The future of Hastings most lucrative event is secure, after Hastings District Council this week (July 19) voted to fully back it.
Horse of the Year brings $12 million into the local economy over its five days, each year.
After carefully considering an independent review of the 2016 event, councillors agreed that Hastings, as host city, should increase its annual sponsorship, this year to $120,000. It also agreed to make a cash grant of $170,000 to Horse of the Year (Hawke’s Bay) Limited to give it the ability to better manage the financial lows and highs that come with major events.
Additional economic analysis confirmed previous studies showing that the event drew thousands of visitors and valuable economic activity into the district. The report also looked more broadly at the show, the first run by SMC Events.
Its findings included that from an equestrian point of view the show was a success and that the loss of $170,000 was caused by a number of issues, including a “deep” clean out of the indoor stabling blocks that cost tens of thousands more than expected, and sponsorship and trade show sales not reaching expected budgets. Some of the loss can also be attributed to work already done for the 2017 show.
The rights to the show are held by a company, Horse of the Year (Hawke’s Bay) Limited (HOYHB), which contracts the running of the event out to SMC Events. HOYHB has three shareholders: Equestrian Sport New Zealand (which owns the show), Hastings District Council, and Show Jumping New Zealand.
It was SMC’s first year running the show, after the previous managers declined to tender for the event.
HOYHB and SMC have agreed with the report’s findings that there is room for improvement in the systems and controls used between the company and SMC, and that the lessons learned from the 2016 show will help ensure a better result in 2017.
The independent review by business analyst Craig Waterhouse was clear that HOYHB should not change the event manager after just one year, and should cover the loss. The report made it clear that changing either the event manager or the board structure this year would create further financial risk for the show.
Mr Waterhouse said Council needed to be clear about the value of Horse of the Year and should be aware that it had secured the very lucrative event for very little money. A district or region wanting to attract such an event to their area would normally have to pay substantial money to the event owner in order to get it.
What came with the event was a $12 million economic upturn for the district, but also the risk that in some years the event itself might make a loss due to a number of factors: Things like unexpected costs; competition; weather.
Through its history the show has made a pattern of occasional losses, with most years showing a modest profit. Mr Waterhouse told Council that such results were normal for events of the scale and nature of Horse of the Year, and that a decision had to be made on where the risk should lie.
Given HOYHB had little capital, that risk would naturally lie with the funding shareholder, Hastings District Council, the report said.
The event company also took some of the risk, in that a portion of its payment was reliant on it making a surplus.
Hastings mayor Lawrence Yule said the Council’s decision was the right one, given the “very real benefits” to the community.
“The $12 million that comes in goes to our retailers, our motel owners, our restaurants and cafés, our supermarkets and petrol stations. The vast majority of those businesses are locally owned, and all employ local people. That money goes into the pockets of our people, whether that be through profits or wages, and it is a yearly boost to our community that we do not want to lose out on.
“The Waterhouse report says that based on the amounts other councils pay to attract events, ‘buying’ Horse of the Year could have cost Council somewhere in the vicinity of $600,000. We’re very lucky to have scored what is the largest equestrian show in the southern hemisphere for almost nothing. Council believes that the relatively small investment it has decided to make is worth it.”
Vicki Glynn, chief executive of Equestrian Sports New Zealand, said her organisation was very pleased that Council recognised the value of the show.
“For ESNZ, the Horse of the Year Show is the pinnacle event of our equestrian calendar. We were delighted this year that our competitors gave such positive feedback about the show. HOY is something Hastings and Hawke’s Bay can be really proud of. Everyone looks forward to coming to the Bay for this iconic event. It has become a real mecca for equestrian competitors for this very special week,” she said.
“Horse of the Year brings over $12 million into the region and we are delighted Hastings District Council has recognised the importance of the show to Hastings and the region and we look forward to another great show in 2017.”
Council also voted to look carefully at how, going into the future, any losses will be handled.
In a related decision Council voted to spend $200,000 on security fencing and irrigation at the A&P Showgrounds. Both would reduce costs for Horse of the Year.
4 October 2017
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