Friday, September 13, 2013

A Fool and His Money

Although we're now into our 6th year living in Sweden, I do still like to keep myself up to date with the significant comings and goings at my former home town of Dunedin in New Zealand. I am 5th generation born and raised in the small city, which made our family one of the oldest in town. It was a litle sad to leave, in that respect, knowing that the line was being broken. I was the last one out after 5 generations. There is probably a message in the fact that our family was completely stable in the city until about 10 or 12 years ago. Now we are all gone, right down to my parents and extended family members. All of us left hoping for something better, all of disillusioned with the state of the city today and the way that we knew it could be with the right attitudes at the top.
 
In my opinion the rot started when local celebrities started getting voted in to office. People who had made careers out of fooling people into liking them. I guess that it's a similar story in many local or central government organistations. Swedish politics, as I have observed it during my brief time, is a bit more serious. Compared to what I experienced in New Zealand, Swedish politicians are generally more suitably qualified for their roles. I say generally, there are always exceptions. But the ones I have spoken to here, know their topic. Dunedin, well you can't quite say the same about the current crop. The mayor is a former tv home handyman presenter. Think Tim the Toolman Taylor, but without the likeable persona. He is abley supported by a retired radio announcer, a 1980s singer impersonator, a local property developer (no conflict of interest there), and a northern lawyer who fled south with a dodgy past and bought a cafe out in the middle of nowhere. That's the cream of the crop with a few bit part players thrown in to make up numbers. In effect, not a single person in power with any experience or qualification in local government management. Hence the problem, and hence the continuing exodus from the city of anyone with half a brain.
 
The final nail in the coffin for Dunedin has been the insane idea to build, and fully fund, a new football stadium. Build It And They Will Come, was the battle cry. Guys, that was a movie, it didn't actually happen. Anyway, under the capable expert leadership of a local dentist, the city fathers of Dunedin bought into the whole bizarre concept and plunged the city it a debt level which has capped out at somewhere near 10 times the "pre-stadium" debt. And surprise, surprise, They Didn't Come.
 
The myth that stadia produce wealth for a region has been debunked so many times that it is almost impossible to find any Google reference to the contrary. A stadium doesn't produce wealth, it merely centralises existing disposable income that would have been spent elsewhere. If a family buys tickets to a football match, it means that they don't go to the local swimming pool that week, or hire a movie from the local video store. There is no additional money coming in, one business wins at the expense of another business. A stadium has a zero income nett effect.
 
So zero money coming into the region, but the facility still has to be paid for and operated. This is where the duely elected members of the Dunedin City Council chose to ignore global expert industry advice, and go with the magic show presented by, yup, a dentist. The decision for a local government body to fund a stadium in order to retain a sporting team results in an immediate loss of power for the party carrying the greatest risk, in this case the city council. Suddenly, the council becomes fully dependant on the sporting team using the venue and that puts the sporting team in a position of power. Sporting teams are mobile, they can play anywhere. They need a stadium, but not necessarily that stadium. The stadium, conversely, needs that sporting team. That allows the sporting team to dictate the terms of use. And that, as with every other stadium in the world, is exactly what happened in Dunedin. The city funds the entire cost for operating the venue, while the sporting team pays a nominal rental fee (sometimes they pay nothing) which equates to about 10% of the actual cost. Bizarre as it sounds, it would actually be cheaper to close the stadium than it is to open it up for football matches. Every time a match is played at Forsyth Barr Stadium, the level of debt being carried by the ratepayers of Dunedin City increases. Other cities around the wold now require the local sporting team to fund their own stadia, or at least share in the financial risk. I guess that they don't employ the use of dentists during the feasibility study phase. Their loss.

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