Hamilton Audit shock

[Mark Petch]

Hamilton Mayor Julie Hardaker yesterday confirmed the cost of the annual V8 Supercar race had ballooned to $27.4m over the three years the city has hosted the event.

The Waikato Times understands the council paid confidential hosting rights of more than $4 million from its events sponsorship fund. The new figure is approaching three times the $11m figure councillors claimed they had previously understood.

The 27.4m is made up of $17.98m for set-up costs, $2.9m for related costs, $5.1m for operational costs and a $3.5m cost to transition the event to a new promoter, offset by $1.5m in revenue.

The spreadsheet outlining V8 costs also revealed the council had spent a further $3.5m to reimburse Hamilton suppliers left out of pocket by former V8 promoters Caleta Streetrace Management. The council penned the new deal in May, which councillors had been told was to cover transition costs from the old promoter to the new one, as part of its new agreement with V8 Supercars Australia.

The new contract also cost the council another $130,000 and $85,000 for the cost of providing Seddon Park for two music concerts - ZZ Top and Good Charlotte - which will be held at next year's event.

Councillors yesterday voted unanimously to appoint a lawyer outside of Hamilton to investigate whether council's processes were flawed. The review will go back to the first business case study presented to the council in 2006.

Hardaker, who revealed the full costs of the event as part of her election promise, indicated she was horrified the council had approved the spend without having all the information in front of them.

"Some councillors have used the words misleading and smoke screens and I think this (review) would lift this up if it needed to be lifted," she said.

"It's glaringly obvious it's made no money."

Council acting chief executive Blair Bowcott confirmed councillors were not presented such a high level of detail about the event when they voted in April this year to extend the V8 contract until 2017.

The revelation was the first "full and frank disclosure" on the V8s councillor John Gower had seen.

Councillor Roger Hennebry said the council had been misled because he had never been given the real figure when he had asked on numerous occasions for the full cost.

"I know we weren't given this information. We are now going to be the whipping boys for the media and the public. When we ask how much, we need it straight up."

Councillor Ewan Wilson's request for the Auditor-General to review the process was diluted to a request for a ratepayer-funded external audit to see if the process of communicating information to councillors over the event was flawed.

Wilson said he was not on a witch hunt.

"It raises the question about whether this is an orchestrated manipulation of facts."

He questioned whether council processes were robust enough.

Meanwhile, the mayor's unveiling of the cost of the V8s showed the council expected to make a $360,000 profit from next year's event. The total setup costs were $17.97m (contrary to $7.95m infrastructure cost cited in the council's long-term plan) with the remainder of the money funded from council's internal cash reserve.

Hefty infrastructure costs in the breakdown included $3.1m on concrete barriers, $2.25m on purchasing the Pit Lane building, $2.4m on Pit Lane ground works and $2.9m on roading.

A further $2.293m was spent on upgrading other rugby fields including $1.813m on Beetham Park due to the Waikato Stadium No 2 ground being given up for the V8s and disruption to Willoughby Park and Fraser Tech Park. The council has also spent $3.75m on operating costs over the past three years. In contrast only $1.525m operating revenue had been made in the past three years.

Hardaker said the city had a contract to host the event for the next four years and needed to support it.

[GTRMagic]

Story Here

Its funny, event promoters sign up to taking a round of the series, knowing it shall take some time to build a following, to get the operational efficiencies optimised to reduce cash outlay, and at the first sign of trouble, run for the hills, looking for everyone else to blame but themselves.

Chillax people..

[fomoco]

Originally Posted by GTRMagic

Story Here

Its funny, event promoters sign up to taking a round of the series, knowing it shall take some time to build a following, to get the operational efficiencies optimised to reduce cash outlay, and at the first sign of trouble, run for the hills, looking for everyone else to blame but themselves.

Chillax people..

You may be right, but then again, Councils are elected by the people. One thing a council should never get involved with is being the promoter or bailing out a failed promoter. You have to remember this:

"every tax payer funded event, or civil works-Gateway bridge in brisvegas- needs to be audited"
Why you might ask:

Simple: The next time you whinge that the Govt has to increase or make a new tax is to pay for these things, usally due to exhorbinate spending and or waste, then the new incoming gov, Local,state, or Fed see's the cost's and s*** bricks. The people will want to know how are my rates and taxes being spent. It's only natural.

You do however have a valid point, let it build up , something like Clipsal and yes it will return a profit.

GTR you are know the Premier of Vic, are you going to keep paying a wrinkled out fart in England millions just to have a race for three days, that the Crown casino makes more than the govt pays for the privilage?

