Hampton Downs officially in trouble

[steveyb]

Just heard on the sports news that HD owners have officially gone to the market seeking investors to secure the longterm future of the facility.
That means that financially it is in trouble and they cannot secure the facility through revenues from operations, at least not with the current debt levels.
So any investments will likely be used to retire (some) debt first and continuing development second. Having to repair/relay the circuit certainly won't help.

Anyone out there keen to own a piece of HD?
Get in touch with the owners.

Best of luck to them. I would think some international motorsport interests might get interested.

[Str8 Jacket]

Link to story in stuff:
http://www.stuff.co.nz/sport/motorsport/8308896/Hampton-Downs-seeking-further-investment

[neil_cb125t]

Race track 'theorys' that work really well:

Lets design a kick arse track with plently of options people will love it, but well only build half of it - we can finish it later...... FAIL
Oh that corner needs a reseal, ok well just patch it - it will be sweet........ FAIL
Once we have patched it well let, trucks and race cars out on it the next day.........FAIL
We'll price it up so its totally affordable for everyone to use.....hmmmmm we aint making any money, ok for national events we will triple the price and make garages more expensive than 5 star hotels in london, that will fix it.

If HD had finished the track, secured aussie V8s there that would have helped ......im guessing.

[jellywrestler]

once those coparate suites go in above the garages the place will die as they will obstruct a large part of the veiw too

[nodrog]

once those coparate suites go in above the garages the place will die as they will obstruct a large part of the veiw too

Stink, you wont be able to see the portable toilets and showers anymore.

[scott411]

they have been in trouble for a few years now, but they have not been easy to deal with when offered extra streams of revenue either,

[Crasherfromwayback]

they have not been easy to deal with when offered extra streams of revenue either,

That's clever!

[scrivy]

Failing racetracks has got me well and truely fucked.

Why is it that central and local goverment can build brand new sports stadiums worth $100's of millions of dollars, for how many people to actually use - maybe 1000 different sports people a year?? (If they're lucky).

How many different sports people a year get to use a racetrack?? All sorts of different codes:
Motorbikes - how many classes?,
Cars - how many classes?,
Sidecars,
Trucks,
Drifters,
Go-karts,
Corporate days,
Training days,
Vehicle Industry testing days,
ACC,
Even drag racing.

Why is it that money is spent on fuckwits to kick (or throw) a ball around, but supporting other sporting codes is not permitted by the goverment?
Why don't the rugby stadiums get funded by private backers.......?? How many would there be then??

Even the Mayor of Dunedin said on TV last week that maybe they shouldn't have built their stadium......... No fucken surprises there!! How many Hampton Downs or Taupo's could they have made for that one stadiums cost????

[HenryDorsetCase]

interesting discussion. Is Hampton Downs Limited a privately held, for-profit company? If yes then presumably the revenues have not met forecast: the economy has been in the shit for a while.

I am interested to see how Highlands goes: though its a different model, backed by Tony Quinns dollar.

[SWERVE]

once those coparate suites go in above the garages the place will die as they will obstruct a large part of the veiw too

Wouldnt want to put a second storey on those garages......... they cant even support WATER.. let alone apartments!

[swarfie]

Failing racetracks has got me well and truely fucked.

Why is it that central and local goverment can build brand new sports stadiums worth $100's of millions of dollars, for how many people to actually use - maybe 1000 different sports people a year?? (If they're lucky).

How many different sports people a year get to use a racetrack?? All sorts of different codes:
Motorbikes - how many classes?,
Cars - how many classes?,
Sidecars,
Trucks,
Drifters,
Go-karts,
Corporate days,
Training days,
Vehicle Industry testing days,
ACC,
Even drag racing.

Why is it that money is spent on fuckwits to kick (or throw) a ball around, but supporting other sporting codes is not permitted by the goverment?
Why don't the rugby stadiums get funded by private backers.......?? How many would there be then??

Even the Mayor of Dunedin said on TV last week that maybe they shouldn't have built their stadium......... No fucken surprises there!! How many Hampton Downs or Taupo's could they have made for that one staiums cost????


HERE HERE....Say it LOUDER.:killingme It's probably because the race track builders/proposers/owners can't afford to feed the politicians their usual back-handers!!!!

[HenryDorsetCase]

Failing racetracks has got me well and truely fucked.

Why is it that central and local goverment can build brand new sports stadiums worth $100's of millions of dollars, for how many people to actually use - maybe 1000 different sports people a year?? (If they're lucky).

How many different sports people a year get to use a racetrack?? All sorts of different codes:
Motorbikes - how many classes?,
Cars - how many classes?,
Sidecars,
Trucks,
Drifters,
Go-karts,
Corporate days,
Training days,
Vehicle Industry testing days,
ACC,
Even drag racing.

Why is it that money is spent on fuckwits to kick (or throw) a ball around, but supporting other sporting codes is not permitted by the goverment?
Why don't the rugby stadiums get funded by private backers.......?? How many would there be then??

Even the Mayor of Dunedin said on TV last week that maybe they shouldn't have built their stadium......... No fucken surprises there!! How many Hampton Downs or Taupo's could they have made for that one staiums cost????

interesting to learn from the stuff piece that the investment is $70m. If memory serves the white elephant that is the dunedin stadium was $100M.

