Deputy Andrews and Deputy Killeen, who have raised this matter, have five minutes in total and may share it in any manner they wish.
Adjournment Debate. - World Equestrian Games.
I apologise for my absence this morning. It was an aberration on my part. I thank the Minister for his presence here this evening. I was a member of the last Government which gave its support to the staging of the world equestrian games in Ireland in 1998. This support was well placed and the games continue to represent an immense opportunity for the country.
I raise this matter on the Adjournment because Ireland's hosting of the games is in some doubt, if not in jeopardy. A meeting is to take place tomorrow in Geneva which may decide if Ireland retains the games. I call on the Government to immediately take action to ensure that the competition is retained on this island.
This can be achieved only if a Minister or Minister of State makes representations at tomorrow's executive committee meeting of the International Equestrian Federation in Geneva. Unless Ireland can definitively say at the meeting that it is hosting the games the State will lose this fantastic opportunity, and future ones. I understand that already Germany and the UK have made pitches to take the games if Ireland cannot. If a Minister is not standing strong with the Irish representatives at the meeting this major event may well be lost.
The crisis facing the games has arisen in part because of the inflexibility of the Government, especially of the Minister for Tourism and Trade, Deputy Kenny. Rather than showing vision and leadership, the Minister has allowed the problems of the games' organisers to escalate. He has sat on the fence. Rather than viewing this as a national opportunity, he has tried to wash his hands of any involvement. The World Equestrian Games could and should take place in Ireland. We have the capability and the personnel in place. It should be viewed by the Government as similar to the attraction of a major industrial project because there would be considerable paybacks for the economy. It represents a fantastic marketing opportunity for Ireland. If a governing role were taken by the Minister, the existing problems could be ironed out.
The Minister is right to exercise caution about taxpayers' money but what is required is not necessarily more State money but solid support and intervention by the Minister to break existing logjams. The Minister needs to stand strongly with the people who are organising the event who can make it work. If the games do not go ahead more than an opportunity could be lost. There could also be a £1.5 million risk to the Exchequer as a bond has been signed by Bord Fáilte in relation to the staging of the games in Ireland. Thousands of visitors and millions of pounds in tourist spending will be lost to the country.
The games represent an opportunity to promote to the widest international audience the most positive image of Ireland, both in the lead up to and during the games, from which long-term benefits should accrue. Inward visitors of the order of 75,000 should contribute £45 million at least to the economy. If it surpasses that order, the return to the economy should substantially exceed the investment involved.
An urgent decision is required from the Government and Bord Fáilte to allow the planning and marketing of the games to proceed and to ensure that no credibility is lost internationally. This débâcle raises the question of what is going on in this Government in relation to sporting events. It makes no sense for one arm of Government — Deputy Gay Mitchell — to promote the staging of the Olympics if there is not even support at Cabinet for Ireland hosting a smaller and more manageable but equally prestigious event. If these games do not go ahead, it is certain that never again will Ireland host a major equestrian event. Others who try to promote major sporting events here will be ridiculed the world over.
I am grateful for the opportunity to support the case made by Deputy Andrews for the holding of the World Equestrian Games in Ireland. I understand the Department has been aware for at least a month — perhaps longer — that the games were in jeopardy. What action has been taken? Has the company any creditors who are in that position because of the commitment of the Government to the holding of the games and, if so, what will be done on their behalf? Will the Government be represented at tomorrow's meeting which, as Deputy Andrews outlined, is extremely important? This issue is important not only for the games but also for the credibility of Ireland's ability to hold events and promotions of this nature. We need to show a commitment to equestrian sports and I hope the Minister will indicate that he is doing so.
I am happy for Deputy Andrews that he has finally succeeded in having this matter raised. The allocation of the World Equestrian Games to Ireland and the organising of those games are matters in the first instance for the Federation Equestre International— the FEI — and World Equestrian Games (Ireland) Limited — WEG. The policy of both this and the previous Government has been to encourage and assist WEG in its work, where appropriate, to ensure a commercially successful games that would reflect well on this country in equestrian and general promotional terms. To this end WEG (Ireland) Limited was given, via Bord Fáilte, an initial grant of £250,000 in 1994 to assist with start-up costs with no commitment to funding in later years. That was made very clear, in writing, by my predecessor, Deputy McCreevy.
