Council facilities company Auckland Unlimited is in talks to take on management of the big ASB Showgrounds and salvage upcoming shows.
ASB Showgrounds’ liquidator can’t honour bookings for upcoming events, because he fears becoming personally liable for seven-figure rent demands.
The liquidator Paul Vlasic has pointed the finger squarely at landlord Cornwall Park Trust Board in his first report.
He reveals Auckland Agricultural Pastoral and Industrial Shows Board, which for the past 50 years has run well-known events like the Royal Easter Show and the Homes Show, has gone to the wall owing money to 90 creditors.
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But there is one Vlasic does not list: the Trust Board, which is owed rent increases backdated to 2018, as well as rents deferred during the past year’s Covid restrictions.
Organisers of scheduled events like October’s Tiny House Expo had been told their shows could go ahead – but that now looks uncertain. “The Liquidator is not currently trading from the site,” Vlasic says in his report. “To do so may require the liquidator to accept personal liability for the on-going rental payments due pursuant to the lease.”
Vlasic did say he was waiting on additional information to determine the way forward. “We know there are many interested parties in this and greatly appreciate everyone’s patience as we undertake this work.”
One of New Zealand’s biggest exhibition operators, Brent Spillane of XPO Exhibitions, said he and council-owned Auckland Unlimited had approached the liquidator and the landlord with a view to Auckland Unlimited taking on the showgrounds’ management as it sought to resume trading.
“We are working with current event operators and have reached out to the Cornwall Park Trust Board with the objective to see events continue in the short-term. ASB Showgrounds is an important strategic asset for major and business events in the Auckland region.”
– Richard Clarke, Auckland Unlimited
That might yet allow upcoming events like XPO’s Food Show to go ahead on July 29, followed by the Baby Show starting on August 20, and the Spring Gift and Homeware Show a week later.
It’s big business. The Shows Board’s 2019 accounts show it grossed $9.28m revenue that year, before Covid hit. The shutdowns, though, were disastrous for the Showgrounds, and chief executive Mark Frankham says it lost $4m last year with the cancellation of 14 major events.
Among the listed creditors is the Showgrounds’ longstanding naming-rights sponsor, ASB Bank, which is owed $3 million. “Whilst support was offered from a number of these parties, including considerable accommodation from the Board’s bankers, collectively this was not sufficient to resolve the financial situation the Board had found itself facing,” Vlasic reports.
Other creditors include Inland Revenue (owed $683,000), Ricoh Finance ($55,000), and Davis Trading Company and other creditors ($905,000). Some of the last 16 staff are owed $211,000 in redundancy payments – but as unsecured creditors, they will be last in line to get their money.
The $3m owed to ASB is thought to have been a bail-out loan. “As is the usual process in these circumstances, we are working through options with the liquidator,” said an ASB spokesperson. “Our sponsorship agreement with ASB Showgrounds is separate and unrelated to the loan arrangement.
“Naturally we can’t comment on a customer’s financial arrangements with us.”
“We have documented billions of dollars in buying power walking through our shows, and we need a home for them. And what’s the contingency plan? Putting up marquees in parks across Auckland?”
– Brent Spillane, XPO Exhibitions
Overshadowing all the troubles are three years of protracted talks to agree a rent increase on the 8ha property, leased from Cornwall Park Trust Board. The Shows Board paid $1.1 million in rent and associated expenses in 2019 – but a valuation commissioned by the Trust Board would have set the new rent at $2.3m a year.
The Showgrounds are on land donated to the people of Auckland by early civic leader Sir John Logan Campbell. The Trust Board is a non-profit charity, which pays for the management and upkeep of Cornwall Park through collecting rent on leasehold properties on its fringe, including the Showgrounds.
In an interview with Newsroom last week, Trust Board chairperson Adrienne Young-Cooper had insisted there was no rent dispute; that the two boards were simply working through the agreed adjudication process. That was heard on May 17, and the adjudicator has not yet ruled on how much rent can be charged. Whatever the increase is, it would have been backdated, if the Shows Board hadn’t voluntarily put itself into liquidation.
The Shows Board’s rents had been piling up, with deferred rents during the lockdown creating a liability that the Board eventually decided was insurmountable. “The outcome of the adjudicator’s decision has not yet been released, however it is anticipated that a significant additional rental liability will crystallise upon this being issued,” Vlasic says.
Despite Young-Cooper’s insistence that there was no dispute, that is precisely how it was described in notes to the Shows Board’s 2019 accounts.
“The organisation is in dispute with the landlord over the rental increment,” wrote accountants Hayes Knight.
The Shows Board’s cash flow projection was for a cash surplus of $1.1m in June 2021 – but that assumed no further shutdowns. It was calculated before the Valentine’s Day cluster forced the ASB Showgrounds to close for another 15 days.
The shutdowns were a double whammy: not only did they force the cancellation of events, but they also forced a delay to arbitration of the rent dispute. “A material uncertainty exists with respect to the going concern of the organisation,” the report concluded.
Last night, Auckland Unlimited said it was in talks to find a short-term solution to allow scheduled shows to go ahead.
“We are working with current event operators and have reached out to the Cornwall Park Trust Board with the objective to see events continue in the short-term,” said Richard Clarke, the head of major and business events.
“ASB Showgrounds is an important strategic asset for major and business events in the Auckland region.
“Auckland Unlimited is keen to be part of ongoing discussions into the long-term management and viability of the venue.”
Brent Spillane was counting down the days; he has just a month until he is scheduled to open the Auckland Food Show at the Showgrounds. “All of the dialogues are pointing to a positive outcome,” he told Newsroom. “I know there is some urgent work happening with council to reopen the facility.”
He said there was a “misconception” that the new New Zealand International Convention Centre, next to SkyCity, would be big enough to host events like the Homes Show. “That’s just not true,” Spillane said.
“The events we and some of our colleagues put on are well beyond the scale of anywhere but this venue. This is too valuable an asset to be lost – just a selection of our shows bring 78,000 domestic visitors to Auckland each year.
“For Auckland as a city, that’s very material and very important. We have documented billions of dollars in buying power walking through our shows, and we need a home for them. And what’s the contingency plan? Putting up marquees in parks across Auckland?”
He had also been talking with a film crew that was meant to be shooting at the site, and he said the Ministry of Health had booked in to use the Showgrounds as a vaccination centre. So there were a lot of influential players keen to reopen the site, and he said XPO would pay its exhibition rent up-front if that helped.
“We’ve been buoyed by what we’ve heard from the Cornwall Park Trust Board chairperson, that they’re keen to see the facility continue. We’ve been living out Sir John Logan Campbell’s wishes by putting on important trade shows and events for the people of Auckland, for the past 20 years.”