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Mount Smart Stadium’s status as an orphan within the Auckland Regional Council’s structure led to the commercial failure of the LA Galaxy exhibition match in December 2008, according to government auditors.
In a 47-page report released by Deputy Controller and Auditor General Phillipa Smith, the LA Galaxy/Oceania ‘All Stars’ match – which lost $1.88 million despite featuring global star David Beckham - was “in essence the wrong event, at the wrong time, for the wrong price.”
The inquiry focused on the governance of the stadium and its position in the council’s structure and operations, as well as the council’s then lack of systems for monitoring and overseeing such events.
It found that the stadium did not “fit well” with the council’s other functions and operations.
“Mount Smart Stadium is, in our view, something of an orphan in the Council’s structure. Although the Council recognised the need to run the facility on a commercial basis, at the time it had not put in place an appropriate governance structure for a commercial operation.”
The report acknowledged the council had come to many of the same conclusions.
But it will have little time to learn from the experience, with the regional council set to vanish when the supercity is established.
The audit also found there was an unclear governance structure for the stadium. inadequate attention to planning in relation to the stadium, a failure by the council to review the management plan continuously as required by the Reserves Act and a failure to appreciate that the council’s business-as-usual processes were inadequate to support a major event such as the LA Galaxy event.
Without sufficient oversight, the council was not best placed to consider and approve the LA Galaxy proposal, according to the audit.
“Although there might have been a general view among councillors that Mount Smart Stadium needed commercial, profit-making events, the Council had no clear framework in which to assess the proposal.
"There was no formally adopted plan that would have guided the Council in deciding, for example, what sort of events it wanted to attract, its desired business model for events, how much risk it was willing to assume, and how it would balance commercial interests with the public good."
The council took further flak for taking on the role of promoter of an event for the first time, as it underestimated or discounted the possibility of a loss.
The council estimated an attendance of 30,000 to 40,000 and were advised that the Auckland market could sustain higher ticket prices than had been charged for a similar Wellington match featuring also featuring Beckham‘s team.
The full report can be found online here.