Sky Convention Centre unlikely to be profitable. So why build it at all?

You have to wonder at the logic of SkyCity. Apparently their ‘gift’ to the nation of a convention centre won’t make them any money.

SkyCity’s international convention centre may end up running at a loss, compensated for by generous gambling concessions.

At the company’s annual general meeting in Auckland on Friday, chairman Chris Moller said the first sod of the huge development would be turned before the year was out.

However, Moller said the board was “under no illusion” that the centre itself would generate any significant profit.

Instead, the return on the $450 million investment will come from gambling concessions granted by the Government, including extension of the Auckland casino licence until 2048.   

Speaking after the meeting, chief executive Nigel Morrison said the centre would be “marginal” as a standalone business.

“We would hope to make a profit out of it, we would hope to do a good job and have some great events out of it – and we might.”

But even earning a few million dollars of profit would not justify the huge capital investment, he said.

Sounds like a bit of risk mitigation there. Perhaps they will build it, then declare that as a business unit it isn’t working, but hey, we have the space and the building now so we will convert it to a new gaming area.

I’m not sure I’d want someone running my business who is planning on spending $50 million with no apparent profit motive.

I’d be looking out for a shake down of the government shortly.

 

– Fairfax

 


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