I agree with you entirely as regards the eggballers. the thing that gets me is this: they use, and expect to have built for them, costly infrastructure by the public. They then expect that same public to pay top dollar to use it, while any profits made by the private, for-profit entities that control that eggball are held by the eggballers. So it is publicly funded and profits are private. Then when it goes horribly wrong like it has in dunedin, the public are asked to help out. I am not sure who rescued Otago rugby from liquidation (was it private or public money, or the NZRFU?) but I think thats a case study of what not to do.

Dave Cull was elected in Dunedin pretty much due to his opposition to the stadium. the problem is, the poor fuckers are stuck with it, and the only thing they can do is gouge their ratepayers to fund it. And I see they are going to make a capital loss on the sale of Carisbrook to Calder Stewart. Awesome business dealings guys, just awesome.

[nodrog]

Z
Failing racetracks has got me well and truely fucked.

Why is it that central and local goverment can build brand new sports stadiums worth $100's of millions of dollars, for how many people to actually use - maybe 1000 different sports people a year?? (If they're lucky).

How many different sports people a year get to use a racetrack?? All sorts of different codes:
Motorbikes - how many classes?,
Cars - how many classes?,
Sidecars,
Trucks,
Drifters,
Go-karts,
Corporate days,
Training days,
Vehicle Industry testing days,
ACC,
Even drag racing.

Why is it that money is spent on fuckwits to kick (or throw) a ball around, but supporting other sporting codes is not permitted by the goverment?
Why don't the rugby stadiums get funded by private backers.......?? How many would there be then??

Even the Mayor of Dunedin said on TV last week that maybe they shouldn't have built their stadium......... No fucken surprises there!! How many Hampton Downs or Taupo's could they have made for that one staiums cost????

Dont get me started on the americas cup, 30ish mill on one campagin and a boat that only 10 or so people get to play with.

[scrivy]

It's probably because the race track builders/proposers/owners can't afford to feed the politicians their usual back-handers!!!!

And I remember seeing Donkey shaking hands with the two directors before the sealing......
Just a photo op, but with no money to help - CUNT! :mad:

[Zedder]

Race track 'theorys' that work really well:

Lets design a kick arse track with plently of options people will love it, but well only build half of it - we can finish it later...... FAIL
Oh that corner needs a reseal, ok well just patch it - it will be sweet........ FAIL
Once we have patched it well let, trucks and race cars out on it the next day.........FAIL
We'll price it up so its totally affordable for everyone to use.....hmmmmm we aint making any money, ok for national events we will triple the price and make garages more expensive than 5 star hotels in london, that will fix it.

If HD had finished the track, secured aussie V8s there that would have helped ......im guessing.

Yeah, but having NZTransport Agency totally against them, they admitted it and apparently said they'd fight tooth and nail, was cited as a major cause of not getting the necessary Resource Consent back then. Puke didn't need one due to "exisiting use".

The track extension had the foundations laid and was preloaded several years ago, it just needed sealing. In a nutshell: Get Resource Consent= get V8 Supercars= get sealing done.

[HenryDorsetCase]

HERE HERE....Say it LOUDER.:killingme It's probably because the race track builders/proposers/owners can't afford to feed the politicians their usual back-handers!!!!

No, I dont think corruption is at issue. I think it is the ridiculous amount of political clout weilded by the NZRFU. Way out of proportion to its importance. I never liked rugby, but I started to hate it when it became "professional"

[scrivy]

Big meetings draw big spectator numbers. Especially international events.
How many spectators do these 40, 50, 60 thousand people stadiums have at most weekends?

Imagine how much advertising the clubs, promotors, track owners could do if the goverment had helped out like they do with the fooseball stadiums. The spectator attendence would be massive, and the tracks would not go belly up. Period.

[HenryDorsetCase]

Big meetings draw big spectator numbers. Especially international events.
How many spectators do these 40, 50, 60 thousand people stadiums have at most weekends?

Imagine how much advertising the clubs, promotors, track owners could do if the goverment had helped out like they do with the fooseball stadiums. The spectator attendence would be massive, and the tracks would not go belly up. Period.

Sure, but the political reality is that it will not happen.

It is also interesting that less and less people care about rugby these days. there are so many other sporting and entertainment options, people's work habits have changed, blahdeblah.

[scott411]

The track extension had the foundations laid and was preloaded several years ago, it just needed sealing. In a nutshell: Get Resource Consent= get V8 Supercars= get sealing done.

The reason the V8's wont go there is because the promotor wont touch the place, the promotor wont touch the place because the best viewing area is the apartments, the apartments are mostly privetly owned so no promotor can stop people going in there, (and their is no major event clause for them to fall back on)

so apartments = no revenue for the promotor, and take up where you would put a heap of paying poeple, he can charge everybody at Pukekohe,

and also Pukekohe is in the supercity, so he can go after the supercity promo budget, Hampton Downs is in the Waikato, he has already bled that budget dry

[Zedder]

The reason the V8's wont go there is because the promotor wont touch the place, the promotor wont touch the place because the best viewing area is the apartments, the apartments are mostly privetly owned so no promotor can stop people going in there, (and their is no major event clause for them to fall back on)

so apartments = no revenue for the promotor, and take up where you would put a heap of paying poeple, he can charge everybody at Pukekohe,

and also Pukekohe is in the supercity, so he can go after the supercity promo budget, Hampton Downs is in the Waikato, he has already bled that budget dry

Have a read about what the V8 Supercar boss Tony Cochrane said:http://www.nzherald.co.nz/motoring/news/article.cfm?c_id=9&objectid=10830310

[quickbuck]

........backed by Tony Quinns dollar.
Roomer has it that he offered to help HD out a few months back, but told his offer was too low.....

