they will all sleep while they’re here

  • Morgy

    Not one cent of tax payer money. That was and is the deal kiwi voters understand. Trading political capital is important for the right reasons. This is not one of those examples.

  • Andy Brown

    Now, if we can only get MoFAT to hold their conferences here …

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