Editorial: Quest for answers on Cup expenses

The Viaduct Basin development is such a splendid addition to the Waitemata waterfront that Aucklanders might consider it good value at almost any cost. Nevertheless, they would like to know the cost - the full cost at the present value of the asset, not on the basis of speculation about what the yacht base might be worth by the time of the next America's Cup.

The Herald has obtained documents which suggest that Infrastructure Auckland, the body responsible for the public money invested in the basin, has accepted a valuation of $29 million for the marina and syndicate bases still in public ownership. On the basis of that valuation we made an assessment of the overall loss of public equity in the development. The figure has been fiercely challenged by the company that Infrastructure Auckland set up to manage the investment, America's Cup Village Ltd.

The company values the property at $40 million, a figure accepted by its auditors and now, it appears, by Infrastructure Auckland. That figure is based on estimates of earnings from the yacht base over the next three years. The revaluation was questioned by the board of Infrastructure Auckland in June, but appears to have been accepted as an "estimated realisable value."

Yet some time earlier, when the renewal of syndicate leases was being negotiated, the Infrastructure board accepted the lower valuation - $29 million - for the purpose of setting leases at a level that would give a sufficient return on the public investment. Obviously the lower the valuation, the lower the rent that syndicates need to be charged in order to produce the required return.

So the answer to the question people often ask, "Exactly how much did the America's Cup end up costing us?" remains a matter of argument. But the $29 million valuation still looks to us the more credible figure. That is the value that those managing the asset believe its earnings can sustain. It is hard to see how those earnings will have boosted the Viaduct's value to $40 million three years hence, particularly when the company managing the asset somehow lost $9.5 million during the Cup regatta last summer.

The loss on the event has yet to be satisfactorily explained. At the time, America's Cup Village Ltd blamed the public for coming to the Viaduct to look but not to buy from the kiosks and services at the basin. But the major sponsorship deal, with American Express, seems to have turned very sour too. There are questions that need to be answered over that deal, and there can be no justification for commercial secrecy now. The event is over, and Infrastructure Auckland will not be running the next one.

The company that next receives the contract to run the on-shore event in conjunction with the America's Cup might learn much from full public disclosure of the mistakes made last summer. It is not just that the shore organisation lost money, but that it did not always engage the public as it could have done. The crowds that thronged the basin to greet the victors could have been given more than a fleeting glimpse of them.

It is a pity the questions left by the Cup have not been quickly answered to everyone's satisfaction. The Cup Village won deserved acclaim, and the successful defence raised the national spirit to such heights that a full financial accounting would have been received with hardly a murmur. But the longer we must try to make sense of incomplete disclosure, the more concern grows.

America's Cup feature