Examination of Witnesses (Questions 260
- 279)
THURSDAY 29 JUNE 2000
MR GUY
HANDS, MR
PETER MIDDLETON,
MR MIKE
SWINNEY, MS
BARBARA ANDERSON
AND MR
GWILYM JONES
260. Could I ask on the financial side, if I
may, do you have bankers that are backing this as well or are
they part of a consortium, as it were?
(Mr Hands) This deal is a 100 per cent equity deal.
Nomura has 100 per cent underwritten it, not just with regard
to the capital cost of purchasing but also with regard to the
approximately £200 million of necessary content enhancement
that needs to go in. We have hit that really hard. When you think
about The Body, The Body cost £30 million but it is a structure.
The sides, the heart, the brain and the eye, it is a structure,
it is a building, so when Mike says "we are going to put
content in there" he is talking about putting £200 million
worth of high technology content to bring those structures completely
to life. All of that money is fully underwritten by Nomura. In
addition, we are underwriting what we would expect to be the start
up costs in the first two to three years of getting a visitor
attraction attendance numbers back up again.
261. Do you consider this has been a success
so far?
(Mr Hands) I think to produce an exhibition centre
for one year is extraordinarily difficult. We have a tremendous
legacy and a tremendous advantage over people who have to do it
for one year. When Mike goes out and he talks to the Beatles about
associating themselves with the Dome, he can talk about them associating
with the Dome for 20/30 years. When you go to a world class artist
and you say "we want to take your ideas and bring them to
life", they have to have trust that you are not just doing
it for a year, you are doing it for the long term. That is the
tremendous advantage we have. In terms of achieving it in the
time frame they had I think they did an extraordinary job but
you cannot look at the Dome as a one year attraction, it has to
be looked at over the long term.
(Mr Swinney) If I could say something. Myself and
many of the people I work with were involved in the Korean World
Fair and the World Fair at Seville and I will tell you what the
people here have done—and I do not know very many of them
but I am beginning to know some of the artists and some of the
vendors who we intend to continue to work with—is world
class in stature. I cannot tell you why 12 million people did
not come, but the fact that 6 million people have come is a huge
credit. The entertainment value that is there is actually pretty
good.
Mrs Organ
262. The particular difficulties and negative
media coverage of the Dome, how much of that is going to affect,
if you are successful, your project when you take over? Will you
be tainted with the same view from the public as a result of the
media coverage?
(Mr Hands) We are going to have a lot to prove and
our advertising proposals are that we will not spend money on
advertising for the first six months. I think I will hand to Peter
for him to explain why.
(Mr Middleton) I think what we have had to make sure
we avoid is promising something that we do not deliver. You cannot
do this twice. So we will assemble a very high quality management
team because we have had conversations with people to fill the
slots that we want to fill and that will involve, of course, people
who will be in charge of marketing. We feel that the way forward
for this is very gradually to get through to people, more by word
of mouth, or low key advertising, the types of change that we
are going to make. Then, yes, at some future point, when we think
that the Dome by then merits a normal advertising campaign we
will begin it but not until then. We cannot afford to have people
coming to the Dome again and being disappointed at the difference
between what they expected and what they got. It is going to be
fun, real fun.
263. You mentioned that you felt that what they
have achieved so far is tremendous. This was a visitor attraction
that was good and successful. You mentioned that some of the Zones
you were particularly attracted to. What percentage of what is
there now would you envisage that you would retain?
(Mr Swinney) I would say probably 30 per cent of the
actual physical Zones would be retained. In terms of the buildings
themselves, about 90 per cent of the buildings will remain. Then
as we go through this in a phased way, there are little things
that we can do to make sure that there is entertainment along
all pathways. There are huge landscapes within this place that
just do not have enough to do.
264. As you say you are going to keep the physical
structures, most of that, but some of the Zones you think are
really excellent and you want to continue with those. Obviously
there will have to be a transition period if you are successful
with the bid while you are putting into place your visitor attractions.
How long do you envisage that will take between the time when
you get, if you do, the go ahead and when you will be open to
the public fully?
