Govt signs SkyCity deal: 230 new pokies for $402m convention centre

The government has signed a heads-of-agreement with SkyCity, which will bear the cost of building a $402 million convention centre and operating it for 35 years.

The budget is up on SkyCity's originally proposed $350 million, and is made up of $315 million in construction and fit-out costs and $87 million in land costs.

In return, the casino operator will be able to install 230 new pokies machines. It had asked for up to 500.

SkyCity will also get 40 new gaming tables, plus the ability for people to gamble using a card rather than cash.

A further 12 gaming tables that can be substituted for automated table game player stations.

And 17% of pokie machines and automatic table games will be able to accept banknotes of denominations greater than $20

Additionally, its gaming license due to expire in 2021 has been extended to 2048.

The centre will have a capacity of 3500.

It is due to open in 2017.

The deal was co-announced by Economic Development Minister Steven Joyce, SkyCity chief executive Nigel Morrison and Auckland mayor Len Brown at a breakfast event this morning.

Mr Joyce says the centre create 1000 jobs during construction, and 800 permanent roles.

It will attract 33,000 visitors a year, who will inject $90 million into the local economy.

On the question of problem gambling, Prime Minister John Key says the number of pokie machines in New Zeland had been "reducing for six or seven years. This will slow the rate decline, but it will continue".

Mr Joyce says 230 new pokie machines is the same number granted to SkyCity under the previous Labour government in 2001, in return building the existing, and much smaller, Auckland Convention Centre.

An independent assessment by financial advisory firm Korda Mentha has described the value of the concessions made to SkyCity in exchange for the convention's centre construction as reasonable for both parties.

Mr Morrison says the listed company will meet the full costs of building the $402-million facility from its cash flows and existing debt facilities.

Earlier, Auckland Chamber of Commerce CEO Michael Barnett told NBR ONLINE readers, "The fact that we as taxpayers don't have to pay [for a convention centre] is a positive. My issue is we do not know what else was on the table to compare with this offer and call it good".

Critics have questioned whether Auckland needs a large capacity new convention centre. Mr Key says that capacity is needed to attract internaional business.

Mr Barnett says, "I believe NZ could attract 20 to 30 International conferences each year" after the centre is built. He sees a total of 20,000 new visitors a year.

Today's heads-of-agreement comes four years after it was first discussed. A full agreement will be completed by June 14.

Sky City shares [NZX:SKC] rose 3.4% to $4.55 after the agreement was announced this morning - the highest price since November 2007.