Auditor-General's overview

In December 2008, Auckland Regional Council (the Council) hosted an exhibition football match between LA Galaxy (a team that included international football star David Beckham) and an Oceania "All Stars" team at Mount Smart Stadium. The event resulted in a loss to the Council of $1.88 million, essentially because far fewer people purchased tickets to the match than the Council expected. The chairman of the Council asked the Auditor-General to review the Council's handling of the event.

We have reviewed how the Council handled the event, and so has the Council. We conclude that, despite the efforts of the council officers involved, the loss occurred because the LA Galaxy/Oceania "All Stars" match was in essence the wrong event, at the wrong time, for the wrong price. The Council has come to largely the same conclusion.

Our inquiry has focused more particularly on the governance of the Mount Smart facility and its position in the Council's structure and operations, and on the Council's then lack of systems for monitoring and overseeing such events.

The Mount Smart operation is something of an orphan in the Council structure – it does not fit well with the Council's other functions and operations, and the Council had not, at the time, considered or agreed on suitable governance and business models for it. Although there was a general view within the Council that Mount Smart Stadium needed to operate commercially, the decision to promote the LA Galaxy event was made without a formal business strategy or a clear policy about the level of commercial risk that the Council was willing to assume.

We are satisfied that the Council has correctly identified the problems with its governance and management of Mount Smart Stadium, and that it is taking appropriate steps to address those problems. Therefore, we have not made any specific recommendations for the Council. However, we trust that this report will provide some useful guidance for all public entities – especially those with commercial operations.

I thank the councillors and staff of the Council who assisted with this inquiry.

Phillippa Smith
Deputy Controller and Auditor-General

18 January 2010