Council share tied to profits

BY NIKKI PRESTON

Losing the ITM 400 V8 race would have a serious impact on Hamilton City Council's coffers as it relies on the revenue from the event to repay the initial $7.95 million start-up costs.

Hamilton ratepayers are already paying $500,000 a year in interest on the 25-year loan on top of the roughly $300,000 a year the council is committed to repaying on the loan each year.

Next month's event is safe but ITM 400 organisers Dean Calvert and Steve Vuleta suggested this week that its future was only sure if ticket sales increased dramatically.

Caleta Streetrace Management has a seven-year resource consent to hold the race but the Waikato Times reported on Tuesday that Mr Calvert and Mr Vuleta had to put their own money back into the business after revenues for the second year of the event fell from $14 million to $10 million.

The financial pressure, accentuated by the recession, has seen Mr Calvert lose his family house in Raglan.

Tickets and corporate box sales for this year's event have been slow but council bosses maintain they are not concerned and stress the event's overall benefit to the city. A Waikato Times request for the total costs of the 2009 event revealed the council spent $768,468. The costs include road infrastructure, project management and staff resourcing, communications and promotions, park restoration and repairing and maintaining the circuit infrastructure.

The council also contributes to the ITM 400 event with a portion of its annual $2.6 million events sponsorship fund.

How much of the fund goes to the V8 race is not known as the council won't provide a breakdown of the costs, citing commercial sensitivity.

Last year the council collected $1,281,242 in revenue from the event, most of which council deputy chief executive Blair Bowcott said would go toward repaying the initial $7.95 million infrastructure costs.

The city council has budgeted for a $3.9 million profit share for the seven-year event but missed out last year after the profit failed to reach the required threshold.

Mr Bowcott would not say whether it had received some its budgeted profit share for the first event in 2008.

He said the event was not about making a profit or a loss. Some years would be better than others. "If the event promoters achieve their budget then they will make a surplus and at some point we will get a share ..."

Chief executive Michael Redman said: "The event has already delivered a significant financial return by way of millions of dollars of new money into the city economy every year as well as being a platform to promote the city and attract other events and investment.

"It is unfortunate and unnecessary that the personal financial affairs of one of the promoters has cast a cloud over what is a successful and important event for the city."

He said it was up to council and V8 Supercars Australia to determine the event's future, not the promoter.

In its first year it was estimated that the event brought in $28.3 million to the city and attracted 54,000 visitors.

Hamilton Citizen and Ratepayers chairman John Easto suspected the event had cost ratepayers far more than the initial $7 million.

"They put the grandstand on the rugby field so it cost the ratepayer an extra $1.8 million to build a practice ground. The councillors say they (the ratepayers) benefit from the trickle down effects. For the people that pay the vast majority for these events it doesn't trickle to at all."

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