Thing is your first offer is usually the best you will get......

[scott411]

Have a read about what the V8 Supercar boss Tony Cochrane said:http://www.nzherald.co.nz/motoring/news/article.cfm?c_id=9&objectid=10830310

would you run a race at a venue where you could not charge for the best veiwing positions?

and would you blame the motorsport poeple who own those apartments pubically when you still want thier dollars up the road?

or would you blame a big faceless organsation that everyone hates anyway (the resource managment act and the people that adminsiter it)

[Zedder]

would you run a race at a venue where you could not charge for the best veiwing positions?

and would you blame the motorsport poeple who own those apartments pubically when you still want thier dollars up the road?

or would you blame a big faceless organsation that everyone hates anyway (the resource managment act and the people that adminsiter it)

I'm just presenting some facts and quotes scott411. Where are yours?

Incidently, the NZTA (who are not faceless) were the stumbling block initially to gaining the Resource Consent if you read the info correctly.

[Deano]

Incidently, the NZTA (who are not faceless) were the stumbling block initially to gaining the Resource Consent if you read the info correctly.

Is that due to traffic jams on the motorway ?

Is there enough room on the road (after the off ramp) for vehicles to go up, then turn back and into the carpark to avoid said traffic jams ? It would certainly grid lock the side road, but leave the motorway free.

[scott411]

I'm just presenting some facts and quotes scott411. Where are yours?

Incidently, the NZTA (who are not faceless) were the stumbling block initially to gaining the Resource Consent if you read the info correctly.

I dont have facts i can quote, but i have heard this talk and you do not need to beleive me, it seems very logical to me tho, and i know they have had run ins with the NZ v8's and even the super tourers, a coupe of years ago the Tier one car meeting did not go their either,

I would call NZTA faceless as well, hardly one person to blame, its a goverment department,

the Prison was also an objector, another goverment department,

[Deano]

I would call NZTA faceless as well, hardly one person to blame, its a goverment department,

the Prison was also an objector, another goverment department,

Haha - prisoners have no rights, why the hell did they object ?

Andy Knackerhead is the face of NZTA - they even list his cell phone number on their website. I bet he doesn't answer it after hours.

[Zedder]

Is that due to traffic jams on the motorway ?

Is there enough room on the road (after the off ramp) for vehicles to go up, then turn back and into the carpark to avoid said traffic jams ? It would certainly grid lock the side road, but leave the motorway free.

The NZTA head in charge of highways, apparently said it would "absolutely block up the main artery in and out of Auckland".

Feeder roads weren't mentioned as far as I could tell.

[Deano]

The NZTA head in charge of highways, apparently said it would "absolutely block up the main artery in and out of Auckland".

Feeder roads weren't mentioned as far as I could tell.

Yeah that's what I thought. I don't know how long the feeder road is but just thought it was an option to take the load off the m/way. Either way it would certainly choke the feeder road up. Maybe that's why the prison objected ?

[HenryDorsetCase]

would you run a race at a venue where you could not charge for the best veiwing positions?

and would you blame the motorsport poeple who own those apartments pubically when you still want thier dollars up the road?

or would you blame a big faceless organsation that everyone hates anyway (the resource managment act and the people that adminsiter it)

or the short sighted munters who sold the apartments to get the cash flow but then gave up any control over them and thus any ability to attract the top earning race. Sure, it probably looked fairly attractive to them cashflow wise early in the piece to build the apartments, flog them off, and get the tin in the bin, but its royally fucked them now. What that says to me is that they were undercapitalised going in, and its gone from bad to worse... From memory those apartments were around the $450k mark? something like that.

[HenryDorsetCase]

Haha - prisoners have no rights, why the hell did they object ?

Andy Knackerhead is the face of NZTA - they even list his cell phone number on their website. I bet he doesn't answer it after hours.

phone him now and see :)

[Deano]

phone him now and see :)

Its tempting but abuse over the phone can get you disconnected can't it ?

[steveyb]

Andy Knackerhead is the face of NZTA -

That's not his real name is it? Surely not....

[trustme]

Certainly isn't. It's Andy Knucklehead, has to be when you hear some of the shit he talks.

[trustme]

Am I missing something here, the article talks about raising capital to extend the track, that is not the same as being in the financial do do. Many businesses start off woefully under capitalised & have to seek outside investors to enable growth or they simply stagnate. Is that what is happening here or is there more under the surface
From the little I heard the supercars decision was because Cochrane had more control & hence more profit from going to Puke & the pollies fell into line. Motorsport in general would seem to prefer to see HD developed. Pity the money being spent on Puke was not directed to HD to give us a premier track rather than 2 also rans.

