Council approves additional funding for Crankworx

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2/04/2019 6:00:00 p.m.

2 April 2019

This year’s Crankworx Rotorua festival received an additional $75,000 in funding support from Rotorua Lakes Council to bring funding levels for the event in line with previous years and address cost pressures. 

The additional funding was provided from within existing Sports, Recreation and Environment budgets that had already been targeted at mountain-bike related initiatives.

The Full Council last week approved a recommendation that came from the Operations & Monitoring Committee to provide additional funding for this year’s festival.

Crankworx organisers faced additional cost pressures this year and sought an increase in the direct support to Mountain Bike Events Limited for the 2019 event and Enduro World Series which were held last month.

Mountain Bike Events Limited sought an additional $75,000 of support from the Council to assist with covering the Enduro World Series and some of the shortfall from other decreased public or philanthropic funding. There was capacity to meet the request within the Sports, Recreation and Environment’s budget by diverting some other mountain bike-related operational costs.

Council staff recommended the request for funding be approved to bring public funding back to previous levels, to recognise the value provided to Rotorua and respond to Council’s wish to see the event remain accessible for the Rotorua community.

As discussed with Council last year, it was intended to keep the event affordable for spectators (particularly locals) so ticket revenue would grow with attendance rather than pricing. With attendance weather dependent, it was a difficult revenue line to forecast, the Operations & Monitoring Committee was told.

The Rotorua Tourism Investment Partner Incorporated Society (RTIP) previously provided $75,000 for the 2015, 2016 and 2017 events. However, this additional contribution was not made for the 2018 Crankworx event.

The budget for the 2019 Crankworx event has a number of additional costs compared to the previous year, including community activations and professional services for Business Development and Sports Operations due to the increasing size of the event, and wider range of races and competitions. The 2019 event also incorporated a round of the International  Enduro World Series that required a hosting licence fee of $70,000. Other operational costs have steadily increased as the event has become larger and more successful on the international stage, the Operations & Monitoring Committee was told.

The revenue to support Crankworx has grown in some areas and declined in others. Revenue from major international sponsors has been increasing as the global reach of the Rotorua Crankworx event grows. Revenue from the associated bike and parts supplier Expo has remained steady over the last few years as space is fully utilised. Conversely, revenue from ticket sales grew initially but then decreased last year, despite an increase in numbers attending, due to lowered ticket prices.

Support from MBIE and philanthropic trusts also decreased this year as longer term commitments were scaled back and the RTIP-sourced funding was again not be provided.

The matter was dealt with in the confidential part of both the committee and Full Council meetings under Section 48(1)(a) and Section 7(2)(i) of the Local Government Act, to enable commercial negotiations to continue without prejudice or disadvantage. The decisions and the report which went to the Strategy, Operations & Monitoring Committee are now released to the public.

Deputy Mayor Councillor Dave Donaldson declared a conflict of interest at both meetings and did not take part in discussions or voting on the matter.

Background

Council has supported the event in the last four years with a direct event sponsorship of $75,000 from the Sport, Recreation and Environment division’s Major Event’s Sponsorship budget.

This sponsorship is committed to continue to 2021 as resolved by Council in October 2016.

As part of its support for the event, Council also provides an underwrite to Mountain Bike Events Limited to a maximum of $500,000 for the 2015-2021 period.

To date $94,000 of underwrite was required in 2015 and $39,000 in 2016. The underwrite was not required in 2017 or 2018 and payments of $12,000 in 2017 and $11,000 in 2018 have been returned.

By the numbers

  • $4.21m economic impact on Rotorua’s economy in 2018 (18.49m since 2015)

  • Average length of stay was 7.4 nights in Rotorua.

  • International Viewership 12.4m in 2018 (up from 11.4m 2017 and 4.6m 2015)

Page reviewed: 02 Apr 2019 6:00pm