[peckstar]

what concerns me here is who in their right mind thought the 3 year cost would be only 11 million.

every other street race has costs to set up and 11 million is not enough to set up the track as the above numbers show 17.98m to make th initial construction of the track

SA government kick in about $3m a year for clipsal, so just using that i would have said it would cost more

I detect some other issue here, some one is trying to get something

I've searched the forums and havent been able to find a press release that suggest a 3 year spend of 11m is to be expected

[rik]

Originally Posted by Mark Petch

In contrast only $1.525m operating revenue had been made in the past three years.

The council certainly sound clueless, but how could there only be $500K revenue per year??? Clipsal for comparison has around $20m per year from tickets, hospitality, sponsorship, merchandise, etc...

See: http://www.audit.sa.gov.au/09-10/b/b...rt%20Board.pdf

[nomad_n]

Originally Posted by rik

The council certainly sound clueless, but how could there only be $500K revenue per year??? Clipsal for comparison has around $20m per year from tickets, hospitality, sponsorship, merchandise, etc...

See: http://www.audit.sa.gov.au/09-10/b/b...rt%20Board.pdf

To true mark, I can't see how hamilton only made $500K a year either. As I tried to get accommodation for next years event and all the places are selling the accommodation for rack rates... So when you are selling all the rooms for top dollar then there's a small fortune just there.

[Just Do It!]

Hamilton's i-Site arranges all hotel and motel accommodation for the event. They clip the ticket per room, which would help to make up the $500,000 per year of revenue that the council makes from the event.

This figure seems to speak of direct revenue that flows back to the council, not the spending that is generate for the Hamilton/Waikato region.

There also seems to be some double-reporting of figues too. The $3.5 million to transition the event from one promoter to the other seems to be the figure that was used to pay out of pocket suppliers.

The provision of Seddon park for two concerts costing $215,000 is interesting as well - perhaps they agreed to pay the appearance fees?

The other interesting question that might be posed is how many of those doing the bleating will be enjoying the Montana Catering and the Lion Nathan Beer and Wine at the 2011 event in the Hamilton City Council corporate suite?

Will the seemingly opposed Mayor Hardaker be in attendance?

[Trev Campbell]

Ha Ha, no surprises thatthe event is a failure. It always looked to me to be another Canberra waiting to happen. Send the race back to Pukekohe, Taupo or Hampton Downs

[Oreti kid]

Originally Posted by nomad_n

To true mark, I can't see how hamilton only made $500K a year either. As I tried to get accommodation for next years event and all the places are selling the accommodation for rack rates... So when you are selling all the rooms for top dollar then there's a small fortune just there.

Mmmm so you are going to sneak out of the Southern Land and flag Hamilton if you get a chance, could be a hanging offence!!!!!

[Marcos WTF]

Originally Posted by Trev Campbell

Ha Ha, no surprises thatthe event is a failure. It always looked to me to be another Canberra waiting to happen. Send the race back to Pukekohe, Taupo or Hampton Downs

Don't reckon it'll happen. Street races are (alas) the future. Look at how their numbers have grown.

Besides there's much more opportunity to fleece the punters at street circuits rather than a permanent track. We can't have people bringing
their own food & drink in, can we?

Can't have the punters comfy in their own chairs taking up space,
gotta cram 'em into a crappy, uncomfortable folding seating.

That's one of the reasons I love club racing at Lakeside. Good racing,
good value and I can bring the ute, esky & BBQ.

And only 3 stations from home.

[D.R.T.]

Originally Posted by Marcos WTF

Don't reckon it'll happen. Street races are (alas) the future.

I can't see to much future in the majority of the street races, in particular this one.

[ForumNick]

Originally Posted by Marcos WTF

That's one of the reasons I love club racing at Lakeside. Good racing,
good value and I can bring the ute, esky & BBQ.

And only 3 stations from home.

How do you get the ute on the train ???????????????

[DJJ]

http://static.stuff.co.nz/files/131210report.pdf

Audit report and details

[Mark Petch]

Originally Posted by DJJ

http://static.stuff.co.nz/files/131210report.pdf

Audit report and details

More tonight:

The man in charge when the V8 Supercars were brought to Hamilton has distanced himself from a funding blowout which has seen the cost of staging the event over three years top $30 million.

Former city council boss Tony Marryatt, who departed in May 2007 to become chief executive at Christchurch City Council, said the cost was $7 million for infrastructure and a confidential hosting fee. He never expected the event to cost the city such a significant amount of money.

News of the blowout has rocked Hamilton this week. Council management are in the gun for how open they were about the mounting costs before new Mayor Julie Hardaker confirmed the latest figures on Monday.

Meanwhile, there are also questions about councillors who had regular briefings on the costs – mainly behind closed doors – yet they failed to pick up on the cost blowout.

Council acting chief executive Blair Bowcott said councillors would have been aware the event needed more money because that's what the V8 reserve fund was created for in June 2007. The promised revenue from the event had been earmarked to repay the growing V8 reserve.

"The numbers (made public on Monday) are very clear, the cost of the track was not $7m but $17.9m."