Surely the apartment owners have a body corporate & controls over apartment use to limit using them for commercial gain at the expense of the track owner, seems a no brainer to me

[nzmikey]

The reason the V8's wont go there is because the promotor wont touch the place, the promotor wont touch the place because the best viewing area is the apartments, the apartments are mostly privetly owned so no promotor can stop people going in there, (and their is no major event clause for them to fall back on)

so apartments = no revenue for the promotor, and take up where you would put a heap of paying poeple, he can charge everybody at Pukekohe,

and also Pukekohe is in the supercity, so he can go after the supercity promo budget, Hampton Downs is in the Waikato, he has already bled that budget dry

Sorry you say what now ???
http://media.speedcafe.com/wp-content/uploads/2011/04/group-last-turn.jpg

Pretty sure that those buildings are apartments ... I have a mate who used to live there & every year she had heaps of mates come over & stay & watch the racing ..

[FJRider]

I am interested to see how Highlands goes: though its a different model, backed by Tony Quinns dollar.

Motor racing there will be secondary to normal daily use. And unlikely motorcycles will EVER race there.

Vehicle testing will be the primary use for that track. (Summer alternative to the Snow Farm)

[jellywrestler]

Surely the apartment owners have a body corporate & controls over apartment use to limit using them for commercial gain at the expense of the track owner, seems a no brainer to me

even eighty apartments with 20 people per unit which would only be unpleasant in reality is 1600 people out of a crowd they expect of 50 thousand so what?? it's only skirting round the real issue.
i'd pick an average of less than 10 per unit

[trustme]

Yeah I think the apartment thing is a bit of a crock. I heard a long serving motorsport insider say that Cochrane had a whole lot of assets left from Hamilton that he would not be able to use at HD but could flog off to Puke for a tidy sum. The Puke decision was all about self interest to the detriment of motor sport at large . Even Chris Amon came out against it, he felt Puke had reached it's use by date.
HD is the future & needs supporting . Puke is the past.

[Zedder]

Am I missing something here, the article talks about raising capital to extend the track, that is not the same as being in the financial do do. Many businesses start off woefully under capitalised & have to seek outside investors to enable growth or they simply stagnate. Is that what is happening here or is there more under the surface
From the little I heard the supercars decision was because Cochrane had more control & hence more profit from going to Puke & the pollies fell into line. Motorsport in general would seem to prefer to see HD developed. Pity the money being spent on Puke was not directed to HD to give us a premier track rather than 2 also rans.

Surely the apartment owners have a body corporate & controls over apartment use to limit using them for commercial gain at the expense of the track owner, seems a no brainer to me

The thread title was incorrect. However, Str8Jkt posted a news item about the HD guys needing more funds which certainly makes sense.

If HD had have got the necessary Resource Consent it would have been all go for the V8 Supercars. They didn't though. As posted earlier NZTA's anti-HD-as-a-venue attitude didn't help their cause at all.

[Woodman]

No, I dont think corruption is at issue. I think it is the ridiculous amount of political clout weilded by the NZRFU. Way out of proportion to its importance. I never liked rugby, but I started to hate it when it became "professional"

Don't bag rugger because they manage to get what they want. Maybe the other sports aren't trying hard enough? Remember the RWC? Did you see how popular it was? Would even a Formula one or Moto GP get that sort of support from the general public in NZ. I don't think so.

[DEATH_INC.]

Remember the RWC? Did you see how popular it was?
No, what was that?

[HenryDorsetCase]

Don't bag rugger because they manage to get what they want. Maybe the other sports aren't trying hard enough? Remember the RWC? Did you see how popular it was? Would even a Formula one or Moto GP get that sort of support from the general public in NZ. I don't think so.

Mate, I live in Christchurch, even if I was interested in the world cup, (which I am not) there were no games here, and what I really was concerned about at that time was if I flushed my shitter would it end up on the lawn, or would it disappear.

And I really dont know how popular it was with the public at large: maybe if they were rugby enthusiasts, already but it is clear those numbers are declining.

What evs.

[steveyb]

In trouble is perhaps overstating the postion a bit, but there are only three reasons why you go to the market to fund your business and remember, going to the market means that you are selling a portion, however large or small, of your business:
1) the bank won't give you the money, to allow you to retain full ownership
2) operating revenues are insufficient to fund expansion, upgrades, purchases, pay off debt, with retain earnings and allow you retain full ownership
3) you want out, for whatever reason. Generally because you have been in it so long you simply have had enough or you have had enough of seeing your large fortune become a small fortune and you cannot simply close the doors (as is the case in this case).
My gut feeling in this case, and of course only those who know will know, is all three.
It is a huge undertaking for a small group of investors/owners to undertake with minimal state support and it is pretty amazing that they got to where they are. I for one hope that a suitable investor/new owner will come on board with the necessary long term horizon to allow the facility to reach its full potential and continue to operate at a rate that NZers can afford.

[trustme]

Not sure I agree , there are many companies that would not be where they are today without going public. Mainfreight is a good example. It is a very good way to raise capital to fund expansion . Your point 2# is about right , it is nothing to be ashamed of , they are seeking funding to enable expansion.

Banks PFFFFT:bleh::bleh::bleh: Blokes who lend you an umbrella but want it back when it rains.

[Zedder]

Not sure I agree , there are many companies that would not be where they are today without going public. Mainfreight is a good example. It is a very good way to raise capital to fund expansion . Your point 2# is about right , it is nothing to be ashamed of , they are seeking funding to enable expansion.

Banks PFFFFT:bleh::bleh::bleh: Blokes who lend you an umbrella but want it back when it rains.

There are pros and cons for going public and it also depends on the type of company.

