Jade Stadium Redevelopment Request for Council Support Page 1 of 8 Introduction Jade Stadium Limited (JSL) has developed a concept and business plan for the further development of Jade Stadium. The estimated capital cost of the redevelopment is $60 million. Management believe that $40 million can be funded from existing and future Jade Stadium cashflows. This leaves a funding gap of $20 million. Council support is requested to address this funding gap. Jade Stadium - The Story So Far Lancaster Park (now known as Jade Stadium) has a history dating back to the 19th century as a centre for sporting and community events in Christchurch. Lancaster Park was formed in 1880 by the Canterbury Cricket and Athletic Sports Company Ltd. Lancaster Park Limited was registered in 1911 by the Canterbury Cricket Association and Canterbury Rugby Union. Lancaster Park Limited ran into financial difficulties. In 1919 The Victory Park Board Act vested the ownership of the land in the Crown and the management of the Park in the Victory Park Board (VPB), which comprised six representatives of the principal users – Rugby and Cricket, plus two others. Over the years Lancaster Park has been the home of Canterbury Rugby and Cricket, but has also played host to a variety of events including tennis, ballooning, swimming, horse racing, athletics, hockey, soccer, rugby league, concerts and evangelical gatherings. Bicycle racing in the 1890s Cricket Test Melbourne v Canterbury 1906 All Blacks v British Isles 1957 Historically, under VPB control, the addition or upgrade of facilities can be commonly traced to the eras when Canterbury Rugby and Cricket had periods of success. In recent years development of Jade Stadium has included: • The construction of the Hadlee Stand in 1995 at a cost of $5.2 million, funded partly from reserves with the balance funded by way of a loan from the builder. • The installation of sports lighting in 1996 to provide for night rugby and cricket, at a cost of $2.7 million. This was funded with a $0.5 million grant from Lottery Grants and $0.6 million from the Community Trust, with the balance funded by debt. VPB got into financial difficulties servicing the Hadlee Stand and the sports lighting loans. As a consequence Christchurch City Council established Jade Stadium Limited (JSL) in 1998 as a Council Controlled Trading Organisation with $4 million in capital. JSL was given a management contract of the stadium by the VPB. JSL advanced a loan to VPB to refinance the loans on the Hadlee Stand and sports lighting. In 1998 JSL began planning for the redevelopment of the standing embankment on the west side of Jade Stadium with more modern facilities. It took two years to finalise a sustainable business case for the redevelopment. The redevelopment involved: • The increase in capacity from 14,000 seated and 18,000 standing to a 36,500 all seated stadium. • The development of the southern 6,700 seat Tui Stand at a cost of $4 million. • The development of the 17,000 seat Paul Kelly Motor Company Stand at a cost of $38 million. • Replacement of the old scoreboard with a $2.5 million replay screen. Page 2 of 8 The stadium redevelopment was completed in March 2002 on budget. The total $44 million of the project was funded by debt arranged through the Council group. The business case was predicated on the increased operating cashflow available to Jade Stadium from user rentals, sale of corporate suites, clubs seats and reserves, naming rights, catering royalties and a $2 per adult stadium development levy on tickets. In addition Jade Stadium benefited from being part of the Council tax group with tax subvention payments to JSL from other Council trading organisations assisting cashflow in early years. This was forecast to produce an increase in operating cashflows (before interest, depreciation and capital expenditure) of approximately $4 million per annum, sufficient to pay loan interest and repay the loans over a period of 17 years. JSL has delivered on the business case and debt repayments are on track. Council provided the loans at commercial rates and interest and repayments have been met by JSL according to the agreed formula. It was originally hoped that some funding may have been available from the Lottery Grants Board and the Community Trust. However none was ever received. Under Jade Stadium Limited management, Jade Stadium has been brought back to a sound financial situation and facilities improved for the community and stakeholders. In late 2005 the management of Jade Stadium was transferred to Vbase, Council’s venue management company, bringing Christchurch’s key venues (Christchurch Town Hall for Performing Arts, Christchurch Convention Centre, Westpac Arena and Jade Stadium) under one management. With VPB’s agreement, the VPB is