For all intents and purposes the possibility of Sky City Entertainment Group Ltd [SKC.NZX] getting the go ahead from politicians for the right to build and operate a National Convention Centre with the benefit of taxpayer money and all the business that would bring to the SKC gaming floor is pretty much dead and buried.I have easily come to this conclusion because over the last week Mayoral candidates John Banks and Len Brown have both come out and backed the new Auckland "Supercity" and its bid for a convention centre in and around the Aotea Centre.
The Sky City and council bids are 2 of 5 that are bidding to build the national Convention Centre, at a cost of around $400 million, but politics has taken over sense in the Mayoral race because it wouldn't be seen as "fair" to subsidise a company like SKC for them to build an asset that they would benefit from - after all it is a big bad casino!
The thing is though, any winner in the race to build a convention centre would get the benefit of the taxpayer subsidy so the issue of favouritism would only be one of Council vs private business and this argument was won by private business many decades ago. Private business always does it better.
The only other arguments that remain are which is the best site and what will be the running costs be.
I agree with the NZ Herald that the best convention site would be a central city one, so that rules out the the ASB Showgrounds bid at Greenlane. A Ngati Whatua proposal for Quay Park, alongside the Vector Arena, and an Infratil Ltd [IFT.NZX] bid for the Wynyard Quarter .
The Herald is wrong about picking the council development though.
Sky City is the most appropriate site in terms of its centrality to the city and its amenities.
It is close to all the best hotel rooms, including Sky's almost 1000 rooms and its 3000 carparks, close to the tourist area of the Viaduct harbour, close to the best restaurants in Auckland, central to most public transport routes and motorways and the easiest to develop because of the sites undeveloped nature.
The big plus though will be the ongoing subsidisation by Sky City for the running costs of the convention centre, which will run into many 10s of million per annum. Of course if the council bid wins, these costs will be bourne by the Auckland ratepayer and they are clearly substantial.
Convention Centres do not make money as a standalone businesses and the justification for them being built is that they "bring custom to the city and surrounding businesses". This is the main reason that both Sky City and the council want to build their respective convention centres.
In my opinion then, the best place for a National Convention Centre is at the Sky City Complex. It will cost the taxpayer and ratepayer less initially and the ongoing cost savings would be the biggest advantage. It is also is in the best most central site, that is probably the most recognised man made icon in Auckland from just about every part of the city.
It looks like the Auckland City Council bid is locked and loaded though and that is a missed opportunity that will cost Auckland ratepayers dearly for many more years to come.
Disclosure: I own SKC shares in the Share Investor Portfolio
Sky City Convention Centre @ Share Investor
Share Investor discusses Convention Centre proposal with CEO Nigel Morrison
Sky City Convention Centre Expansion a Money Loser: Part Two
Sky City Convention Centre Expansion a Money loser
SKC Convention Centre power-point slide illustrations & SKC submission to Auckland City Council
Sky City Entertainment Group @ Share Investor
Sky City Entertainment Group: Australian Acquisition on the Cards?
Sky City Entertainment Group Ltd: 2010 Full Year Profit Analysis
Sky City Entertainment Group 2010 Full Year Profit Preview
Chart of the Week: Sky City Entertainment Group Ltd
Share Investor discusses Convention Centre proposal with CEO Nigel Morrison
Share Investor Q & A: Sky City CEO, Nigel Morrison
Sky City Entertainment: CEO Nigel Morrison discusses 2010 HY
Sky City Convention Centre Expansion a Money Loser: Part Two
Sky City Convention Centre Expansion a Money loser
Sky City Entertainment Group Ltd: Download full Company analysis
Sky City 2010 full year profit looking good
Long Term View: Sky City Entertainment Group Ltd
Sky City Entertainment: CEO Nigel Morrison discusses 2010 Half Year
Sky City Entertainment Group 2010 Interim Profit Review
Sky City to focus on Gaming
Sky City debts levels now more manageable
Insider Trading on Sky City shares
Sky City Profit Upgrade: Always on the Cards
Sky City's Current Cinema "Boom" a Horror Story in Disguise
Stock of the Week: Sky City Entertainment Group
Are Insiders selling Sky City Stock?
Sky City Entertainment 2009 Interim Result Preamble
2008 Sky City profit analysis
Sky City share offer confusing and unfair for smaller shareholders
Sky City Entertainment 2008 Full Year profit results , NZX release, 2008 full year presentation, result briefing webcast, financial statements
Sky City 2008 profit preamble
Sky City outlines a clear future plan
As recession bites Sky City bites back
Sky City Assets: Buy, sell and hold
Why did you buy that stock? [Sky City Entertainment]
Sky City Share Volumes set tongues wagging
Sky City half year exceptional on cost cutting
NZX Press release: Sky City profit to HY end Dec 2007
Sky City Cinemas no Blockbuster
Sky City Entertainment share price drop
New Broom set to sweep
Sky City Management: Blind, deaf and numb
Sky City sale could be off
Opposition to takeover
Premium for control
Sky City receives takeover bid
Sky City Casino Full Year Profit to June 30 2007
Setting the record straight
Sky City CEO resigns
Sky City Casino: Under performing
Sky City Casino 2007 HY Profit(analysis)
Sky City Casino 2007 HY Profit
Discuss SKC @ Share Investor Forum
Download SKC Company Reports
| Security Analysis: Sixth Edition, Foreword by Warren Buffett (Security Analysis Prior Editions) by Benjamin Graham Buy new: $41.77 / Used from: $32.40 Usually ships in 24 hours |
c Share Investor 2010
No comments:
Post a Comment
Comment on Share Investor Stuff