The finances of NMEC
37. The total budget for NMEC is £758 million.
NMEC's income was expected to be financed from four main sources:
first, a net grant of £399 million from the Millennium Commission;
second, £150 million from sponsorship; third, £194 million
from ticket receipts and other commercial income; and, fourth,
£15 million from disposal of the Company's assets.[98]
We explored the prospects for meeting the income targets.
38. We have previously congratulated NMEC for its
success in meeting its ambitious sponsorship target.[99]
The value of sponsorship has now reached more than £160 million,
and NMEC hopes that further, smaller sponsorship deals will be
secured.[100]
39. The target for income from ticket sales and other
commercial activities is in many ways equally ambitious and, unsurprisingly,
the prospects for meeting this target are less certain. NMEC has
decided to keep the precise figures on ticket sales commercially
confidential so that the timed release of such information can
assist the sales and marketing strategy.[101]
However, Mr Ayling said that "sales are going very well at
the moment", and Lord Falconer viewed the initial response
as "incredibly encouraging".[102]
Both also set much store by opinion poll evidence about the scale
of demand, which apparently suggested that 11 million adults in
the United Kingdom were expected to buy tickets for the Dome.
Given that this total excludes overseas visitors and children,
it was seen as implying a very high level of demand to visit the
Dome.[103]
40. Merchandising will be another source of commercial
income. NMEC assumes an average merchandising expenditure per
visitor to the Dome of £4, which is slightly greater than
the middle of the range of spend per head at other United Kingdom
tourist attractions.[104]
The net profit forecast remains commercially confidential.[105]
41. Other major projects have often provided dedicated
merchandising outlets in venues other than the location of the
project itself. We believe that it has been unimaginative and
unenterprising of NMEC not to have acquired sales outlets in the
major cities, since not only might there have been very substantial
sales of merchandise, but such outlets would have provided further
publicity for the Dome and opportunities for further ticket sales.
42. The estimate of disposal proceeds of £15
million was made at a time when the value of the Dome was thought
to be only its potential scrap value.[106]
It is now known that the Dome will be sold as a functional building
with a long life. Although the division of proceeds from the sale
between NMEC as owners of the Dome and English Partnerships as
owners of the land remains to be determined,[107]
we expect NMEC's share to reflect the Company's enormous contribution
to establishing the Dome at Greenwich as a major international
architectural icon and, it is hoped, a major visitor attraction.
43. NMEC has decided that its next Annual Report
will cover the period from 1 April 1999 to 31 December 1999, rather
than the financial year to the end of March as was the case for
the last Report. The purpose of the change is to enable its reporting
periods to coincide with each distinct phase of its operations.[108]
Although the change may assist the Company in its work, it may
reduce the information available to Parliament and the public
on operational performance during the year of operation itself.
Accordingly, we expect NMEC to provide this Committee with
provisional information on its financial performance during the
first three months of the year 2000 on a commercially confidential
basis in the course of our next inquiry on Millennium matters.
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