Report blames lack of independent checks for rowing's financial woes

Sparc CEO Peter Miskimmin. Photo / Supplied

Sparc boss Peter Miskimmin insists the financial flop out of the world rowing championships should not deter New Zealand from striving to host other major international sports events.

A damning report into the organisation of the championships at Lake Karapiro last November was released yesterday. The report, by Brendon O'Connor of Coffey Commercial Advisory and commissioned by the Government funding agency, was highly critical of the K2010 organising committee and its parent company Rowing New Zealand for its running of an event which lost $2.2 million, having budgeted for a $500,000 surplus.

However both Miskimmin and K2010 chief executive Tom Mayo maintain that while there are lessons to be absorbed, New Zealand must keep a bold perspective.

The country must not become "gun shy" over hosting global-interest events - but it must be done prudently with sufficient checks and balances in place, said Miskimmin.

"Putting on major events of this scale is a complex and risky thing to do," Miskimmin said last night.

"It does need expertise in event management and ways of analysing things with controls."

Miskimmin described the championships as "enormously successful on the water. They delivered a world class event; where they came up short was in financial aspects."

But New Zealand "need those events" for their ability to showcase the world's best and the positives they bring to the country.

The report suggests there were not enough independent checks and balances and that insufficient rigour was applied to financial issues in the leadup to the championship.

RNZ, the K2010 committee and the budget and finance committee were all chaired by one person, Bill Falconer. The report said there was "an over-reliance on [Falconer] and assumptions made that at governance level fundamental issues were being well managed".

It described as "poor practice" extending the influence of the chairman into running the budget and finance committee, resulting in "a lack of scrutiny and discipline around risk, financial policies and cost management processes".

Mayo insisted his committee did not lose sight of the financial difficulties.

"When you're trying to raise $12 million you don't take your eye off the ball one little bit. Everyone on that organising committee was about 'what can we do to get this across the line'," he said.

The global economic downturn through 2008-09 hurt, and optimistic ticket projections were a key shortcoming.

"The report put a lot of responsibility on my board, 'you could have done better here and there'. That's the nature of it. No event organiser is happy when you lose money," Mayo said.

"We were dealing with huge variables, from foreign exchange to ticketing, sponsorship, weather.

"All the stakeholders said 'we like what you're doing' beforehand, so it's disappointing to have criticism after the event, rather than constructive criticism beforehand."

An RNZ statement said the loss was "disappointing", but defended the structures of the organisational bodies, accepted that management and budget decisions are open to criticism and accepted that "many of those were too heavily based on predictions of income rather than actual revenue".

What went wrong

* The loss on the world championships was $2.2 million. Budgeting had been done on the basis of a $500,000 surplus.
* Over-ambitious ticket sales expectations, projecting about 87,000 over the week, when about 67,000 were either sold or set aside for sponsors and officials.
* The financial management approach of the K2010 organising committee "significantly contributed to the cause of the ... deficit".
* Having one person chairing both RNZ and K2010 as well as the budget and finance committee was "poor practice", resulting in "a lack of scrutiny and discipline around risk, financial policies and cost management processes".
* When the event was initially sought Rowing New Zealand "did not understand what they were taking on and proposals and undertakings relied on aspiration and emotive factors ..."
* Failure by K2010 to establish an initial robust financial budget, a loose approach to expenditure management, and "significant and fundamental gaps in experience and skills relating to reporting and management, commercial acumen and financial management and reporting".