Multi-million dollar Claudelands spend-up adds to deficit

Since Claudelands Event Centre opened in 2011 it has run at around a $10 million deficit per year, and with nearly $10 million worth of capital expenditure planned for the next seven years, the figure is not expected to drop.

Major portions of that include a $2.6 million spend-up in 2020/21, which include kitchen equipment replacement, furniture replacement, replacement conference carpets and drapes, audio-visual system renewal, and drainage renewal.

This is followed by a $2.9 million in 2022/23 for another phase of kitchen equipment, replacement of the conference PA systems and projection screens, renewal work on Hall C, a stage replacement, drape and carpet replacement for the Arena and a sports floor replacement.

In December last year, Hamilton News reported on a proposal from councillor Garry Mallett to sell the complex - a sale which he claimed could eliminate the annual 3.8 per cent rates increases.

According to this year's annual report, total rates revenue totalled roughly $140 million.

"When Claudelands loses $10 million per year it soaks up 7.1 per cent of our total rates," Mr Mallett said.

Council's chief financial officer Paul Conder said expenditure of these types could be expected in a complex as large as Claudelands which holds hundreds of Council assets, from furniture to electronics and furnishings.

"You would expect to have replacement of high use equipment. It's the same as Waikato Stadium -- you have to replace the seats."

Capital expenditure from year to year varied from $301,000 to $2.9m, but Mr Conder said cycles of replacement often created up and down waves,

He said deficits were projected in the original business case presented to Council and that the figures had to be taken in light of the public good that the complex contributes.

"At the moment it's continuing to run to the business case."

He said complexes such as Claudelands often had to be built by councils because they rarely generate enough income to cover the cost of building.

"They are city assets that create other benefits," said Mr Conder.

"If we were to take a purely commercial argument we would have to do the same thing with parks."

When asked about the specifics of the capital expenditures, events and economic development general manager Sean Murray said although parts of Claudelands were new, many were older buildings which needed greater upkeep.

"Some are 40, 50, 60 years old," said Mr Murray.

"Like any building asset of operation like that with lots of fixtures and fittings it does have a useful end of life."

He said Council entered into the development "fully eyes open" to the costs and likely return.

"Around the country and Australia you will find its at similar bottom line results. They do it for the business development they attract."

Mr Murray said that 65 per cent of people who go to a conference or major show were coming from out of town and staying overnight and therefore bringing money into the city, and that although the complex only directly employed 25-30 people, there would be up to 150 staff working there at any given event.

Council has also commissioned Waikato University for a study of the economic benefits of projects like Claudelands, which Mr Murray said would be the first study of its type.

Claudelands exceed its net revenue targets by 2.8 per cent or $2.26m in this year's annual report.

The venue was also crowned Supreme Venue of the Year at the 2014 Entertainment Venues Association of New Zealand industry awards.

Figures from Council reflect a growth in attendance, with 185,067 people attending 204 events over the 2013-2014 period, and 224,133 attendees at 234 events a year later, an increase of 39,066 attendees.