Golf Open loses millions

By JAMES GARDINER Weekend Herald Reporter

Losses faced by the organisers of the New Zealand Golf Open are at least three times higher than the $1 million first suggested.

The private company Open2002 Ltd was relying on 70,000 spectators to pay an average ticket price of just over $110 so it could raise more than 60 per cent of the tournament costs, a report made public this week shows.

Instead, fewer than 40,000 came through the gates, leaving a $3.3 million hole in the $12.1 million the company hoped to raise from all sources.

The previously secret report, which went before the Wellington City Council last month, shows the organisers knew they were facing a loss of more than $300,000 even if all the budgeted income arrived.

It also shows they borrowed $4.25 million from "equity partners" - the dozen or so private investors, all said to be from the Wellington region, who put in between $200,000 and $1 million each in the hope of getting at least their money back and possibly a profit if gate sales or other income exceeded expectations.

A further $250,000 was borrowed from sponsors, who had already put up around $2.8 million to buy naming rights and the right to host functions for clients and guests in corporate marquees on the course.

Sport, Fitness and Leisure Minister Trevor Mallard said no Government money went into the tournament despite requests from the organisers.

Mr Mallard said he was approached more than a year ago by the Plus Fore group, which had the idea to bring Tiger Woods to New Zealand and over the next 12 months had discussions with up to 10 people.

"I made it very clear verbally that it was not my intention to promote Government funding for this and I think that stopped organisers asking more formally for Government support."

Local government did come to the party, with the Wellington City and Kapiti Coast District Councils promising to underwrite the tournament to the tune of about $280,000 between them.

The councils will pay to ensure bills are paid but will not cover the losses of the investors in the Open2002 company.

Wellington City spokesman Richard MacLean said the councils had not heard whether tournament organisers would call on any or all of that money.

"If they do call in the underwrite, we'll be asking for detailed invoices about where the money has gone."

The Open was more expensive to stage this year than in previous years mainly because of Woods' $US2 million appearance fee but also because the prizemoney was doubled to $1 million and extra security guards were needed.

Telstra and Hyundai were the main sponsors and got naming rights.

No one will say how much they put in but estimates range around $1 million each.

That would suggest about $800,000 came from the other 18 sponsors.

Lion Breweries' Steinlager brand was described as the "presenting sponsor", a second-tier sponsor.

One step down were associate sponsors - computer company Compaq, TVNZ's One Sport, Air New Zealand and insurer and banker AMP.

On top of their sponsorship, they spent around $100 a head for food and drink for up to 1000 guests each. Open2002 hoped to make $600,000 profit on catering.

A variety of hospitality deals were available to companies wanting to entertain guests at the Open.

Top of the range was the $100,000 (plus GST) "Eagle Package", which allowed 60 tickets a day to the top deck of a two-storey marquee at the 18th green, VIP carparks, invitations to play in the ProAm tournament before the Open and tickets to various dinners and gala events.

One tier down, literally, was the "Birdie Package" at $65,000, which allowed a company to entertain 40 guests a day in a smaller marquee at ground level at the 18th.

Bottom of the range was the "Par Package" - $50,000 for 25 tickets a day in a marquee at the ninth green.

As in any corporate box, the marquees had food and drinks served to the tables, viewing balconies and televisions.

Individuals wanting pampering and prepared to part with just over $2800 could get into the Platinum Club - daily tickets to the course, a carpark, access to the clubhouse with its viewing deck, three meals a day and continuous snacks, wine and beer.

But so few of those tickets sold that club members, who were originally told they would not have access to the clubrooms for the tournament, were allowed in and a small area was separated off for Platinum Club members.

The slightly cheaper Ambassador Club ($1687 to $2250) offered a similar deal but with meals and drinks served in a marquee rather than the clubhouse.

Unlike previous tournaments, which were run by a partnership of the Golf Association and International Management Group, the rights to run this year's event were sold to Open2002 for a fee. The company then contracted IMG to manage the event.

Association president Neil Woodbury said he expected the fee would be paid. He indicated it was no more than $50,000.

The NZGA-IMG partnership had broken even on Opens in recent years, he said, with losses in some years covered by profits in others. This year the private company took on the risk.

The big financial difference between holding a tournament in Wellington or Auckland was that TVNZ charged considerably more to broadcast from Wellington because most of its staff and equipment are Auckland-based.

TVNZ spokesman Glen Sowry said this was the fourth year the state network had been a sponsor, but no cash was paid to the Open organisers.

The contribution was "contra", meaning some free airtime and production services. Open2002 had to pay for the rest and was "on schedule" to make those payments.

Neither Open2002 managing director David Pool nor IMG head Paul Gleeson returned calls to discuss the figures.

Email: James Gardiner