(This story was published in 2002).

By: Sean Maher

Reprinted by permission from the Sydney Star Observer

Sydney 2002 has approached local councils in a bid to secure a $1.5 million guarantee for a bank overdraft from Westpac, with the organization experiencing cash flow problems one month out from the event.

Although latest Gay Games budget figures earmark an ultimate quarter of a million dollar profit for the event, organizers are currently experiencing a cash shortage to cover ongoing expenses including equipment for the opening ceremony and expenses for the Games’ Erskineville workshop.

Games officials approached City of Sydney, South Sydney City Council (SSCC) and the state government last week requesting the organizations go co-guarantors for a bank overdraft of $3 million to cover ongoing expenses.

Gay Games co-chair Bev Lange told Sydney Star Observer on Tuesday that the organization was still waiting on a response from the councils, but said Sydney 2002 has since re-arranged their payments schedule such that the original bank overdraft request of $3 million had been reduced to $1.5 million.

“I’m not sure if we want to comment on the response of the councils, but we’re still in discussions and we’re hopeful of guarantors coming forward,” Lange told the Star.

While it is unclear whether City of Sydney or the state government will agree to act as guarantor for the Games, a number of leaked emails obtained by the Star suggest that South Sydney Council will prove a hard sell for Sydney 2002.

Key players within SSCC, including councilors and senior staff, have so far advised the council against accepting the Gay Games request, citing that it would not be appropriate for SSCC to step in this late in the day as guarantor and that the risks associated with the Games’ reliance on overseas visitors were high, due to the volatile nature of America’s war rhetoric over Iraq.

SSCC Mayor Tony Pooley yesterday confirmed that he had been approached by Sydney 2002.

“Council has been a very strong supporter of Gay Games. As of last Wednesday we have contributed $440,000 in cash and in kind towards the Gay Games and that’s an indication of our support. It’s a big leap to go from cash and in-kind support to be guaranteeing a potential cash grant of in excess of a million bucks or three million dollars, four weeks from when the event starts. I think that is a quantum leap,” Pooley said.

When told yesterday about SSCC’s reluctance to act as part guarantor, Lange said, “We’re still in discussions with Ticketek and the NSW government. We need a guarantor or guarantors and we’re in discussions now.”

It is also understood that negotiations with the City of Sydney are still open but that the city would prefer to enter a deal which did not see it as the sole guarantor.

The cash shortage sends a mixed message about the current financial position of the Gay Games. To date, the organization has experienced steady ticket sales resulting in over $2.5 million held in trust by Ticketek. However, this cash must remain with Ticketek until the events have occurred, a measure designed to protect ticket holders from risk of event cancellation.

Bailey said that earlier negotiations with Ticketek had led Games organizers to expect that they would have progressive access to the funds. However, they were only recently told that they would be required to spend $250,000 on cancellation and abandonment insurance in order to access the funds.

The $2.5 million in ticket sales to date is just over one-quarter of the total $9 million the Gay Games hope to raise from ticketed events.

“You look at the models of when our tickets were sold, it’s much stronger than the Olympics at this far out and they had a much larger marketing budget than we have. We’re not too worried about that,” Lange said.

Lange also noted a recent ticket purchase surge which saw nearly half a million dollars worth of tickets sold in less than a week.

Sydney 2002 in recent weeks has also celebrated the arrival of several key sponsorship deals, including deals with the Newtown Hotel and Vodafone last fortnight and new cash and in-kind sponsorship deals with Southcorp and Ansell secured last week.

While details of the two most recent sponsorship deals have not been announced, it has been confirmed that Southcorp’s sponsorship deal will mostly include cash, while Ansell will help finance the Black Party and supply safe-sex product for the Games.

Note: Dollar amounts are in Australian Dollars.

Broadcaster Pulls Out of Gay Games

On Tuesday, SBS announced that it had pulled out as broadcaster for the event, citing a lack of planning by Games organizers.

Craig Collie, head of local production at SBS, told the Star that there was no antagonism between SBS and the Games, claiming the deal was pulled because Sydney 2002 was unable to present a production budget for the planned broadcast.

Gay Games were to produce the show, with SBS having the contract for exclusive free-to-air TV broadcast rights. Negotiations began in November 2001 and Collie claimed that a contract had been awaiting sign-off since July.

Lange’s version differs. “It’s a bit difficult to say it was one reason [why the deal was pulled]. We were all a little taken by surprise with the deadline that ultimately SBS gave us. They gave us a deadline the day of the deadline. I think the budget was an issue, the international host was an issue,” Lange said.

“At the end it’s one of those issues where broadcasters have different timelines, different requirements. Lots of things. I don’t want to go into too much detail.”

Collie emphasized that the contract floundered on “small bits and pieces” and that “some of the things that were making up the deal changed”. These “things” are understood to include the lack of a signed host for the show, the venue for the live-to-air show and the number of overseas networks signed on to buy the show.

Collie said that negotiations finally foundered because Gay Games were unable to present a budget which showed that a program of sufficient quality could be produced under the terms as specified in the draft contract.

“That’s not right. The deal we had on the table was sufficient for them to run the program. It was certainly the case that our timing seemed to be different to theirs and we weren’t aware of the deadline they put to us. Whilst we sent a full budget and a signed contract to them, they’re not prepared to revisit their decision,” Lange said.

The Sydney 2002 co-chairs revealed that negotiations are now under way to secure an on-line broadcast deal, and a deal with “a DVD and video distributor”.

Lange was defiant. “[The failure of the SBS deal was] disappointing more than a setback. Our view is that it would be great to get a broadcast happening, but I think we all recognize that it’s not our core business,” she said.