I've met company owners who curse the day they went public. However, I've also met others who were happy but their employee turnover was huge and the company culture was septic. I've worked in both types as well.

[Hitcher]

For heaven's sake. Don't put a cent into the current operation. Anybody with a serious interest in having a stake in Hampton Downs would be best to wait and negotiate with the receivers once the current overcapitalised operation has been wound up.

[Zedder]

For heaven's sake. Don't put a cent into the current operation. Anybody with a serious interest in having a stake in Hampton Downs would be best to wait and negotiate with the receivers once the current overcapitalised operation has been wound up.

There is no hard evidence currently about HD being in financial trouble though. In fact, some sources point to their problem as being one of exclusion from the "closed circle" of NZ motor racing.

[steveyb]

True enough, but at the end of the day when you 'go public' you are selling your company, you no longer own it, or at least the shares in it that you do not retain.
If business for a company like Mainfreight was so good, the original owners would have been able to fund it through debt equity, which is generally the most tax efficient manner in which to fund expansion (obviously to a point). By 'going public' the owners sold their company, hopefully made a neat return on their original position and either remained with the company as directors or employees (I have no idea if this is so) or left it to someone else to take the reigns.
Mainfreight is an example of a good company.
But there are plenty of examples of companies being dressed as purses when they are in fact sows ears and being sold to the market by 'going public'. Facebook is an example of that. Many $ being promised, but the reality struck home after the IPO when investors discovered how difficult it is to actually monetise some internet businesses, especially free service based business. Mighty River Power might just be another.
But Hampton Downs is land, bricks and mortar with considerable value in land and buildings if nothing else. Not enough to pay down the debt and certainly not enough to cover the costs of rehabilitation should the place be shut down.
The on-going business proposition of a motor racing circuit in NZ at the level of investment that has been put in place must be questionable. At the level of say Ruapuna it would be much better, but then we wouldn't be that interested in going there then would we.

As much as we would like it to continue, just one person on here tell us now that they would invest in HD if they were a high net worth individual (or group of individuals) looking for a sound investment (NOTE: investment, not just to purchase a plot of land that has some road and houses on). An investment returns value to the investor, at some time in the future, maybe next year, maybe ten years, but that's what an investment does.
Just one.

It's a lot like the Wellington Phoenix in many ways I think. It is generally a loss making business operation, but it returns value to stakeholders in many different ways. Wellnix have already halved the losses being made and bought new players at the same time and are committed to lifting the profile of football in Wellington and NZ and providing a pathway for NZ youth into professional sport. Maybe new investors/owners can do the same with HD by reducing the debt load and not being worried about taking a dividend for some time to come?
Fingers crossed.

[steveyb]

For heaven's sake. Don't put a cent into the current operation. Anybody with a serious interest in having a stake in Hampton Downs would be best to wait and negotiate with the receivers once the current overcapitalised operation has been wound up.

You mean undercapitalised.

From a hard cold business viewpoint you are of course dead right. But (and this is purely hypothetical) should the current operation be forced into receivership, there is no guarantee that the receivers would want to do anything but plow it under and turn it into a business park or subdivision or back into a farm (not that any might be successful) and cut their losses.

I think that receivership (and again, as stated above there is no real evidence that they are in real trouble and I certainly put my hand up for overstating that), would be a real shame for what is, and can be, a fantastic sporting and training and events facility. The re-investment in Pukekohe is certain to be a catalyst in this announcement and certainly can't do their business case any good at all. It is pretty unfair that one day everyone said Puke is dead (they did actually say that) and then turn around and say nup, we're spending more and it's all go again. But as they say, the market is blind and fairness is irrelevant. Whatever makes the best business case will win in the end, the market will dictate the outcome. I think that this is a really good case study for that actually. I wonder if there is any recourse to the law here?

Where will we end up going once we have the choice in the AKL region? You can bet your bottom dollar that Pukekohe will undercut HD rates and offer incentives to get events, classes and clubs back there. Various clubs and classes that have run at Puke for ever will just go back there because they want to and so on. V8 Supercars already going there, so they might well recover 25+% of their investment in one year!

But the simple fact that HD owners have gone to the market means that they need more money, or have been told to go and find more money, for whatever reasons.

[Hitcher]

You mean undercapitalised.

No I don't. Putting more capital into this business won't help. Well, not if those "investors" want a commercial return on their investment. Hampton Downs' owners are looking for a sugar daddy, not an investor.

If its value was reduced, then the owners wouldn't have to borrow money to service their debt. That must mean that it is currently overcapitalised?

[steveyb]

You mean if the debt was written off? How can it's 'value' be reduced unless there are write-downs to land/building/plant book values?
Which in turn means that they will be even less able to get capital because their gearing will be too high.

If the owners have borrowed $10, they need to repay $10 + interest over an agreed time scale, or call in the receivers and recover what 'value' they can.
I can't see anyone with a lien on the business/assets wanting to write down their lien.
If new assets need creating/purchasing (e.g. track extension) in order to generate more revenues, the only way to do that is by buying them, with capital.
I think however, that the level of revenues currently being received might indeed be maxed out. Unless they think really outside the square, how many more trackdays/racedays/training days can they sell? How much higher can the charge out rate go? Most of us already bring our EZi-Ups and sandbags rather than rent garages. That is how we roll in NZ.