planned to be wound up (by Act of Parliament), with the grounds to be transferred to Christchurch City Council as a reserve and the facilities to be transferred to Jade Stadium Limited. The statutory steps for this are currently being finalised and the Christchurch City Council (Lancaster Park) Land Vesting Bill will go to government in April 2007. It is important to acknowledge the associated contractual obligation this presents for JSL with the Canterbury Cricket Association (CCA). In exchange for CCA agreeing to forego their historical Jade Stadium ground access rights for domestic cricket, JSL is required to work with the CCA to establish a new, alternate to Jade Stadium, playing home for domestic first class and international test match cricket. Project ‘First Class’ is underway and it is likely that a proposal will be bought to Council later this year. As at today JSL is running to plan. Other Stadia During the period of Jade Stadium’s rejuvenation other stadium development has occurred in New Zealand. By contrast these developments have often required significant local authority funding or bail out. • North Harbour Stadium, Albany: North Harbour Stadium was developed in 1997 at a cost of $41 million on a green field site in Albany with a capacity of 19,000 in a stand with a further 6,000 on grass embankments. It is operated by a Trust. It was originally funded $6 million by local government and $4 million from Lottery Grants, with the balance in debt. The North Shore City Council has recently moved to bail out North Harbour Stadium with a $30 million no interest loan. In August this year Council also made provision for the non recovery of all existing and future loans to the Trust. • Eden Park, Auckland: Eden Park is operated by the Eden Park Trust Board (EPTB) and has operated viably to date. EPTB has recently developed plans to increase the capacity of Eden Park from 48,000 to 60,000 for the Rugby World Cup (RWC) final in 2011. Page 3 of 8 Initially these were based on a $320-$385 million redevelopment proposal expected to be funded $42.5 million from additional Eden Park cashflows; $17.5 million from debt; $20 million from Trust grants; $30 million from Rugby New Zealand 2011 Limited (understood to be the RWC 2011 bid commitments of $10 million from NZRU and $20 million from Central Government); $50 million from Auckland City Council; $50 million from Lottery Grants; and $175 million from Central Government and related sources. However the Government has recently announced their support for a $170-$190 million upgrade of Eden Park including the development of one new stand, bringing the permanent capacity of Eden Park to between 40,000 and 50,000. The development of temporary facilities for the RWC2011 will take the capacity for that tournament to 60,000 plus. Funding of this proposal is still not clear but statements by the Minister of Sports and Recreation indicates funding is expected from the sale of suites and naming rights, Lottery Grants, ASB Trust, Rugby New Zealand 2011 Ltd, Auckland City Council and possibly the Auckland Regional Council, with a significant level of funding support still to be sought from Government. • Mt Smart Stadium, Auckland: Mt Smart is owned and operated by the Auckland Regional Council. As a result of a $23 million new stand development in 2004, Mt Smart now has a capacity of 25,000. Additional ongoing ARC funding support has been required as Mt Smart did not deliver on the new stand development business case. • Waikato Stadium, Hamilton: Waikato Stadium was redeveloped in 2001 to a capacity of 26,350 (of which 5,000 are standing) at a cost of $40 million. The Stadium was original owned by Waikato Rugby but Hamilton City Council assumed control in 2003. It is understood this was due to financial issues. • Westpac Trust Stadium, Wellington: Westpac Trust Stadium was developed on a green field site at a cost of $130 million in 2000. The stadium is operated by a charitable trust and was funded by $40 million in no interest non recourse loans from the Wellington City Council and Wellington Regional Council, 15 year prepaid sales of corporate facilities, a $4 million grant from Lottery Grants Board and sponsorship with the balance funded by debt. Jade Stadium - The Next Chapter The Rugby World Cup 2011 has provided the impetus for the redevelopment of the aging Number 1-3 Stands (dating from the 1960s) on the east side of Jade Stadium. The stands are nearing the end of their economic and structural life. In assessing the appropriate development for Jade Stadium, JSL has primarily considered the long term needs for Christchurch, and secondarily considered the RWC 2011 requirements, in order to get the right mix between optimising the RWC opportunity and the future requirements of the growing city.