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Arena deals a first in public-private partnerships

20 May 2004

Arena deals a first in public-private partnerships

New Zealand’s first major public-private partnership will be sealed tomorrow (Friday) when Auckland City Council and Quay Park Arena Management Limited (QPAM) sign the development agreement for the city’s new $80 million indoor arena.

Recreation and Events Committee chairperson, Councillor Scott Milne, says the deal pioneers the concept of mixing public and private money to fund infrastructure in New Zealand.

“It’s a win-win deal which means Aucklanders will get a state-of-the-art venue for sports and entertainment and QPAM gets a business it can earn revenue from for the next 40 years.”

He says the signing brings to a close eight years of planning for an arena by the council, including 18 months of intensive negotiations to secure a BOOT (build, own, operate, transfer) deal.

Under the deal, QPAM will build the 12,000-seat arena for sports and entertainment in downtown Auckland.

While the council will invest most of the upfront cost of the arena, QPAM will invest some of its own money and will be responsible for building the venue on time and within budget. QPAM will also carry all commercial risks for the 40-year rights period.

The council will receive a 20-cent royalty from every ticket sold from day one, to help fund community events. It will receive more royalties once profits reach a certain level.

Mr Milne says ownership of the arena will transfer to the council at the end of 40 years in good working order and without any additional cost to ratepayers.

“The deal means that Auckland gets a world-class facility that will bring new events, new business and new jobs to the city.

“It recognises that council are not the experts when it comes to building and managing venues like this. Nor do we want to.

“We are allocating that responsibility to QPAM, which has the experience and expertise to manage it.”

He says the deal is the forerunner of public private partnerships.

“It is great news for Auckland because deals like this will increasingly help provide major new infrastructure in our city.”

He says BOOT schemes are typically used to bring private sector resources and expertise to help construct and manage new public assets and infrastructure including roads.

“BOOTs recognise that neither central nor local government alone will be able to finance all the investment needed in public sector infrastructure. A BOOT combines the resources of the public and private sectors to deliver public services and infrastructure efficiently and economically.”

Quay Park Arena Management Limited is jointly owned by Sydney-based Jacobsen Venue Management (JVM) and Miami-based Jack Utsick Presents. JVM also manages the Sydney Entertainment Centre, Sydney Capitol Theatre and Brisbane Convention and Exhibition Centre while Jack Utsick Presents owns and manages entertainment and sports venues internationally.

Tomorrow’s signing of the development agreement for the Auckland City Arena will take place at 3.30pm in the council chambers, ground floor, Auckland Town Hall.

Construction of the arena is expected to start in June and QPAM aims to have the arena open by the end of 2005.


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