Government comes out on top over SkyCity deal

The new look SkyCity Convention Centre. Photo / supplied

A new report into the International Convention Centre deal says the government has come out on top over SkyCity in the protracted wrangling over the project.

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The office of Economic Development Minister Steven Joyce sent the Herald a fresh KordaMentha evaluation of the new deal which was announced this week.

The report stated "the impact of the changes to the proposed transaction is that the Crown is receiving more contribution from SkyCity than was envisaged".

The new design released this week revealed a smaller convention centre which required SkyCity to increase its spend from the $402 million agreed in 2013 to $430 million. The casino company said it might end up spending $450 million-$470 million after earlier saying it might need public money to build a centre for $530 million.

Mr Joyce said the report showed the Crown and the taxpayer had come out of the negotiations with a better deal than previously with SkyCity spending more on the outlay of the convention centre than was surrendered in changes in gambling laws.

He said the original deal was judged to be "cost neutral" by analysts and the new report showed it had "moved in the Crown's favour".

"It shows it's a very good deal for the Crown. The changes are to the net benefit of the Crown and the taxpayer."

Asked if the Crown dug its heels in with SkyCity, Mr Joyce said: "It was pretty clear back in February-March (when SkyCity mooted public funding) we had got to the end of where we were going and they had a choice to make.

"They made the right choice for Auckland. They made the right choice for New Zealand and they made the right choice or themselves."

KordaMentha said it had "specifically not been asked" to address other issues which would improve the value of the deal to SkyCity including the "benefit of the possible hotel and any impact to Skycity from reallocating land".

That means analysts did not consider the increased room rate and the integral position of the hotel in the ICC design, connecting the centre to SkyCity's existing facilities and central Auckland.

However, it did value the benefit of "on spend" from the hotel and laneway of bars and restaurants running between the convention centre and hotel at $4.4 million.

The original deal was hashed out with the SkyCity hotel built at the back of the convention centre in a less favoured position rather than its new central position. The land it was moved to was bought from TVNZ for use building the convention centre.

The shift in the hotel had been described as the "fundamental" component to the increase in the casino company increasing its contribution from the originally agreed $402 million to $430 million. The new report shows the increase on value was based on a hike in land values alone at $17 million.

The report also said SkyCity had agreed to spend $11 million on artwork as part of its new contribution to the convention centre.

See the full report here: