Team NZ's $13m free rent of Viaduct Events Centre base has Mayor Goff wanting them out early

Te Kahu, the Emirates Team New Zealand practice yacht, is launched at the Viaduct Events Centre in Auckland in January. Photo / Emirates Team NZ

Auckland mayor Phil Goff has asked his council to investigate moving Team NZ out of the Viaduct Events Centre before its lease expires, after ratepayers have already forked out $13.7 million in rent for the base.

Official Information documents show Emirates Team NZ is paying $1 a year to use the events centre as its America's Cup base until March 2022 - with a "maximum" lease term until September 2027.

The Government last week suspended payments to America's Cup organisers and Team NZ in the fallout from a Crown inquiry into the spending of public money, including allegations of a "reclassified" $3 million loan, and claims of fraud involving a Hungarian bank account.

Before 2018 and before the 6000sq m centre was occupied by Team NZ, it generated $3.5m-$4m of rent revenue for Auckland Council every year.

Auckland Council's Governing Body decided to grant the lease in November 2018, but Team NZ's rental cost was never made public.

Auckland Mayor Phil Goff met with Regional Facilities Auckland in late February to discuss the impact COVID-19 was having on its budget. New Zealand Herald photograph by Michael Craig

In March 2022, the conditions of the $1 annual fee will be "reviewed" to potentially implement a "market rate" for the remaining six years.

However, the Herald can reveal that in February Goff met with council controlled organisation Regional Facilities Auckland (RFA) to discuss revenue generating measures to offset Covid-19 economic losses.

"RFA informed the mayor that under the Host Venue Agreement, there was provision for Team NZ to move venues sooner than otherwise planned should a suitable alternative venue be found and agreed by Team NZ," a spokesperson for the mayor's office said.

"In this scenario, RFA would be able to return the Viaduct Events Centre to normal operation sooner than otherwise planned."

RFA is working with Team NZ now to try to find a suitable new base premises after the 2021 America's Cup.

If a site is found Team NZ could be out of the venue from September 2021 - five months before their scheduled market lease review.

Setting up our new home

The day of our long awaited move to the amazing new Emirates Team New Zealand base has arrived! We have been through some incredible times in our old base, but 2021 is around the corner and our new home is in the middle of the future America's Cup village. Thanks to all the partners and the team members that have been working behind the scenes to make this move possible. #AmericasCup #ETNZ

Posted by Emirates Team New Zealand on Wednesday, October 10, 2018

Auckland Council's director infrastructure Barry Potter insisted the approximate $13 million in lost revenue from Team NZ's free lease was always included in the $113 million Council has contributed to the America's Cup event.

"The sublease of the VEC building to ETNZ is part of, and not over-and-above, the council's contribution to host AC36," Potter said.

"It is in-kind support rather than direct financial support, with the foregone revenue budgeted as part of the council's total contribution to hosting the America's Cup."

Team NZ staff and crew outside the Viaduct Events Centre, in Auckland's Wynyard Centre, in January. Photo / Emirates Team NZ

Prime Minister John Key at the Olympic Gala Dinner at the Viaduct Centre, Auckland, in June 2012. Photo / Norrie Montgomery

The original Ministry of Business cost/benefit ratio for the 2021 Cup, estimated in 2017, was barely one-to-one back then, with a range of 0.997 to 1.14.

Since then, University of Auckland economics Professor Tim Hazledine and New Zealand Initiative chief economist Eric Crampton have expressed scepticism over the purported cost/benefit ratio for the city.

Crampton told the Weekend Herald yesterday the Cup was an excuse for "the Government to spend a lot of money on what is effectively a big party in Auckland".

"The business case for governance support of the America's Cup was weak to begin with. The benefits in these sorts of things are always overestimated," Crampton said.

"Now, under Covid, the event will be much smaller than it otherwise would have been. A lot of the expected visitors on which the business case would have depended will not be showing up, so the case obviously will have worsened.

"It was never that great an idea to start with. It's an even worse idea now."

Sam Neill attends a dinner hosted by former US President Barack Obama held at the Viaduct Events Centre. 22 March 2018 New Zealand Herald Photograph by Dean Purcell.

In 2018, Hazledine said: "It's very hard to get to the bottom of all this but my guess is that the regatta will make less for the country than the amount Emirates Team New Zealand are asking the Government for."

Auckland Ratepayers alliance founder Jordan Williams argued "countless other community groups and businesses would love the chance to use this space, and pay for it".

"Team New Zealand is hardly impoverished – its sponsors include Emirates, Toyota and Omega watches. They can fend for themselves without the help of struggling ratepayers," Williams said.

"Ratepayers are already forking out around $150 million to revamp the waterfront, including the Events Centre. Haven't we been milked enough?

"The council probably argues that we have to spend this much to compete with other countries keen to host these events.

"This is a dangerous line of thinking that sees the council engaged in ratepayer-funded spending wars with other, wealthier, countries."

The Duke of Cambridge meets people at the Auckland Viaduct during a royal visit in April 2014. Photo / Dean Purcell

Another unseen cost of Team NZ entering the Events Centre is the absence of an Auckland venue for big events - which has been dramatically compounded since the SkyCity convention centre burned down in October last year.

The seven-room Events Centre can house more than 3000 people, and has held hundreds of functions each year, including NZ Fashion week, political party launches, corporate functions, conferences and school balls.

Auckland based Ninety-Nine Reasons event management director Frankie Mahoney said they were "quietly screwed" for large event locations now big hotel reception venues were also being used for Covid-19 isolation.

"We could kind of cope knowing the Viaduct Events Centre was out - it was an inconvenience - but we had other options," Mahoney said.

"Because when we're booking events we're pre-booking years in advance so we're never looking at something next week.

"When Sky City burned down then we went 'now we've got a problem'; those options are gone.

"What's even a bigger problem now is all the big hotels have become Covid hotels. So we can't use them.

"I saw a client recently and I said to them 'we can't do this event in Auckland next year'. We're taking them offshore next year."

Last week, NZ Herald and NewstalkZB were served an injunction in the High Court by America's Cup Event Ltd (ACE) and Team NZ from publishing details of a report commissioned by the Crown.

Herald and ZB owner NZME has sought to lift the injunction and the case was heard in court last Monday. Justice Simon Moore has reserved his decision.