As for a sugar-daddy, I am not sure I necessarily disagree with you, but I am willing to cut them some slack for now and hope that they can find a good solution. And why not look for a sugar daddy? If someone wants to buy in, they will, but with their eyes wide open I am sure.

But I can't say that I as an individual have helped them much. I have paid for three Cali Supebike School students for two days each, two days in a gge (other days under an EZi-Up), three rider entries and some food and drinks. Not much help there on my part.

[Zedder]

You mean undercapitalised.

From a hard cold business viewpoint you are of course dead right. But (and this is purely hypothetical) should the current operation be forced into receivership, there is no guarantee that the receivers would want to do anything but plow it under and turn it into a business park or subdivision or back into a farm (not that any might be successful) and cut their losses.

I think that receivership (and again, as stated above there is no real evidence that they are in real trouble and I certainly put my hand up for overstating that), would be a real shame for what is, and can be, a fantastic sporting and training and events facility. The re-investment in Pukekohe is certain to be a catalyst in this announcement and certainly can't do their business case any good at all. It is pretty unfair that one day everyone said Puke is dead (they did actually say that) and then turn around and say nup, we're spending more and it's all go again. But as they say, the market is blind and fairness is irrelevant. Whatever makes the best business case will win in the end, the market will dictate the outcome. I think that this is a really good case study for that actually. I wonder if there is any recourse to the law here?

Where will we end up going once we have the choice in the AKL region? You can bet your bottom dollar that Pukekohe will undercut HD rates and offer incentives to get events, classes and clubs back there. Various clubs and classes that have run at Puke for ever will just go back there because they want to and so on. V8 Supercars already going there, so they might well recover 25+% of their investment in one year!

But the simple fact that HD owners have gone to the market means that they need more money, or have been told to go and find more money, for whatever reasons.

You're right, they do want more money, which means they are undercapitalised. They want to "tidy things up" because they haven't got the support of Motorsport NZ like the other car clubs have.

Incidently, those clubs are losing confidence in Motorsport NZ and can't see where their $1million per annum fees go so if the HD guys are sensible they're probably targetting them. And if Tony Quinn comes back with a better offer as well it's all good.

[steveyb]

Yeah I know, man if we think the politics in Motorcycling NZ (witness the Classic register thread) are tough, it ain't nothin compared to the Motorsport NZ stuff (and to think I nearly applied for a job with motorsport nz last year!! Went to the offices to chat and it was like a damned mausaleum!!)
Even within the clubs and classes the politics are heavy.
Is it a case of the tall poppy cutting its petals off to spite its stamen??? or something like that.
If HD management are being effectively snubbed by MSNZ it is hard to see it cos they have many high profile events and classes there. But nothing would surprise me.

Why am I belting on about this? I find studying business start-ups intensely interesting and of course being into motorsport this is even more interesting. Starting a highly capital-dense business in NZ is just almost impossible. It is just so difficult that I wonder why anyone actually does it.

[300weatherby]

interesting to learn from the stuff piece that the investment is $70m. If memory serves the white elephant that is the dunedin stadium was $100M.

I agree with you entirely as regards the eggballers. the thing that gets me is this: they use, and expect to have built for them, costly infrastructure by the public. They then expect that same public to pay top dollar to use it, while any profits made by the private, for-profit entities that control that eggball are held by the eggballers. So it is publicly funded and profits are private. Then when it goes horribly wrong like it has in dunedin, the public are asked to help out. I am not sure who rescued Otago rugby from liquidation (was it private or public money, or the NZRFU?) but I think thats a case study of what not to do.

Dave Cull was elected in Dunedin pretty much due to his opposition to the stadium. the problem is, the poor fuckers are stuck with it, and the only thing they can do is gouge their ratepayers to fund it. And I see they are going to make a capital loss on the sale of Carisbrook to Calder Stewart. Awesome business dealings guys, just awesome.

A little off topic maybe, but I (among many ) will forever hate the mfking council that decided to sell an iconic piece of NZ and Otago history (that was usefull and in good working order) to see it destoyed in pursuit of the developers dollar, imagine the wailing and carry on if they tried to sell some dump of a shiitty old marei......

[DEATH_INC.]

Hampton was doomed from the start. It was invented by a bunch of F5000 guys without the proper finances to see it through, spent it in places where there wasn't sufficient recovery, and also failed to generate the $$$$ they thought they could.
It had a heap of uphill battles which can't have been researched properly before it started, including fighting the ltsa.
The idea was great, the execution wasn't.
As a note, they were made an offer for the place that was within a few thou of their asking price...and turned it down.

[DEATH_INC.]

A little off topic maybe, but I (among many ) will forever hate the mfking council that decided to sell an iconic piece of NZ and Otago history (that was usefull and in good working order) to see it destoyed in pursuit of the developers dollar, imagine the wailing and carry on if they tried to sell some dump of a shiitty old marei......
Yeh...remember Baypark?

[roogazza]

There is no hard evidence currently about HD being in financial trouble though. In fact, some sources point to their problem as being one of exclusion from the "closed circle" of NZ motor racing.
If that is the case it might be the death Nell and I suppose Puke will be trucking on, long after the grass is poking thru the HD surface.
How can they survive without Motosport NZ ?

