The future of Auckland's ASB Showgrounds is at risk as the board that runs the premiere exhibition site struggles to see how it can remain solvent in the face of major event cancellations due to Covid-19 and a proposed massive rent hike.
The non-profit charity operates the 8 hectare showgrounds at Cornwall Park commercially - its only income is from shows, events and concerts.
In normal times the showgrounds host more than 250 exhibitions and events a year, attracting over 1.3 million visitors. The top 20 major shows generate more than $35m for the Auckland and New Zealand economies.
• Lack of events means billions lost to economy
So far this year due to Covid lockdowns and alert responses the 150-year-old showgrounds have lost four major events, including the Home Show scheduled for last month and the Royal Easter Show, due next month.
Last year 14 major events were cancelled due to the pandemic response, plus 11 smaller shows and concerts.
On top of its income drying up, the showgrounds' board, formally known as the Auckland Agricultural Pastoral and Industrial Shows Board under a 1972 Act of Parliament, is soon to enter arbitration with its landlord, the Cornwall Park Trust, which wants to put up its annual rent from $750,000 to $2.3 million.
The board has spent around $725,000 on legal and arbitration fees challenging the rent hike. Mediation with the Cornwall Park Trust, itself a charity, has failed.
Showgrounds chairman Kim Campbell said an approach last year to Agriculture Minister Damien O'Connor for Covid impact relief through a $750,000 loan or grant was unsuccessful.
He said the board had talked to the Auckland Council - which in some ways was a competitor with its own events space - "but the problem is the city has no money".
"The showgrounds are very much at risk. We have a very difficult path ahead. We will certainly have to take stock of whether it is viable.
"We have an amenity on its knees because of Covid and (rent) arbitration. Is there an argument for a collective way of dealing with this?"
The Cornwall Park Trust had offered the showgrounds board a rent suspension - but no discount on its rent, Campbell said.
The showgrounds simply could not operate under any Covid alert level above 1 and, realistically, no shows of size could be held within two months of moving to Level 1 to allow time for contracting shows, selling space and marketing.
The showgrounds board has debt of $2.3m. It owes this to the ASB Bank after taking out an $8m loan towards a $32m building development which was completed in 2010. The board said it had paid back $6m of the loan several years ahead of the debt falling due.
The board also contributed $6m of its savings to the building project. Community groups and large and small businesses also helped fund it. Development funds included ASB naming rights sponsorship.
The board said the buildings were now valued at $48m and had replacement value insurance of $148m.
What would happen to those buildings or the land if the showgrounds' board wound up is unknown.
The Cornwall Park Trust did not answer the Herald's questions around this issue.
The Herald asked to speak to trust chair Adrienne Young-Cooper about the showground's predicament but the request was declined. The trust asked for written questions.
A written response attributed to Young-Cooper said the trust board understood the ASB Showgrounds had been impacted by Covid-19. It had been in close communication with the showgrounds since the virus began.
"The trust board has responded positively to the showgrounds' request for assistance in relation to the ground rent.
"The current review is to set the rent as at November 2018, well before Covid-19. The trust board engaged a registered valuer to ascertain the rent at that date, using established valuation methodologies. There will be an arbitration hearing in May, at which the rent will be set by a valuer independent of both parties. In the meantime, the showgrounds has not had to pay any increased rent.
"The trust board has legal obligations under the Cornwall Park Trust Deed in exercising duties as trustees. Both the trust board and the showgrounds are charities but have different charitable purposes.
"Legally the trust board can only use its resource for charitable purposes, not for another charity's purposes."
The trust said its only income was from leases, rentals and "some other investments". This income was used to fund all the public programmes and day-to-day operation and maintenance of Cornwall Park, which hosted four million visitors a year at no cost to Auckland ratepayers or the Government.
Pressed by the Herald for a discussion with Young-Cooper because questions were unanswered by the trust's statement, she said through Cornwall Park director Michael Ayrton that the trust board was "unable to discuss the affairs of the ASB Showgrounds with you and will not talk publicly about the discussions we have had with them".
"We expect to continue our ongoing dialogue with the ASB Showgrounds directly."
The ASB and Damien O'Connor have been approached for comment.
The Act that created the showgrounds' board in 1972 was allocated to his ministry. In recent years the showgrounds has been recognised as an Auckland Precinct under the current unitary plan for Auckland city.
The board comprises six members of the Auckland Manufacturers' Association (now the EMA) and six representatives of the Auckland Agricultural and Pastoral Association.
Board member Laurie Margrain, a high-profile Auckland businessman, said board members did not get paid and volunteered their governance time.
He said he was "acutely disappointed" at the lack of engagement in the showgrounds' predicament by local government.
"We have never required a subsidy since the 1970s yet we are by far and away the biggest facility like this."
The board when approaching O'Connor for assistance last year noted several board members had "expressed significant concerns in regards to their personal liability should we fail to survive the immediate future".