Dunedin Stadium fuzzies
Paddy Lewis20/01/2010 11:30:00 a.m.
IN BETWEEN going outside and getting rained on, I’ve spent some of my break working on a new professional sports franchise, only to come to my déjà-vu conclusion that sport in New Zealand, were it a private sector business, would not exist.
It’s only thanks to the goodwill of sponsors that many sporting organisations remain standing. Every time I poke my head around the door marked “Sponsorship Market”, there are new and improved ways of getting accountability for their dollars.
It used to be a logo on a team shirt and a few posters, signage, and a few other bits and bobs. Nowadays all major sponsorship comes conditional on you getting the rest of the sponsorship budget.
Nevertheless, necessity compels. I was thinking about sponsors whilst in Dunedin on a trip to see the whanau, and my father suggested we go and look at the new Stadium.
I’m pleased I’m not a ratepayer in Dunedin. A Test match at Carisbrook always offered a leisurely walk back to town via several hostelries in the warm glow of post-Test bonhomie.
The Awatea St stadium offers no such bonhomie. But I digress.
For all the pro and anti Dunedin Stadium arguments, the city council reasoning has generally fallen around the “benefits” to the city.
Yet, as George Mason University economics professor Tyler Cowen wrote 10 years ago in a paper for the NZ Business Roundtable; “The case for stadium and event subsidies is a weak one. The economic arguments in favour of such subsidies do not succeed. Evidence from a variety of sources suggests that government support for stadiums and events is unlikely to contribute to economic growth. Furthermore, subsidies are often directed at pleasing special interests rather than promoting the overall welfare of residents.”
And so it seems in this case. The benefit is far outweighed by the cost. But yet it is subsidised by the local council and underwritten by the government (to a $15 million extent). The stadium will only be completed two months before it is due to be used in a Rugby World Cup match.
In the USA, the University of California has been raising funds for 25 years for a $300 million overhaul of Memorial Stadium (a football ground). They realised they could raise the remaining required money by selling seats in the new stadium. Yep, seats. But not season ticket seats.
You can buy your seat for up to 50 years. The best seats will cost up to US$220,000 with the cheapest going for a mere $40,000 for 40 years. This way, they only have to sell 3000 seats to raise $270 million. That’s 3000 out of 72,000 total seats. Paid for by fans – who gain title to the seat and can on-sell it or hand it down through their estate.
In New Zealand, this sort of equity plan has never been floated, cities preferring to hit ratepayers up for the required dosh. As the Dunedin Stadium debate showed, ratepayers are getting sick of it.
In Dunedin’s case, the council is stumping up $82.2 million in capital expenditure. The total cost is supposed to be around $200 million.
As Cowen notes: “The burden of proof rests upon those who propose stadium and event subsidies, given their cost, the lack of a clear demonstrated benefit and given that they represent a deviation from egalitarian standards. The case for stadium and event subsidies has not been established…”
However, as ratepayers in New Zealand find out every year, when did councils ever put “clear demonstrated benefits” above the warm fuzzies?
It’s only thanks to the goodwill of sponsors that many sporting organisations remain standing. Every time I poke my head around the door marked “Sponsorship Market”, there are new and improved ways of getting accountability for their dollars.
It used to be a logo on a team shirt and a few posters, signage, and a few other bits and bobs. Nowadays all major sponsorship comes conditional on you getting the rest of the sponsorship budget.
Nevertheless, necessity compels. I was thinking about sponsors whilst in Dunedin on a trip to see the whanau, and my father suggested we go and look at the new Stadium.
I’m pleased I’m not a ratepayer in Dunedin. A Test match at Carisbrook always offered a leisurely walk back to town via several hostelries in the warm glow of post-Test bonhomie.
The Awatea St stadium offers no such bonhomie. But I digress.
For all the pro and anti Dunedin Stadium arguments, the city council reasoning has generally fallen around the “benefits” to the city.
Yet, as George Mason University economics professor Tyler Cowen wrote 10 years ago in a paper for the NZ Business Roundtable; “The case for stadium and event subsidies is a weak one. The economic arguments in favour of such subsidies do not succeed. Evidence from a variety of sources suggests that government support for stadiums and events is unlikely to contribute to economic growth. Furthermore, subsidies are often directed at pleasing special interests rather than promoting the overall welfare of residents.”
And so it seems in this case. The benefit is far outweighed by the cost. But yet it is subsidised by the local council and underwritten by the government (to a $15 million extent). The stadium will only be completed two months before it is due to be used in a Rugby World Cup match.
In the USA, the University of California has been raising funds for 25 years for a $300 million overhaul of Memorial Stadium (a football ground). They realised they could raise the remaining required money by selling seats in the new stadium. Yep, seats. But not season ticket seats.
You can buy your seat for up to 50 years. The best seats will cost up to US$220,000 with the cheapest going for a mere $40,000 for 40 years. This way, they only have to sell 3000 seats to raise $270 million. That’s 3000 out of 72,000 total seats. Paid for by fans – who gain title to the seat and can on-sell it or hand it down through their estate.
In New Zealand, this sort of equity plan has never been floated, cities preferring to hit ratepayers up for the required dosh. As the Dunedin Stadium debate showed, ratepayers are getting sick of it.
In Dunedin’s case, the council is stumping up $82.2 million in capital expenditure. The total cost is supposed to be around $200 million.
As Cowen notes: “The burden of proof rests upon those who propose stadium and event subsidies, given their cost, the lack of a clear demonstrated benefit and given that they represent a deviation from egalitarian standards. The case for stadium and event subsidies has not been established…”
However, as ratepayers in New Zealand find out every year, when did councils ever put “clear demonstrated benefits” above the warm fuzzies?