[slowpoke]

Hampton was doomed from the start. It was invented by a bunch of F5000 guys without the proper finances to see it through, spent it in places where there wasn't sufficient recovery, and also failed to generate the $$$$ they thought they could.
It had a heap of uphill battles which can't have been researched properly before it started, including fighting the ltsa.
The idea was great, the execution wasn't.
As a note, they were made an offer for the place that was within a few thou of their asking price...and turned it down.

Harsh bro', you haven't mentioned a lil' inconvenience called the GFC that effectively torched EVERYBODY'S business plan and redefined a whole generation's worst case economic scenario. The HD developers are no different to 99.9% of us in being caught with plummeting property values and revenue.

No way can you envisage every difficulty with a project of this size, (you can't even do it building a simple house, that's why there's always a contingency figure) and given the duration of the project no way can you predict which way the bureaucratic (both local government and motorsport) winds will blow upon completion. Puke has been in it's supposed death throes for years, who'd have predicted a redevelopment there? Who could predict the Hamilton debacle souring the public's perception of investment in motorsport?

So what if they turned down an offer. If it didn't make economic or personal sense that's their right isn't it? And given all the above the place is still afloat, while many other buisnesses have gone to the wall so I'd say that a "bunch of F5000 guys without the proper finances to see it through" haven't done too bad. Doomed from the start? WTF? I don't even like the place but I can see the potential, and given slightly different circumstances we'd be raving about a world class facility.

[BoristheBiter]

No way can you envisage every difficulty with a project of this size, (you can't even do it building a simple house, that's why there's always a contingency figure) and given the duration of the project no way can you predict which way the bureaucratic (both local government and motorsport) winds will blow upon completion. Puke has been in it's supposed death throes for years, who'd have predicted a redevelopment there? Who could predict the Hamilton debacle souring the public's perception of investment in motorsport?


If you can't then you will pay someone that can or you will have no end of problems.

For starters the track;
who designed it and didn't check with the local boards as to what they would be allowed to do?
Who thought that the placement of the start/finish straight was a good one?
Who designed what the track would made on/with and to what standard and what if the track failed?

These are 3 easy questions that they seemed to over looked that have cost them a lot of money that I would guess was marked for something else.

It looks to me as if they didn't do their due diligence correctly and it has bitten them big time.

[Zedder]

If that is the case it might be the death Nell and I suppose Puke will be trucking on, long after the grass is poking thru the HD surface.
How can they survive without Motosport NZ ?

If HD got the same shareholding deal in the Motorsport NZ subsiary company as the Manfield, Ruapuna,Teretonga and Pukekohe tracks, it would certainly boost them a lot.

Currently though, they appear to be getting a bit of a "chuck the dog a bone" deal and this is where it starts to get messy. Motorsport NZ say HD never asked for a shareholding while HD say some of the the rules Motorsport NZ impose are anti-business and they can't work with them.

[trustme]

I don't believe Puke will be sustainable in the long term. There are already problems with noise complaints & council restrictions , these will get worse as the area builds up & pressure from locals becomes more intense. Baypark went , Western Springs will go at some stage , Puke will be a target before long. Motor racing venues in a built up area don't work.

[FJRider]

Motor racing venues in a built up area don't work.

Depends on who makes the most money from it.

[Kickaha]

Motor racing venues in a built up area don't work.
Like the speedway at Palmy North?

[BoristheBiter]

Like the speedway at Palmy North?

It all comes down to the council bylaws and zoning.

the new St johns development up here used to be a quarry (zone 6 heavy industry) and now is zoned residential so all the zones around them have been changed.
A lot of business have had to move or reduce their work.

Funny how the developers got the change so easily......Oh that's right it's a Fletcher's development.

[Zedder]

It all comes down to the council bylaws and zoning.

the new St johns development up here used to be a quarry (zone 6 heavy industry) and now is zoned residential so all the zones around them have been changed.
A lot of business have had to move or reduce their work.

Funny how the developers got the change so easily......Oh that's right it's a Fletcher's development.

Behind that deal also was Landco of the Todd Property Group, a subsidiary of Todd Corporation, so yeah, a bit of clout there.

It can go the other way though BtB. Fulton Hogan had an industrial zoned quarry in Penrose which the neighbours hated. However, FH did everthing they could to keep them happy, including running water trucks around to keep dust down plus they stopped blasting and only used hydraulic rock breakers etc.

Nothing worked and the neighbours, who only saw lower house values due to the quarry being there, bitched and carried on until it was economically unviable for FH to carry on.

[BoristheBiter]

Behind that deal also was Landco of the Todd Property Group, a subsidiary of Todd Corporation, so yeah, a bit of clout there.

It can go the other way though BtB. Fulton Hogan had an industrial zoned quarry in Penrose which the neighbours hated. However, FH did everthing they could to keep them happy, including running water trucks around to keep dust down plus they stopped blasting and only used hydraulic rock breakers etc.

Nothing worked and the neighbours, who only saw lower house values due to the quarry being there, bitched and carried on until it was economically unviable for FH to carry on.

can't see how that is different, the company's suffer due to council planing.

[Zedder]

can't see how that is different, the company's suffer due to council planing.

With the St Johns site, it was zoned industrial but you believed because it was a "Fletchers development", it was made residential.

In the case of Fulton Hogan, it was zoned industrial but the neighbours made it become non industrial although they were going against the legality of an industrial zoning. Both cases were about pressure groups.

[Gremlin]

the new St johns development up here used to be a quarry (zone 6 heavy industry) and now is zoned residential so all the zones around them have been changed.

