Cash crisis

Cash-strapped Gay Games organisers promised this week to deliver the event on budget -“ even if this meant slashing their budgets in half.

While Sydney 2002 co-chair Bev Lange refused to rule out a Mardi Gras situation, she said the board of the organisation was doing everything in its power to see the Games through a difficult time.

I can’t guarantee sitting here right now that a Mardi Gras situation won’t occur, but I can guarantee that absolutely every effort is being made to ensure that we monitor our cash flow, that we monitor our expenditure, that we look at whatever savings we can make.

I think if you look around it’s not an indulgent organisation. Things are continuing to be done, and have been done for a long time, on the smell of an oily rag. I don’t believe that there’s an ounce of fat in the organisation.

Lange put out an impassioned plea for Sydneysiders to get behind the Games.

This is an event that’s important to Sydney. The Games need help, and we need you to go out there and buy tickets, she said.

With three weeks to go before the opening ceremony the organisers have spent the last week desperately seeking a guarantor for a $1.5million bank overdraft in order to finance the Games preparations.

Although South Sydney Council, the City of Sydney and the NSW state government were all approached to guarantee the overdraft, all three bodies have dismissed the proposal as too great a risk.

A spokesperson for the NSW premier Bob Carr’s office insisted that there would be no further government financial assistance of any kind provided for the November event.

Up until a few weeks ago there was never any question of the government underwriting the Gay Games, the spokesperson said.

We’ve provided in-kind support but it is not a function of government to be underwriting private events such as these because we must be cautious about taxpayers’ dollars. There are too many risks in regard to the government underwriting a private event.

In spite of the unequivocal statement from the premier’s office, Sydney 2002 co-chair Peter Bailey insisted that negotiations were still continuing with government sources. Both Bailey and Lange said that they were still talking to a couple of parties about a guarantee but refused to comment on who had been approached.

According to Bailey the Games have sold almost $3million worth of tickets to Games events and parties. However, under NSW law the money is held in trust by Ticketek until after the events have been held.

Current Games budgets project $9million in ticket revenue. Sales are currently averaging only $250,000 per week, but Lange insisted that their sales model had always counted on a surge in the final weeks before the Games -“ which could account for up to half their budgeted sales.

Lange confirmed that the Games was entering a very expensive period of [the] event where you have a lot of outlays. However, Lange and Bailey revealed that projected expenses of upwards of a million dollars had been deferred until they had addressed the cash crisis.

Games organisers also confirmed that a number of contingency budgets had been prepared to address possible shortfalls in sales. Lange told the Star that even if ticket sales continued at the same rate they could deliver the event without a budget shortfall.

If ticket sales didn’t increase exponentially and they just went at the same rate they are selling now -“ a quarter million dollars a week up to this point without advertising -“ we’ve worked out what we could expect to get, and we’ve worked out what we need to shave off the budget to meet that expectation and not owe any money and we’re comfortable we can achieve that, Lange said.

If we have to [make budget cuts] we will but we are trying to deliver the best show we can for the best amount of money we can.

If ticket income sits at $3million and ticket sales continued at their current rate, total revenue would amount to $4million -“ leaving the Games with a $5million budget shortfall.

Despite intensive questioning as to how the organisation could make up such a shortfall, organisers were unable to point to specific savings. As an example, Bailey told the Star that one contingency budget could deliver savings of 33% on one of the party budgets. Such a cut on a standard Mardi Gras-style party would see a saving of only $300,000.

The event is clearly at a difficult point. We started the marketing of the event at a time when we thought it was appropriate, at a time when we thought people were starting to pay attention. I think we are acting as responsibly as we could be asked to act, I think we are being extremely cautious and conservative. We know that we can cut budgets if we need to, even at a late stage if we need to, Lange said last week.

Lange told The Sydney Morning Herald earlier this week that the financial crisis of Mardi Gras had taken away the focus from the Games and had made the community nervous about the event.

These claims have been described as utter nonsense by former Mardi Gras CEO Kelly Gardiner.

In a letter to the Herald (and copied to the Star), Gardiner claimed that Games organisers had known they were heading towards a cash crisis since at least June.

Games organisers have known for many months that Ticketek would not release ticket revenues until the event takes place, and have indeed been working hard since at least June to ensure that alternative arrangements (including guarantees and event insurance) were put in place, Gardiner wrote.

Ticketek is following its standard operating procedure under the new guidelines, and is right to do so. This has been the case for more than a year, and has nothing to do with Mardi Gras. Bad timing, it may be, as far as Games organisers are concerned, but every event organiser in NSW is in the same boat. Blaming each other is not only undignified, it is also unproductive and means we run the risk of never learning from hard-learned lessons, Gardiner concluded.