Ripples from the Auckland venue's liquidation are spreading beyond the troubled events industry, with its bank and other creditors unlikely to recover their millions.
Contractors should have begun erecting the massive framework of the Home Show marquee at ASB Showgrounds this morning. Instead, Home Show general manager Amanda Magnus is awaiting confirmation of the Government's three-point plan for Omicron before likely pulling the plug ... again.
It's perhaps the starkest illustration of the trouble the events industry is in. With New Zealand's move to red light restrictions, the show looks set to be postponed for a fifth time.
The statutory board that previously ran the Showgrounds is in liquidation, owing an unsecured $4.3 million to the bank whose name it bears. Unable to pay the rent, the liquidator handed back the shiny building complex (with an insured value of $242 million) to the landowner, Cornwall Park Trust. A liquidator's report this month reveals 121 out-of-pocket creditors.
The former Auckland Agricultural Pastoral and Industrial Shows Board general manager Mark Frankham brashly attempted to rise from the ashes with a new management company, to operate the unmatched 20,000 square metres of exhibition space for big events like the Home Show and the Food Show. It resumed trading for little more than three weeks – before Delta closed it down again. And now, just as it was gearing up to reopen for 2022, Omicron....
ASB confirmed it had ended its 16-year naming rights deal: "ASB is no longer a sponsor of the Showgrounds," said the bank's external communications head Brigitte Ransom.
Instead, family-owned Exhibition Hire Services has sponsored Frankham's new company a six-figure sum to keep the critical venue operating, owner Raana Horan says. But to no avail. Events for at least the next six weeks are expected to be cancelled.
The Auckland Lantern Festival, with an anticipated 100,000 visitors, was scheduled to start on February 10. Then the Home Show beginning February 23, with 45,000 anticipated visitors. The Autumn Gift & Homeware Fair was to run from March 6, followed by the Autumn Baby Show a week later.
Frankham said government policy had been directionless, as illustrated by the 300 camper vans officials hired at the start of Covid for $2 million, to isolate returning travellers. They were parked up at the Showgrounds – only to sit idle for two months before being returned to the rental company.
The same was true of the policy around lockdowns: the events industry was repeatedly shut down, while shopping centres were allowed to operate without even vaccine passes. "It's just crazy stuff," he said. "And I've seen the standard of cleaning at shopping malls. Their cleaners couldn't even wipe a toilet seat."
He said neither the Auckland Council nor the Government had shown any recognition of the importance of the events industry to the economy, nor any willingness to support them.
So the previous ASB Showgrounds operator that he managed, the Auckland Agricultural Pastoral and Industrial Shows Board, had been forced into liquidation in June 2021. Inland Revenue will be first in line for $541,000 it's owed; there will be little left to share between unsecured creditors like ASB, small suppliers and exhibitors like the Home Show who'd paid fees in advance, and 48 redundant staff. "It's diabolical for them." Frankham admitted.
This month's liquidator's report shows staff have been paid partial redundancy (about 30 percent of their entitlement) but they're still owed $211,000.
Unable to pay Cornwall Park Trust Board's demands for increased land lease, its buildings had been handed over to the landowner. That was a significant commitment: the power bills, even with the site mothballed, had doubled from about $5000 to $12,000.
With new sponsorship from Exhibition Hire Services and in partnership with Waitoki farmer David Scott, he and operations manager Dean Mulholland had set up the NZ Exhibition and Events Co Ltd, purchased back their desks and computers from the liquidator, and negotiated to operate the Showgrounds on the Cornwall Park Trust Board's behalf.
"There are all sorts of social problems associated with people not earning enough, and they come from various backgrounds. They just look at us with puppy dog eyes and say, what's next boss? And I'm trying, man." – Raana Horan, Coast Group
They were able to successfully open the doors to host the Food Show from July 29 to August 1 – but then two weeks later, officials detected community transmission of the Delta variant in Auckland, and the city was put back into months of lockdown. Frankham says they effectively were able to trade for only three weeks.
Raana Horan said companies in the exhibitions industry had symbiotic relationships. So the money he was sponsoring to help keep the Showgrounds trading wasn't out of the goodness of his heart; his company needed them to survive.
His Exhibition Hire business had supplied equipment for the big LAB concert at Mt Smart on Saturday night, then marquees for the Auckland Marathon on Sunday morning – then came the news that the Prime Minister would be holding an unscheduled press conference. And all the plans and bookings came tumbling down again.
His company Coast Group had grown from a small events company, started by his mum and dad, into the country's biggest nationwide exhibitions supplier. It typically supplied equipment for events with 500 or more people – so the move to red light with 100-person limits meant entirely shutting down trading.
Through recurrent level 4, level 3 and red light restrictions, he had managed to continue employing the 80-plus staff at Exhibition Hire Services, supporting them through the revenues of the other business arms of the Coast Group. "We've just been waiting, waiting, and just doing whatever we can to keep them employed for the past two years."
But now, it was getting to the point where he would have to make some tough decisions about the future of the exhibitions business. "I'm just tossing up whether I take one more swing at it before I say no, bugger it, I can't do it any more."
That would be hard, because many of the staff had worked alongside him for their entire working lives. His managers had warned staff this week that coming months would be critical: "There are all sorts of social problems associated with people not earning enough, and they come from various backgrounds."
The workers had been stoic. "They just look at us with puppy dog eyes and say, what's next boss? And I'm trying, man."
Like Amanda Magnus from the Home Show, Horan is awaiting the Government's announcement this week about the three-point plan for responding to the Omicron outbreak – but he's not optimistic.
"All I know is that we hear about the cost of thousands of people in hospital. But there's a social cost, too, of all the businesses and people losing their jobs. What is the cost of that? I'm out of solutions."
The Government provided a $10 million contestable Domestic Events Fund to support the Covid-stricken events sector. A small amount of that is to Showgrounds exhibitors: $20,000 for the Go Green Expo booked in for April, and a small share to the Baby Show, the Autumn Gift and Homeware Fair, and the Auckland Food Show.
"Yes, we’ve faced significant losses from shows cancelled, many on the eve of lockdowns – however we’ve kept our heads above water and we’ll continue to strive for the same this year." – Brent Spillane, Food Show
The events industry is not optimistic about further Government support; Finance Minister Grant Robertson has given little indication that applications for the wage subsidy or business resurgence grants will be reopened under the red light restrictions. His position has been that most businesses should be able to trade in red light – but Horan and others in the exhibitions industry say that's not true of their big events.
There is still hope for smaller events.
Food Show promoter Brent Spillane said there continued to be exceptionally strong demand for face to face exhibitions (business-to-business and business-to-consumer) across the many industries his events company, XPO, served in NZ. "Even with the more recent Delta restrictions, XPO still managed to run 14 shows nationally across 2021 in between lockdowns – we’re estimating that this is more than any organiser across Australasia across the same period."
Spillane said he remained confident XPO would deliver a similar number of shows again in 2022. "Yes, we’ve faced significant losses from shows cancelled, many on the eve of lockdowns – however we’ve kept our heads above water and we’ll continue to strive for the same this year.
"These events are critical for the nation’s economic recovery with many thousands of SME exhibitors and literally tens of thousands of targeted industry and consumer buyers. While this new Covid variant will continue to disrupt our schedule we are buoyed to see major exhibitions in Australia recommencing a mere three months after Omicron’s arrival, a timeframe we are hopeful to see play out in New Zealand once we begin to transition more towards treating the virus as endemic.
"And we’re seeing very, very strong buying attendances return globally at industry expos across US, UK and across Europe."
