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Local Government Minister Rodney Hide has attacked as "truly appalling" the revelation that soccer star David Beckham's visit to Auckland in December cost ratepayer-owned Mt Smart Stadium $1.79 million.
Mr Hide said the big loss on events associated with Beckham's LA Galaxy team's visit would rightly anger Auckland Regional Council ratepayers.
"It shows a cavalier attitude to ratepayers' money, and the ease which local authorities undertake expenditure outside of their core job."
Only 16,600 people went to the ARC-run stadium on December 6 to see Beckham's team play an Oceania All Stars side.
The event made less than half the sum needed to break even, said ARC chief executive Peter Winder yesterday in revealing the size of the loss after an internal review of the event.
"At the end of the day, we did not sell enough tickets," he said.
"That reflects that ticket prices were too high, marketing that did not achieve cut-through, an Oceania All Stars team that the public did not rate, and significant competition from other events.
"This is a very disappointing outcome and it has been a disaster for the ARC."
Mr Winder said his review highlighted serious concerns about management decisions and performance. But he would not comment further because the review was unfinished and was an "employment matter."
Mr Winder said the ARC was determined the loss would not have any effect on rates or ratepayers.
Mt Smart Stadium operated as an independent business unit of the council, although it received a "public good" subsidy from ratepayers.
This was $848,000 this year in return for the 250 community events it holds annually.
The Auditor-General is also reviewing the event after a request made in December by ARC chairman Mike Lee.
Mr Lee said he asked for the review "because I became alarmed at the upward trend of the loss that was being reported to me almost on a daily basis".
He did not think it appropriate for the ARC to investigate itself in an internal review and so sought help from an impartial outside agency.
"The loss is quite shocking and we want to reassure the public that this blunder won't happen again.
"Appropriate action is being taken where we have identified serious problems."
But Mr Hide said he was unconvinced that the loss would be absorbed in the stadium's trading operations.
"Of course, it will be the ratepayer who carries the can... There will be a whip round at their next council meeting," he said.
"It clearly was a high business risk. You would have expected business to be doing this sort of thing - not a council with ratepayers' money."
Mr Hide said he was pleased that Mr Lee had called in the Auditor-General's office.
"It's astonishing that we still do not know who made the decision.
"That's part of the problem we are dealing with in local government.
"It highlights what is wrong with local government, and in these times we expect much better performance than this."
A spokesman for the lobby group NoMoreRates.com, David Thornton, said the decision to guarantee losses from the event was approved by regional politicians "many of whom were basking in the glory of bringing the great David Beckham to Auckland".
"Meanwhile ratepayers are asking why the ARC, or indeed any city council, should be putting ratepayers' funds - either directly or indirectly - into commercial events which often bring financial benefits to a few, while relying on ratepayers to ultimately underwrite any loss."
The Auckland City Council contributed $115,000 to the event, including $80,000 to bring the team to Auckland.
It also paid $35,000 to help 6500 children from 130 schools watch Beckham and the LA Galaxy training.
A spokesman for the Auditor-General's office said the inquiry had just started, and he could not say when the results would be made public.
The inquiry will examine:
Funding and support arrangements for the team's visit
Policies and rules for supporting such events
Process for making the financial and support arrangements, including its business plan and its assessment of risk; and
Management, monitoring and reporting of the arrangements.
Mr Winder said that despite the loss, Auckland received benefits from hosting the event.
One of these was the broadcast of the game to people across the Pacific and to the west coast of America.
Auckland also gained by international media attention brought by Beckham at the airport and his bungy jump off the Harbour Bridge.
Those images were shown in Britain at the same time as a $7 million Tourism New Zealand campaign was publicising the country throughout the United Kingdom.
* Put it this way ...
$1.79 million is equivalent to:
The average annual ARC rate from 7780 homes
$22,375 for every minute Beckham was on the pitch