SkyCity now demanding public funds
SkyCity Casino Hotel in Auckland, New Zealand has been getting the best of a deal to build an international convention center on behalf of the NZ government. According to the New Zealand Herald, when the company agreed to build and operate the International Convention Centre at SkyCity?at no cost to the public?the government changed its own laws to let the firm keep more of its gaming profits.
SkyCity cut a shrewd deal, getting another 230 pokie machines, 12 automated gaming tables, which can accommodate multiple players, and 40 more standard gaming tables. It ensured its monopoly by having its license extended to 2048. Changes were also made to the currency limitations, with about a fifth of pokie machines and automatic table games now able to take denominations higher than $20.
Some observers say SkyCity cut the deal in order to expand its own footprint in a crowded market. “They had that capacity problem and they realized if they weren’t going to do anything about it, they were stuck,” said management consultant Patrick Rottiers. “If I were to evaluate management talent and strategic thinking, the points would go to SkyCity.”
But two years after the agreement was signed, the Herald reported, SkyCity and the government have yet to agree on a design, and SkyCity has already made substantial changes to the original proposed design. Throughout the process, critics say, SkyCity has gotten the upper hand. For example, it has added a 300-room hotel to the complex; for years, SkyCity said all the land was needed for the convention center. A skybridge that once led from the street to the convention center now leads to SkyCity’s new hotel. In addition, SkyCity says the price tag, originally pegged at $402 million, could top out at $470 million to $530 million. And CEO Nigel Morrison refuses to pay the overage. Instead, he says the project should be finished with public money.
Auckland Chamber of Commerce CEO Michael Barnett supports the convention center, but thinks SkyCity may be the wrong partner. Barnett was offended by Morrison’s assertion that SkyCity would not pay for a project that was supposed to cost the public nothing. In December, Morrison told Radio New Zealand the company “absolutely” wants taxpayers to fill in the funding gap.
“This is an unprecedented investment in tourism infrastructure in Auckland,” he said. “If Auckland doesn’t want it, if New Zealand doesn’t want it, quite frankly that’s fine with SkyCity, we don’t have to do this.”
“That was a like-it-or-lump-it statement,” Barnett said. “This has been an appalling exercise in communication.”
New Zealand’s National Business Review called for an end to SkyCity’s involvement in the convention center, saying the company is trying to “extort” the government.
“Let SkyCity walk,” the publication wrote in an editorial.
