Auckland councillors have voted to approve a $63.3 million dollar bail-out package for Eden Park.
The agreement was hammered out in a protracted, and sometimes heated, meeting on Tuesday by the council’s Finance and Performance Committee.
The deal includes the council taking over a $40 million loan from ASB Bank to the Eden Park Trust, which it had previously been a guarantor for. The loan will be over 10 years and will include interest and will be secured against the trust’s assets.
The package also includes a $9.8 million grant for maintenance and upgrade work, including replacing the stadium's playing surface. While a $7 million working capital facility currently between the Eden Park Trust and ASB Bank will be consolidated with an existing loan of $6.5 million owed to the Auckland Council by the Eden Park Trust which predates the creation of the super city.
Mayor Phil Goff is keen to emphasise that the council’s offer is generous.
“We’re offering a package worth $63.3 million to Eden Park Trust, this is a huge sum of money,” Goff says. “We have two obligations here. One is to help Eden Park Trust, but our other obligation is to our ratepayers and residents.”
Goff had supported giving the trust a $9.8 million interest free limited recourse loan, instead of giving the money to the trust as a grant, which was finally agreed to by councillors.
He said it wouldn’t have had any impact on the upgrade works Eden Park has planned.
“If the trust does go under or they realise their assets we get our money back. The ratepayers’ interests will be protected.”
But councillor Desley Simpson had instead recommended giving the trust a $9.8 million grant and this was the final form that was approved.
Finance and Performance Committee chairman Ross Clow says he pleased to have reached an agreement to help the stadium.
“We are pleased to have reached a resolution for the Eden Park Trust Board which will allow them to carry out crucial maintenance work and enable the stadium to continue to host major international sporting events, concerts and community events," Clow says.
But he says he would have preferred to have given the trust a limited recourse loan, instead of a grant as it would have allowed council to recover the costs if Eden Park was sold at a later date.
“I just don’t think it’s very responsible for us to give it as a grant in this case. We don’t have any interest in the Eden Park Trust,” Clow says. “But where’s the government in all this? We’ve been left holding the baby again.”
The trust’s financial predicament can be traced back to a historic $40 million loan it received from ASB in 2010 which it secured after the former Auckland City Council agreed to act as a guarantor.
The now defunct Auckland City Council entered into the agreement under former Mayor John Banks in the lead up to the 2011 World Cup.
According to the Eden Park website, most of the costs involved in redeveloping the stadium for the 2011 Rugby World Cup were funded out of a $190 million grant from the government. But the now defunct Auckland Regional Council and the region’s other city and district councils were expected to contribute a further $50 million towards the works.
However, aside from $10 million from the Auckland Regional Council, the other local authorities refused to pay and the Auckland Council was forced to act as a guarantor on the remaining $40 million dollar construction contract to ensure the works, which included the redevelopment of the Southern Stand, were completed in time for the 2011 Rugby World Cup. The loan has a fixed repayment date of September 30, 2019.
But according to the Eden Park Trust’s 2018 Annual Report last year the Auckland Council refused to continue as guarantor after that date.
According to this week’s Finance and Performance Committee agenda the council was left with few options, aside from taking over the loan.
“If the loan were not taken over by council in an orderly manner, there is high likelihood of the guarantee being called and council needing to try and recover the amount owed through its guarantee security, likely to be a long and expensive exercise.”
And despite the latest financial fiasco Auckland Council still has no ownership rights or control over the stadium.