terminator_x wrote:
james dean wrote:
Smithy wrote:
2ndBest wrote:
He misses the point. The main reason for the stadium isn't the expectation that more people will suddenly turn up (although this might be the cases given the buzz around a new stadium etc), but that if 7-8K people is a normal crowd (and it has been his way for the past 5 years) how can we make it financially sustainable for the club. New stadium is likely to have lower hireage costs so we won't need 10K to break even.
^what he said.
I think the author is coming to the question with a conclusion and then fitting his argument to it. Which is fine, but he makes a bunch of poorly substantiated points and totally ignores some important stuff. So it's hard to take it seriously.
Completely agree. I think for fans there is three things to focus on:
- watching in a square stadium where the ground is 3/4 or more full will be way better. Not just a bit better - way, way way better. This isn't about being 20m closer to the game, it's about watching the game how it is supposed to be watched. Now to my mind that means we should do everything possible to get to a venue which gives us that
- there is a real risk (not a theoretical one, a real one) that without a change in venue Welnix say we can't see this breaking even any time in the future and we're out. If they have invested in a stadium the likelihood of this happening goes down a lot.
- Westpac stadium is not the best outdoor venue in Australasia. That is a ridiculous myth. It's a bland, fairly generic multi use stadium. When it opened it offered something completely different to what we had seen before in NZ but that was a long time ago. Its limitations have been exposed as a football venue. The reason it has good sightlines is because it's an oval and while everyone has a good view, everyone is quite a distance from the action.
Also, the stadium isn't run at a profit. Well it is, but only so it can fund itself for the future without further cash from ratepayers - there's no dividend back to the regional council from the stadium trust, no-one takes cash out. Objecting to ratepayers paying for a new stadium, but saying that Westpac shouldn't run a profit to help tenants doesn't make sense - basically you're saying ratepayers should subsidise tenants on an ongoing basis. Either way ratepayers end up paying for something - but in the Petone stadium scenario at least they get a new facility out of it.
As a Phoenix fan I'm totally on board with this plan. The new stadium would be fantastic and I wouldn't even care about having to travel to Petone from Island Bay - it would be worth it. So as a Phoenix fan I hope it happens.
But from just about any other point of view I honestly can't see how you would justify the investment. From a regional perspective it doesn't make a lot of sense - particularly if it undercuts the financial viability of another publicly owned regional stadium.
And the bit I've highlighted above doesn't make any sense to me either. I can't reconcile how Welnix can say on the one hand "the Nix must break-even" but on the other hand "we're prepared to invest $25m+ in a new stadium". Let's say the Nix lose $1m a year. With the $25m you're prepared to invest in a stadium you could actually just run the Nix at a loss for 25 years. And you would actually be better off because your investment would be spread over time instead of a one-off hit. And borrowing the money only makes the equation worse.
Yes, with a capital investment in a stadium you would at least get an asset out of it but in this case the asset would be half owned by Hutt City and it would be on land wholly owned by Hutt City. From Welnix perspective it would be pretty hard to sell on so I can't see how that really plays into it. I agree that if Welnix have invested in a stadium then it ties them to the Nix a lot more and makes their exit seem less likely, but that's my point - why would they do that to themselves if it doesn't financially add up?
As far as I can see the new stadium would have to increase the average attendance considerably (i.e. basically sell-out most of the time) to make the sums work. Is there something I am missing here?
As I said at the start, I'm totally for the new stadium from a fan's point of view but I'm really not sure what Welnix are up to when the option of simply running the Nix at a loss might actually be a better financial option. I smell a bit of BS around this and feel like we might need to lower our expectations. It may yet turn out to be just a negotiating tactic.
I think what you're missing is how an investment like this is structured. Plus I think there's some devil in the detail here. Welnix aren't going to fund the stadium in all reality with cash (i.e. write a cheque). Some of the Welnix members will lend money to the stadium trust. That may be a loan that won't be repaid for a long time but that will be in the form of debt - it doesn't make sense to contribute cash as it's tax inefficient. They will earn a return on that cash (although the WCC loan to finance the stadium build was an interest free) - risks are that the build goes over budget or the thing doesn't get built, then you lose your money. That initial funding will be development financing and is used, along with the ratepayer cash (which would likely also be in the form of debt) and the other funding they've mentioned to finance building the stadium.
Once the thing is built and starts to be able to earn money you move into a different phase. The development debt will be refinanced on new terms and you'll have a longer term operating financing package which basically is serviced by the ongoing performance of the stadium as a business. If the stadium performs well you may get repaid some of your principle but there will be a regular income stream of interest there (again, this might be off market rates for the investment but the trust will need to pay interest). That debt will always sit on the asset so the stadium needs to make enough money to cover operating costs + interest. If the business is a viable one then you will earn a return and perhaps over time you might be able to get your loan repaid out of surplus proceeds if any are generated. Or the thing looks very attractive and you get an infrastructure or even private equity investor who comes in and takes you out of it and you get completely repaid (unlikely however given history of stadium performance). I doubt very much whether Welnix will ever "own" the stadium in the way that you are thinking although they will probably be represented on the management board and/or the trust that runs it given their investment. The stadium will be owned by a trust.
So I don't think it's fair to just compare it to running the Phoenix at a loss - it's a completely different thing. Of course this is just based on my experience but this is broadly how Westpac was financed (massively simplified).
[sorry about the formatting, will add spaces as soon as the site is working for me again!]