Today, the NZ Herald reported:
Institutional investment reaction is divided over SkyCity Entertainment Group's pokies-for-convention-centre proposal.
Graeme Thomas of Milford Asset Management in Auckland said the $350 million Auckland deal was leaving some shareholders unimpressed.
"There is little doubt that the possible outcomes of this process have caused investors to be wary," Thomas said.
It's no wonder they're a bit worried about the deal... The feasibility study (PDF) into the convention centre showed that it would only be financially viable if the global economy picked up. It hasn't with more bad news coming out of Europe and the United States. China is also experiencing an extended downturn and perhaps more importantly, as our closest trading partner, Australia's economy has slowed as well.
This all means less delegations and therefore less business turnover for convention centres around the world. With our local business community not often requiring such facilities, the merit of investing in the project in the first place is questionable. But despite these facts, SkyCity is pushing ahead with it's plan, even purchasing $30 million worth of additional land to build their convention centre on. Clearly there is something in it for them.
Along with an official investigation into the governments involvement in trading off our legislation to allow 500 more pokie machines, which is a proven way to increase the number problem gamblers, the SkyCity convention centre is really looking like a dead dog in a ditch. Is there a National minister willing to risk jumping in to try and save it I wonder?
This has all been another PR disaster for the rightwing and especially John Key who initially arranged the secretive deal. After being on the back foot, they've now decided to remain largely silent on the issue while the Auditor General investigates. Previous attempts to spin the story to their advantage were largely feckless, with the public realizing that our legislation should simply not be for sale.
It would seem that some investors are also waking up to the questionable nature and lack of economic viability for SkyCity's convention centre. I wonder if the government will listen?
