The Auckland Indoor Arena, an entertainment and sporting events centre, is a PPP entered into by the Auckland City Council in May 2004.
Quay Park Arena Management has agreed to build, own, operate and maintain the Arena for 40 years, when ownership of the building and the operating systems will be transferred to the Council. Construction is currently in progress.
As the arena was not commercially viable, the Council provided a subsidy by way of a contribution of $68.2 million towards the capital cost of $80 million.
Quay Park Arena Management has put up the remaining $11 million. It will be entitled to revenue from ticket sales and venue rentals. The agreement provides for the Council to receive royalties, which will in part be used to fund community events at the Arena. However, there is no guarantee that royalties will be received.
The main reason for choosing a PPP approach was that the Council does not understand and has no experience in operating a major events venue. Under the agreement, the private sector partner, which has the experience and skills to run this type of business, is responsible for operations and carries the operational risk.
|
|
|
|
|