Published HBT Saturday 6 August (Paragraph in highlighted in red not published)
In her July 29 Talking Point Jessica Maxwell has raised a number of significant issues regarding “Horse of the Year”. As one of the HDC Councillors involved I believe more needs to be explained.
For a start crucial decisions have been made without all relevant information being disclosed. When councillors were first informed of plans to tender the event in 2015 we were not told this situation had been precipitated by Kevin Hansen of EventPro, requesting a fee increase. Some including the Mayor may have known but most of my collogues had no idea of this situation.
Councillors also had no role in the decision to appoint SMC Events Management and were told of the decision after it had been made. SMC were said to offer advantages as an experienced management company but information that has subsequently been gleaned casts some doubt on the wisdom of the decision. For instance SMC’s involvement in the Ellerslie flower show was not fully appreciated. SMC bought the Flower Show in 2004, ran it for just 3 years before selling it in 2007 to the Christchurch City Council for $3.0 million, receiving an average of $658 000 to manage each event. Whilst the first show in 2009 made a $224 700 profit, in every subsequent year the show incurred losses, other than 2011 when it was cancelled due to the earthquakes. In 2014 following a loss of $516 000 SMC’s contract was not renewed and further shows cancelled.
Also unknown was SMC’s involvement in another failed event, the A2B Blue Water Classic, a proposed race for super and maxi yachts from Auckland to Bluff. The event in 2014 was expected to cost $1.5 million with Government committing $440 000. Government actually contributed $100 000 up front and the Invercargill City Council $115 000. Venture Southland and Invercargill City had previously spent $15 000 on a feasibility study, but yacht racing legion Grant Dalton had warned as early as 2011 that the event would struggle to attract entries. Two years later when this eventuated the event was cancelled with none of the advanced money being returned.
SMC do have some success stories such as the Wheet-Bix Kids Tryathlon and Port of Tauranga Marathon but these do not compare with HOY for complexity or difficulty.
Following the revelation of the $170 000 loss by Horse of the Year in 2016, HDC Councillors were advised SMC had struggled with the complexity of the event and that there had been problems with the transfer from Eventpro the previous organiser. Additionally there had been additional costs of $50 000 for cleaning out the stables, $172 500 for temporary fencing and $30 000 for irrigation.
For the record in HDC contributed $35 000 in 2015 and at the urging of the Mayor this was doubled to $70 000 for 2016. Effectively the combination of the $170 000 loss and the additional $35 000 grant means the event finances were $205 000 worse off. The initial $90 000 initial shareholder advance had already been used up
On July 19 Councillors were asked to approve a rescue package consisting of:
- $250 000 to recapitalise HOY
- $150 000 annual contribution
- $600 000 reserve to cover future event risk
A decision on the $600 000 was deferred pending further investigation (but strongly opposed by this councillor), the annual contribution was whittled back to $120 000 a year (but still opposed by 4 councillors), and a one time bail out of $170 000 approved but opposed by 2 councillors.
One councillor asked if the HDC would have been so accommodating had the Deputy Mayor not also been Chair of Horse of the Year? This raises the issue of whether this back door involvement by council is wise. All who remember the V8 fiasco in Hamilton will be wary of council’s direct involvement in eventing.
There was also support for a $200 000 grant to the A & P show grounds for fencing and an irrigation system, part of an unallocated $500 000 assistance provision. Helping the A & P society to provide these facilities meant a potential annual saving of $30 000 for HOY and also offered a permanent upgrade of this important local venue for all users. The value of these improvements effectively translates to a further increase in the annual grant to HOY.
We are told repeatedly that HOY contributes $12.5 million to the local economy a figure supported by council officers but not verifiable by councillors. It is unquestionably an iconic Hawke’s Bay event but his does not mean council should be providing a blank cheque year after year. Clearly in hindsight it might have been very much cheaper to have agreed to the fee increase requested by Eventpro, but that option was never explored.
Whilst the hiccups for 2016 seem plausible and some help justified, the HDC has been locked into additional support beyond 2017 if that year produces a similar outcome. The option of pulling the plug must be retained.
