The future of Rotorua's "sabotaged" Mudtopia festival is up in the air with a Rotorua Lakes Council committee voting to no longer financially back it.

The council's Operations and Monitoring Committee today unanimously voted against delivering another Mudtopia festival after a report found it was too financially risky.

The festival has been dogged with issues, including the cost to ratepayers, controversy over paying for and importing mud from Korea and the number of tickets given away.

The total loss for the event was $570,387, plus $170,000 of capital expenses.

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Mudtopia, held from December 1 to 3 last year, attracted about 14,000 visitors but only 1500 people paid for their tickets.

The report said the council's event team "reacted quickly" to "ensure the event was vibrant" by giving away 12,000 tickets to locals and 3000 to sponsors and suppliers.

The festival was expected to become self-sustaining, but given its failure to attract revenue from ticket sales and the high fixed costs, the report did not believe the council-owned model should continue.

However, the council's acting group manager of operations, Henry Weston, told the committee deciding not to have a role in Mudtopia did not necessarily mean no longer having the event in Rotorua.

"What we're doing here is putting in front of the committee a recommendation on the future council role in Mudtopia, not necessarily a decision," Weston said.

"On one hand what we had on the ground was a successful community and family event ...On the other hand the question we've got to look at is what's the role of council going forward, particularly considering the financial cost of the event."

Weston told the committee the revenue, the sponsorship, the number of tickets sold were all worse than projections.

He said the sponsorship may have been around the $35,000 mark against a projected budget of something over $200,000.

"We don't believe the council should be the one owning and delivering this event and the risk of it going forward. Having said that, we do see a role for the festival and are keen to do what we can to support and enable someone who may want to take it on."

Members of the committee said the event had been sabotaged by negative comments, particularly when concerns were raised about the potential for the South Korean mud to carry foot and mouth disease.

Mayor Steve Chadwick said during the meeting there were some who wanted to see the event flop.

"There were those that were dying to see this fail and they sit around this table. They don't want to see investment in vibrancy in our community and I think it's sad," she said.

"We knew that this was a risk. We were well supported by MBIE ... We took a risk .. It just didn't hit the right market and I'm really sad about that.

"But I don't believe we can take that risk another year and that's a pity because it was hijacked and that's caused the detrimental outcome."

Committee chairman Charles Sturt agreed the event had been sabotaged.

"I hope this can be a commercial success for someone else. We knew when we went into this we weren't going to make money out of it, it was just another event for our community."

Tegan Griffin, 13, (left), Katia Harvey, 12, Kerehi Tamati, 13, and Amy Patchell, 12, at Mudtopia Festival in December 2017. PHOTO/FILE
Tegan Griffin, 13, (left), Katia Harvey, 12, Kerehi Tamati, 13, and Amy Patchell, 12, at Mudtopia Festival in December 2017. PHOTO/FILE

Councillor Trevor Maxwell was also disappointed the event had been a flop and hoped it could be picked up by someone else in the future.

"Hopefully we do get an entrepreneur who will come forward and assist not only our council but our community to have something," he said.

"All the negative comments did affect the sponsorship, did affect the revenue."

Weston told the committee its decision didn't necessarily mean the end of Mudtopia, or the end of the council's involvement with it as they would still potentially be able to provide a venue.

Councillor Tania Tapsell agreed with the rest of the committee.

"I truly hope another partner can come along in the commercial world and we can be there holding Mudtopia for our community. It's an excellent event and it's a lesson learned, we will know how to do it properly next time."

Rotorua District Residents and Ratepayers chairwoman Glenis Searancke told the Rotorua Daily Post after the meeting she thought the decision was the right one.

"It didn't attract people, it wasn't the right time of year so I think it's the right decision."

Searancke said she wouldn't have a problem with the council providing a venue and said it could potentially be successful if someone else took it on.