The long term plan for the quarry (before it was a quarry) was to be residential...

[Zedder]

The long term plan for the quarry (before it was a quarry) was to be residential...

The land was zoned for quarrying activity only though. Landco had to apply for a plan change which they started in 2004.

Also, local residents fought part of the development so it wasn't a foregone conclusion.

[Mental Trousers]

In trouble is perhaps overstating the postion a bit, but there are only three reasons why you go to the market to fund your business and remember, going to the market means that you are selling a portion, however large or small, of your business:

They're only selling a portion, otherwise someone has to buy out the $70m loan.

If anyone wanted the place the best way is to buy the debt from the bank. That way the current owners have to make payments you and if they aren't able to keep up with payments you end up foreclosing and getting the track debt free.


1) the bank won't give you the money, to allow you to retain full ownership

The bank virtually owns it. There's a $70m loan on the place.


2) operating revenues are insufficient to fund expansion, upgrades, purchases, pay off debt, with retain earnings and allow you retain full ownership

Apparently they're booked 330 days out of 365. Less than 3 days a month where it's not generating revenue.

You can count them up if you like - http://www.hamptondowns.com/pages/56/event-calendar.htm


3) you want out, for whatever reason. Generally because you have been in it so long you simply have had enough or you have had enough of seeing your large fortune become a small fortune and you cannot simply close the doors (as is the case in this case).

My gut feeling in this case, and of course only those who know will know, is all three.
It is a huge undertaking for a small group of investors/owners to undertake with minimal state support and it is pretty amazing that they got to where they are. I for one hope that a suitable investor/new owner will come on board with the necessary long term horizon to allow the facility to reach its full potential and continue to operate at a rate that NZers can afford.


That's entirely possible. I've never met Chris so I don't know if he's looking for an out or not. I have met Tony plenty of times and he's very involved with the day to day running of the track and associated businesses (Play Day on Track etc) so I'd be surprised if he wanted to get out of it.

End of the day there's still $70m owing on the place so the bank is likely to be unwilling to come up with more.

However, the Resource Consent now enables very large events to take place, for which the long track is needed. To finish that they need money and one of the few avenues open for that is investment.

The thing that strikes me is how short sighted everyone seems to be. It's my understanding they were always going to

start with the "National Track"
run that while the Resource Consent to run big events is sorted out
when the Resource Consent is granted (for which addressing all the issues LTSA, local council, the prison, the land fill etc have with the track) find investment to fund the expansion
finish the long track
host the big events and start making some serious money


Looks like they're right on track to me, although things like the Motorsport NZ bullshit weren't in the plan. However, the V8 Super Tourers and support classes have mostly filled the gap.

[gixerracer]

http://www.nzmotorsportpark.co.nz/

[BoristheBiter]

http://www.nzmotorsportpark.co.nz/

Buy the looks of that they are cutting their loss's and selling the whole thing.

Just noticed that in the video there are no bikes.

[ktm84mxc]

With our problems at Ardmore there was talk of us moving to Hampton downs but the costs put us off $200,000 a year in ground rent plus we'd have to build the track and put in a watering system etc. Can see why it's a bit of a white elephant.

[Tony.OK]

http://www.nzmotorsportpark.co.nz/

NZ's new China town? :msn-wink:

[ktm84mxc]

With the new developments at Pokeno township 5000 houses are planned and a train station Auckland is coming to a Ntn Waikato area. Hampton downs will be next.

[Big Dave]

Personally I think the problem is the location. It's too far out of town for the 'casual' spectator.

[trustme]

It is very little different time wise to Puke for the average AK resident, closer to the Tron & Tauranga so in terms of demograhics it should work. Remember Dave not everyone lives north of the Bombays. If you go closer to residential areas you run into other problems like Western Springs is currently finding out. Puke has problems with noise complaints & it will get worse.

[Robert Taylor]

Personally I think the problem is the location. It's too far out of town for the 'casual' spectator.

Get over it. Its 3 and a half hours drive for us, about the same to Taupo and 3 to Minefield. If it was too close to population everyone would be complaining of noise pollution. Its a no win............

[Big Dave]

Nothing to get over.

All I'm saying is that Auckland offers a lot of 'bums on seats' competition closer to the city.

[Maido]

Same problem bathurst has, just to far to travel so no one goes......

[Big Dave]

Dunno how it is for the other 51 weeks of the year though.
It's a long time since I went there. Too far for my interest in motorsport.

I did just have a surf around and note that Mt Panorama got $6mil in taxpayer funds last year.

It prompts the question of NZ government. Their Social responsibility and all that.

[Paul in NZ]

Mt Panorama just got $6mil in taxpayer funds.

I think Australia has a Minister responsible for Motor Sports?

[sil3nt]

Pretty sure location isn't the problem. Don't think the drag strip ever has trouble getting crowds.

The trouble is there is no promotion of any event that is on there. Unless your looking the chances are your not going to know about it.

The fact the short track is pretty bloody boring to watch doesn't help.

[Big Dave]

Obviously PRomotion comes down to the budget and bums on seats.

Vicious circle while the facility is not finished.


Dunno Paul - do we? The Minister for Petrol Heads.
Chuck a wheelie mister.

[Mental Trousers]

Promotion is down to the organisations that hire the place. If you're running an event there it's up to you to promote it.