Sydney 2002 have approached local councils in a bid to secure a $1,500,000 guarantee for a bank overdraft from Westpac, with the organisation experiencing cash flow problems one month out from the event.

Although latest Gay Games budget figures earmark an ultimate quarter of a million dollar profit for the event, organisers are currently experiencing a cash shortage to cover ongoing expenses including equipment for the opening ceremony and expenses for the Games’ workshop.

Games officials approached City of Sydney, South Sydney City Council (SSCC) and the state government last week requesting the organisations go co-guarantors for a bank overdraft of $3 million to cover ongoing expenses.

Gay Games co-chair Bev Lange told Sydney Star Observer on Tuesday that the organisation was still waiting on a response from the councils, but said Sydney 2002 has since re-arranged their payments schedule such that the original bank overdraft request of $3 million had been reduced to $1.5 million.

I’m not sure if we want to comment on the response of the councils, but we’re still in discussions and we’re hopeful of guarantors coming forward, Lange told the Star.

While it is unclear whether City of Sydney or the state government will agree to act as guarantor for the Games, a number of leaked emails obtained by the Star suggest that South Sydney Council will prove a hard sell for Sydney 2002.

Key players within SSCC, including councillors and senior staff, have so far advised the council against accepting the Gay Games request, citing that it would not be appropriate for SSCC to step in this late in the day as guarantor and that the risks associated with the Games’ reliance on overseas visitors were high, due to the volatile nature of America’s war rhetoric over Iraq.

SSCC Mayor Tony Pooley yesterday confirmed that he had been approached by Sydney 2002.

Council has been a very strong supporter of Gay Games. As of last Wednesday we have contributed $440,000 in cash and in kind towards the Gay Games and that’s an indication of our support. It’s a big leap to go from cash and in-kind support to be guaranteeing a potential cash grant of in excess of a million bucks or three million dollars, four weeks from when the event starts. I think that is a quantum leap, Pooley said.

When told yesterday about SSCC’s reluctance to act as part guarantor, Lange said, We’re still in discussions with Ticketek and the NSW government. We need a guarantor or guarantors and we’re in discussions now.

It is also understood that negotiations with the City of Sydney are still open but that the city would prefer to enter a deal which did not see it as the sole guarantor.

The cash shortage sends a mixed message about the current financial position of the Gay Games. To date, the organisation has experienced steady ticket sales resulting in over $2.5 million held in trust by Ticketek. However, this cash must remain with Ticketek until the events have occurred, a measure designed to protect ticket holders from risk of event cancellation.

Bailey said that earlier negotiations with Ticketek had led Games organisers to expect that they would have progressive access to the funds. However, they were only recently told that they would be required to spend $250,000 on cancellation and abandonment insurance in order to access the funds.

The $2.5 million in ticket sales to date is just over one-quarter of the total $9 million the Gay Games hope to raise from ticketed events.

You look at the models of when our tickets were sold, it’s much stronger than the Olympics at this far out and they had a much larger marketing budget than we have. We’re not too worried about that, Lange said.

Lange also noted a recent ticket purchase surge which saw nearly half a million dollars worth of tickets sold in less than a week.

Sydney 2002 in recent weeks has also celebrated the arrival of several key sponsorship deals, including deals with the Newtown Hotel and Vodafone last fortnight and new cash and in-kind sponsorship deals with Southcorp and Ansell secured last week.

While details of the two most recent sponsorship deals have not been announced, it has been confirmed that Southcorp’s sponsorship deal will mostly include cash, while Ansell will help finance the Black Party and supply safe-sex product for the Games.

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