(Mr Hands) We think that one of the most important
things there is the workforce that has been trained and built
up over the last 12 months. The great thing about the entertainment
industry—and I was speaking to somebody who was with Walt
Disney back in 1957 in the Swamps of Florida and was acting as
a car attendant and then finished his career by being in charge
of those transformed swamps—is it is a career where people
can move up, regardless of background, sex, ethical group, it
is purely a question of hard work and skill. Those people over
the last 12 months have been trained, they have developed skills
and we do not want to lose those for one minute, we do not want
to stop. What we intend to do is to close for approximately a
month between January and February to make the big physical changes
that need to be done. We will spend that time doing some additional
training and then be able to relaunch with the half term holidays
in February next year. If I can hand to Mike he will explain how
we will then be spending a three year programme bringing content
in but it will be exciting for people to watch that content brought
in.
(Mr Swinney) The good thing about a lot of the work
that we have already done in the concept of Dome Europe is that
a lot of the work that we have already done is within the culture
of Europe. We worked extensively in Berlin with folks and most
recently with the Berlin Philharmonic where we created this wonderful
attraction. My favourite picture in the news is of this young
girl whose passion is to play violin, she is six years old but
in a virtual reality experience she gets to conduct the Berlin
Philharmonic. If we start with things like that which are very
simple, easy to do and working within the community then within
the greater community, as it were, we can launch this thing in
a series of opening events which will last about two years. Bringing
in content from Maurice Sendak, from Mobeus the great French graphic
novelist, from Maurice Sendak with Grimms' Fairy Tales, he is
the worldwide authority on Grimms' Fairy Tales. We think that
over this two or three year period there will be great opportunities
to launch and relaunch and relaunch the Dome.
265. Obviously you will be the beneficiary if
you win the competition of the year or so lead-in that any major
visitor attraction has to have. You end up not having to get involved
in any of the problems and the Lottery financing and you become
a beneficiary. I wonder if you could just answer finally two things.
First of all, if you had been running the Dome this year in its
one and only year of operation under NMEC what would you have
done differently? What one thing you would have done differently?
Secondly, do you believe that if you had been running it this
year that your visitor numbers would have been any greater than
the possible 6 or 7 million that may be achieved within the year
of operation?
(Mr Middleton) The one thing that we would not have
done would have been to put a figure of 12 million visitors into
the public arena because I do not think there was any research
which gave credence to that as a realistic target. Being cautious
I would have preferred 2½ million or something like that.
Getting 6 million has been good, it has been a very good performance.
I think that was one of the cardinal errors that was made. We
have done a lot of research into the people who have been to the
Dome or who have not been to the Dome and the surprise compared
with the sort of media image, is the high proportion of people
who are pleased that they went.
Chairman
266. A few minutes ago in answer to Mr Fearn
you talked about the disappointment of people who went there.
I was going to ask you about that in view of the surveys which
have been conducted by NMEC showing over 80 per cent of people
like it. I would be grateful if you could reconcile what you have
just said with what you talked about, the disappointment.
(Mr Hands) It is very, very interesting because we
did some very, very detailed surveys. We spent an enormous amount
of money preparing for this project. One of the things you have
to get absolutely right is your understanding of the audience,
what they like, what they do not like. 74 per cent of people,
going on our surveys, think that it is a great achievement, however,
depending on the age group only between 16 and 24 per cent think
it is fun. The only way to get education to work—and I am
a dyslexic by background, I had a distracted attitude to education
at the best—is to make it fun. You have got to make it fun.
Only 16 to 24 per cent, regardless of whether they think it is
worthy, regardless of whether they think of the thing as educational,
regardless of the good achievement, only 16 to 24 in our survey
say it is fun.
Mrs Organ
267. I have to agree with you. I find sometimes
all this talk about what it is about culture, what it is about
British, what is it about this great thing, in the end what we
are talking about with the Dome is it is a day out to enjoy yourself.
Let us not get too highbrow or too high minded about it, it is
not like building the Tate Modern or anything else, it is a fun
day out for people. You would consider that the figure was the
thing that you would not have released into the public domain
and you would have ended up probably, given the situation, not
being terribly successful, the New Millennium Experience has not
been this year?