However, deterioration in WEG's financial perspectives became apparent to me in early 1995, soon after I came into office, when the company confirmed escalation by £6.3 million in projected costs on figures used for the successful bid. New costs included revelation, for the first time, by WEG to the Department that provision had now to be made for a fee of £4.5 million which it had agreed to pay the FEI for hosting the games.
At meetings in March 1995 with the chairman of WEG I made plain my serious concern at the manner in which WEG had managed events, underlining the fact that the company had been told repeatedly that the Government would not underwrite the games. On foot of certain assurances from the WEG chairman, including strong expressions of company optimism about prospects for generating up to £6 million in corporate sponsorship which would turn the games into profit, a further grant of £250,000, again with no future commitment, was provided by Bord Fáilte.
To enable WEG retain the games at that point, Bord Fáilte also agreed to guarantee an undertaking given by the company to the FEI for payment in respect of hosting the games in this country of not more than £1.5 million from proceeds in 1998. This guarantee is subject to the fulfilment of the terms of the contract governing the granting of the games.
In December, 1995 WEG indicated to the Department that the FEI had still not put a TV strategy in place and that to meet cash flow requirements it would need a further grant of £500,000 in 1996 and a bankable commitment for a similar figure in 1997 otherwise they would be unable to continue trading. Despite repeated indications that commercial sponsorship would be signed up, no contracts had been negotiated, WEG's only source of funding continued to be the Exchequer and the company was now in deficit.
I made it clear that I would still like to see the games going ahead but obviously not at any price.
A sensitive little U-turn.
I asked the company to reconsider its proposals, examine possible ways of reducing costs and to come up with hard evidence of adequate levels of sponsorship in the light of their own approximately £10.9 million cost projections for the event.
It was as well that I raised the matter.
In the absence of a satisfactory response to my request from the company, I completed a review of the State's involvement in the games with particular reference to the exposure of the Exchequer and the credibility of the figures in WEG's business plan. Specific points which I felt should be taken on board included the failure to deliver a TV strategy by the FEI, who retained the TV rights but still have to complete negotiations on a TV strategy; absence to date of any contracts with WEG for commercial sponsorship despite repeated indications, especially in recent months, that negotiations with potential sponsors were advancing; growing concerns about WEG's credibility in delivering on its own budget projections, given that in the two years since the successful bid of March 1994 WEG expenditure projections had increased by 79 per cent while income projects rose by 35 per cent almost half of which was accounted for by the insertion of a higher figure for commercial sponsorship; a key element of WEG's income projections is provision for a title sponsor of £3 million which would appear to be way beyond anything achieved to date for a sporting event in Ireland with no credible evidence from WEG that it is achievable; further slippage on costs by WEG over the next two years, a not inconsiderable risk given company experience to date with its own projections coupled with a serious shortfall on their income projections, could leave the games with losses of the order of £6 million or more; and I have seen no evidence that any Irish or international financial institution or commercial business is prepared to invest its funds in this enterprise. The Irish taxpayer is the only person being asked to take the risk of investment here.
I subsequently brought the matter to the attention of the Government following which WEG were informed on 27 March that it had been decided to cease further State financial support for the games. On 4 April representatives of WEG met with senior officials of my Department. While they briefed my officials on some contacts which they had had since being informed of the Government's decision, there was no substantial case put forward to address Government concerns warranting a reconsideration of our decision. The future of the games is now a matter for the board of WEG.
The decision to cease Exchequer funding for this project was not an easy one. The concept of hosting the World Equestrian Games in Ireland was attractive, especially based on WEG cost projections as presented in March 1994, which deserved and got support from the previous Government. It is a project which I continued to support even amid growing concern about the direction in which it was heading.
Unfortunately, for reasons beyond my control and in some areas beyond the control of the Irish organisers, we have reached a stage where my responsibility to the taxpayers requires me to cap Exchequer liabilities in respect of a project facing such a serious and growing risk of major losses.
I could have taken a soft option and continued to drip feed some funds into WEG in the hope that something will turn up, but I do not believe that would have been in the best interests of the Irish taxpayer, Irish equestrianism or the future of the World Equestrian Games. I did a full analysis of the project and came to the conclusion that in the absence of any other significant source of funding for the games emerging, the correct course of action was to cease Exchequer support. Nothing has happened since that decision was taken which would merit it being reconsidered.