Leaked report slams stadium project

By SCOTT KARA and BERNARD ORSMAN

A secret report is scathing of a $37 million stadium meant to be the jewel in Manukau City's crown.

And Auckland City's Quay Park arena proposal, costed at between $75 million and $100 million, is in doubt after lukewarm support from councillors.

A report by Ernst & Young that was leaked to the Herald says a feasibility study into Manukau's Pacific stadium by accountants KPMG has optimistic predictions and assumptions.

Pacific, to be sited just south of the Manukau Shopping Centre next to the motorway, includes a 15,000-seat outdoor arena, a 3000-seat indoor arena, an art gallery and a plaza.

In March, plans and costs were released after the council voted in favour of the project, but the two reports were kept under wraps.

Ernst & Young's report says the KPMG assumption that stage one and part of stage two of Pacific can be done without funding through debt is "very optimistic."

The report says it is more likely that borrowing will be needed.

But Pacific steering committee chairman Noel Robinson said if the funds to build Pacific were not raised then it would not go ahead.

Mr Robinson said KPMG had already made changes in light of the Ernst & Young report.

These included doing a worst-case scenario that showed Pacific would make a profit in its third year.

"We had to be very sure that it wasn't going to be a noose around anybody's neck," said Mr Robinson.

The Ernst & Young report says stage one and part of stage two will cost $37.6 million, meaning there are no funding projections for finishing stages three to five.

By not fully developing stages two to five, Manukau City may be left with a "partial complex."

But KPMG does not see a lack of funding for future developments at Pacific as critical to the project's success.

Mr Robinson said Pacific would not progress past stage two unless the market demanded it.

Ernst & Young says KPMG's assumptions in support of its financial projections mean ongoing funding may be needed to cover operating losses each year.

KPMG also assumes that $15 million will be raised by selling adjoining council land.

Manukau mayor Sir Barry Curtis said he could not comment on the sale of land except to say its location had attracted much interest.

Naming rights are also assumed by KPMG to be worth $6 million. But Ernst & Young points out that Jade Stadium in Christchurch received only $4 million for naming rights.

And securing naming rights has proved tough for North Harbour Stadium, which has been trying for three years to find a sponsor.

Meanwhile, Auckland mayor Christine Fletcher is sceptical whether the council can afford the Quay Park stadium. She believes it is a distraction from the city's most pressing problem, congestion.

Nevertheless, a council working party is holding talks with three private developers who have been shortlisted to build the 10,000 to 15,000-seat arena.

If the council does proceed, it plans to raise $50 million from ratepayers and hopes that the Government and the developer will find what is needed beyond that.

In return, the developer will receive 30-year management rights over the building.