Queenstown’s two private gyms are flexing their muscles about a council-quango rival setting up at Alpine Aqualand swim centre.
Queenstown Lakes District Council last week authorised Lakes Leisure to raise $780,000 for its new gym.
“The last thing I want is for a council [quango] to be competing for my business, because that’s what they’re doing,” says angry Queenstown Gym co-owner Sarah Kerby.
“[Queenstown] can’t sustain three gyms – one of us will close.”
Pulse Fitness manager Andi Rapley adds it’s “wrong” for LL to compete with private enterprise.
Both feel QLDC welshed on an earlier commitment to lease out the swim-centre gym to a private operator.
A QLDC agenda item three years ago noted: “Several individuals and groups have expressed interest in leasing the space for a health and fitness commercial facility.”
Correspondence a few months later has a QLDC project manager still expecting to “publicly advertise” the gym space.
Kerby says she and partner Tim O’Leary sold up everything to set up in 2004.
LL isn’t creating a level playing field, she maintains – she pays $15,000 a month rent and $2500 a quarter in rates.
LL director Peter Faul confirms the quango gym won’t pay rates but will fork out $90,000 a year for the space.
Kerby and O’Leary’s biggest concern is the new gym won’t make money so ratepayers will fund losses – LL is already a money-loser.
LL states it will charge gym-goers market rates but facilities boss Cam Sheppard concedes they’ll offer a special discount for combined pool/gym access.
Outspoken councillor Vanessa van Uden shares the private gyms’ concerns: “Rather than using the money to do things for the community to meet unmet needs, we’re allowing [LL] to use it to set up in opposition to ratepayers.
“That’s wrong, and it’s really wrong that we’ve got a user group of all the sports groups in our community crying out for facilities and space and instead of prioritising those, we’ve set up a gym – I’d have said what we’ve got now adequately meets our needs.”
Another gym “doesn’t even rate on our radar as something that our sports and recreation community needs”, Wakatipu Sports Users’ Group spokesman Craig “Ferg” Ferguson confirms.
“If [LL is] going to step into the area of competing against commercial operators, that’s pretty dodgy stuff.”
LL director Peter Faul: “We don’t believe it’s a viable proposition for an external operator – when you look at the economics of it, it works best, and probably works only, when you integrate it with the other facilities that are there.”
Gym’ll fix it, says quango
Lakes Leisure is going into the gym business to stem forecast losses of $2 million annually for three years.
The $6m hole emerged this month in a “statement of intent” filed by LL with owner Queenstown Lakes District Council.
The deficits are operating losses – on top of the $780,000 fit-out loan for the new gym.
LL is also putting out the begging bowl to QLDC for another $2.4m of capital expenditure.
All told, LL wants $8.63m funding from QLDC between now and 2011-12.
Ratepayers will be hit up to part-fund the body-building quango. Last year’s $59 “aquatic centre charge” jumps 24 per cent to $73 from July 1.
LL will spend $260,000 this year on “mobile infrastructure” for events – stuff like portaloos and demountable seating.
Why not hire it?
“Too expensive, it’s prohibitive,” LL director Peter Faul says. Portaloos for a big rugby match cost about $22,000 to hire and transport.
“We can lower our costs significantly if we can own that equipment.”
Community events may get mates’ rates, too.
On planning for $6m in losses, that’s just prudent budgeting – “we’re going to aim to better that”.
Not-for-profit quango Lakes Leisure has been hammered by critics claiming it’s a bloated QLDC
enterprise gouging the public to build its empire. Last December there were 36 staff, including boss Fiona McKissock reportedly on $110,000-plus per year.
– Frank Marvin