These infrastructural and associated costs took the cost to $27.4 million. The Waikato Times understands the council has used at least $4 million from its events sponsorship fund to hold the race in the city.

Marryatt said he had no knowledge of a V8 reserve fund, which is forecast to reach $14.61m by June 30 2011.

"In 2006, the council was clearly told the two figures – the cost of infrastructure and secondly the payment to the promoters. They were right up front."

The operational costs came out of the council's existing marketing and events budget.

He said he had accounted for "the worst case scenario" when budgeting for the cost of the infrastructure and had expected potential revenue streams to pay off the figure over the seven-year contract. The information had been presented to councillors and was available in the annual plan and financial statements. He didn't ever expect the street race would end up costing more than $30m.

Marryatt was comfortable all the correct process had been followed when the first deal was signed and said he would assist an external audit of the process any way he could.

Former Hamilton Mayor Bob Simcock has defended the way information was presented to council. He said the V8 Reserve was always in the council's plan. While Simcock had not seen the actual $27.4m figure, he said the most recent figure in his mind was capital costs had increased to between $17m and $18m.

Yet in March 2010, an Official Information Act response to the Waikato Times stated the net capital cost of the event was $7.95m. There was no mention of the V8 reserve, which sits at $10.91m, nor was the Times corrected when it was led to believe the full cost was $11.03m.

Simcock said: "Every step along the way the councillors have known the decision that needed to be made and they've had the information they needed to make it and they've had any information they've asked for."

[Gaz170]

Originally Posted by Mark Petch

Hamilton Mayor Julie Hardaker yesterday confirmed the cost of the annual V8 Supercar race had ballooned to $27.4m over the three years the city has hosted the event......

Mark, I'd be interested to hear your thoughts on all this.

[Mark Petch]

Originally Posted by Gaz170

Mark, I'd be interested to hear your thoughts on all this.

I am on record as being apposed to street race's, this type of money would go a very long way to seeing a permanent circuit like Hampton Downs, a world class facility, that would stand us in good stead for decades to come.

[Axeman444]

Originally Posted by D.R.T.

I can't see to much future in the majority of the street races, in particular this one.

really? Would never have known

[Oreti kid]

Originally Posted by Mark Petch

I am on record as being apposed to street race's, this type of money would go a very long way to seeing a permanent circuit like Hampton Downs, a world class facility, that would stand us in good stead for decades to come.

I absolutely agree Mark, we have Hampton Downs, Manfield & Powerbuilt as quality venues and would love this sort of money spent, same thing has happened in Sydney as they have Eastern Creek but still want a street circuit?
i was involved in the Wellington street race as asst Comms Marshal and could see how it mirrored Monaco but that was the only one.

[RogerH]

Originally Posted by Mark Petch

I am on record as being apposed to street race's, this type of money would go a very long way to seeing a permanent circuit like Hampton Downs, a world class facility, that would stand us in good stead for decades to come.

This is exactly what should be happening but Hampton Downs are not part of the cosy club of MSNZ and the established track owners. There are financial benefits to MSNZ to keep the big North Island races at Taupo, Pukekohe and Manfield. MSNZ have not made it easy for Hampton Downs in the past and it doesn't look likely to change. A crazy situation when you have what is arguably the best track in the country half an hour up the road from the Hamilton street race circuit and its not being used.

[PVDA]

For those that might not have been around in 2002 when the ACT Auditor General checked the Canberrra GMC400 race, here is the report;

http://www.audit.act.gov.au/auditrep...eport_5_02.pdf

[Oreti kid]

Originally Posted by PVDA

For those that might not have been around in 2002 when the ACT Auditor General checked the Canberrra GMC400 race, here is the report;

http://www.audit.act.gov.au/auditrep...eport_5_02.pdf

Mmmm you have to wonder if everyone has to make the same mistake hey nakkers

[peckstar]

wow a 2002 audit report thats really relevant. not

now the 2010 clipsal audit report that is relevant.

i still ask the question why did they think it would only cost 11 million to build the original track, i have never seen any evidence to support this number

every bit of information about street circuits suggest a build cost of around 20 million, why would hamilton be different

something dodgy is going on here

[F J Nedos]

When I glance at the title of this thread, I keep on thinking" what shock is there to be had about audi's in hamilton? Surely they've been on sale there for some time!

[Matthew Ronke]

Originally Posted by F J Nedos

When I glance at the title of this thread, I keep on thinking" what shock is there to be had about audi's in hamilton? Surely they've been on sale there for some time!

and Hamilton's used to be the audi importers.

[PVDA]

Originally Posted by peckstar

wow a 2002 audit report thats really relevant. not

Actually Peck it is relevant because it looks at the so called "Economic Benefit" an event like the GMC400 was supposed to generate and found it wanting.

That sort of stuff is still relevant today.