AusLeisure

A decision on the future size and shape of Christchurch venue management company Vbase is expected in the coming weeks.

Christhcurch City Councillors are set to consider plans to take partial control of its subsidiary company at its annual plan meeting on 9th and 10th June with a decision on potential staff redundancies set to follow by the end of June.

Vbase's venues were badly damaged in the earthquake that hit Christchurch in February quake. While CBS Canterbury Arena reopened in mid-March, the Christchurch Town Hall and the Convention Centre are expected to remain closed until at least the end of next year, while AMI Stadium will not reopen until February 2012.

The company faced financial problems before the earthquake, with the Council considering a $45 million lifeline to help service its debt.

Vbase Chief Executive Bryan Pearson has explained that the company was reviewing several options for "substantial" downsizing, stating that "it's a relatively complex situation.

"Our revenue levels have been decimated ... but now the extent of the damage and amount of time (the facilities will be closed) is clear, it makes our future trading profile clearer."

Council chief executive Tony Marryatt has revealed plans to take over part of the company's operations stating that his preferred option is for Vbase to be split, with management and operations to be run by the council and assets to stay with Vbase.

Pearson said Vbase would need to be open to all options, given its plight adding "I wouldn't rule anything in or rule anything out ... my preference is a structure that ensures the future viability of the company."

Prior to the 22nd February earthquake Vbase's debt stood at more than $75 million – a sum that it cannot afford to service.

New Zealand publication Business Day has suggested that "Vbase's problems arise from the redevelopment of the stadium, with the Paul Kelly and the Deans stands completed in the last few years. That some work was needed to replace and renovate old and worn-out facilities is undeniable. But the business case for the latter was confidently prepared in the middle of a boom and now, when the economy is far less healthy, has been shown to be considerably less robust. The expansion of the stadium's capacity, designed partly to attract Rugby World Cup games, has turned out to be in excess of what Christchurch needs.

"The downturn obviously has not helped. The bulk of the stadium's income comes from rugby and it was Vbase's misfortune that rugby itself was hit by a succession of bad management decisions that hammered its popularity. The Crusaders mounted a concerted campaign last year to win back some of the support it had lost, but the blow to crowd sizes from the waning appeal of the game to ticket-buying spectators was nonetheless considerable. About the same time, the recession hit, sharply curbing the appetite of businesses for the corporate boxes that were part of the redevelopment and carving another large chunk out of Vbase's income. In addition, Vbase's accounts took a further hit when last year's Budget altered depreciation on buildings with an expected life of more than 50 years.

"Vbase's problems are, however, only a particular example of a general problem – that city-owned sports stadiums can be a double-edged asset. In-depth studies have repeatedly shown that most stadiums built with public money more often than not turn out to be an economic drain on a city. Few of them make money; if stadiums were the money-spinners they are meant to be, business concerns would be funding them. There is a balancing value to a community – without such a venue the city would not host major sports or other similar entertainment – but this is not one that can easily be determined in dollars and cents. It is an equation that requires thorough community debate.

"Christchurch City Council must now try to find the best way to resolve Vbase's debt problem. In doing so, it must look to a solution that inflicts the least imposition on ratepayers as possible. And in future, the council must also keep this episode in mind and take care that, when it enters into risk-taking enterprises, the case for them must be subject to thorough and rigorous scrutiny." 

Image: Vbase manages Christchurch's AMI Stadium.

2nd June 2011 - TIANZ CALLS FOR NZ NATIONAL CONVENTION CENTRE

11th April 2011 - VBASE’S PLANS TO BRING CHRISTCHURCH VENUES ‘BACK TO LIFE’

5th September 2010 - HERITAGE AND LEISURE BUILDINGS SUFFER IN CHRISTCHURCH QUAKE

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