(Mr Middleton) I think that is right. I think 6 million
visitors, which makes it easily the biggest attended paid attraction
in this country and second only to Disneyland in Paris in Europe.
268. Yes.
(Mr Middleton) That is success.
269. Is it possible, if circumstances came,
if you won the competition, you would consider taking over the
Dome prior to 31 December 2000?
(Mr Hands) We would look obviously at anything which
we were asked to look at which we felt was rational and sensible.
We do have a concern for the people who are working in the Dome
and for morale there. Some very good people are starting to leave.
It is essential that they have confidence going forward. It is
not something we would choose to do. We have a concept we want
to launch, we have a plan for launching it. Our plan starts January
1st in what some people would say is the new Millennium, and that
is the date we have. If we were asked we would consider it.
Chairman
270. Following on from some of the questions
Mrs Organ has been putting to you. In the document we have got,
you talk about taking over some of the Zones that exist now. Certainly
I am not going to ask you which they are but what would be the
nature of the way in which you would take them over, if you were
successful? They are all sponsored, not all but almost all are
sponsored. Would you seek to continue to have a relationship with
the sponsors similar to that that NMEC has? Would you seek to
buy the sponsors out?
(Mr Hands) It is an excellent question. It is a very
complex question because the contract they have with each sponsor
is different. What I would like to say is two things. Firstly,
our business plan only relies on us getting four sponsors in the
first year and, secondly, our relationship with the sponsors is
a very different type of relationship based on the fact we will
be looking for a five to ten year contract with them. Also if
I can hand over to Barbara and let her speak a little bit about
what we are going to be able to do for sponsors as well, I think
that will be useful.
(Ms Anderson) If I can introduce myself. I am responsible
for e-commerce and online strategy across all the principal finance
businesses. I have been working on developing the strategy for
e-Dome. One of the things that we believe to be absolutely fundamental
to our vision, and it has been part of the vision since its inception,
is an online strategy. The reason this is absolutely critical
is that we require broader access to the Dome as it is. It is
as important to us that a child in Argyll or an inner city feels
as much contact with this as somebody living 200 metres from the
front door. The second objective is to encourage more visits and
make those visits more exciting and entertaining. If you can imagine,
if you can personalise your visit to the Dome and you can decide
in advance what you are going to see, what you are going to do
and where to eat perhaps in Taste Europe, then that is already
an advantage. Thirdly, it is all about creating an ongoing sense
of community. This is fundamental to the important thing for the
sponsor. If we can create a real sense of excitement on an on-going
basis around the spectacular content that Mike has been describing,
then we create something that is fundamentally very important
for the sponsors to participate in.
(Mr Swinney) May I say one thing about sponsorship
because we have been fairly successful at raising significant
sponsorship dollars for projects in other countries. One of the
critical problems they have at the Dome as it is now is, again,
content. If you can link a Ford with the Beatles or you can link
as BT did with ET, it is a much easier proposition for the long
term and a much more healthy relationship between the owner and
the artist.
271. In response to Mrs Organ you were indicating
that you anticipated being able to get the thing open in your
version and operating pretty well within a matter of weeks. Now
in the memorandum we have got here you talk about the additional
space around the Dome and you have interesting plans for that.
But there would presumably have to be a substantial amount of
physical reconstruction unless you were simply going to take over
all the buildings that are there now and use them for different
purposes. Taking into account your anticipation that you could
get the thing operating under your auspices within a matter of
weeks, would there not be a problem of that space around the Dome
being a building site while you are attracting visitors to the
Dome itself?
(Mr Hands) Interesting issues there. There is the
issue with regard to the interior inside the Dome, that is something
which Mike has huge experience of, and Disney had experience and
all attractions have experience, how you make the changes internally.
The external area, if I can pass to Gwilym he can have a go at
that.
(Mr Jones) Gwilym Jones from Ove Arup and Partners,
dealing with the planning side. We have prepared a detailed planning
application for some buildings around the Dome which are core
buildings for the operations. So a new entrance building, for
example, storage facilities and some staff facilities as well.
We are working with Greenwich on the proposals. We are confident
we can get planning permission in place for those essential elements
for the Dome Europe to open. The wider proposals which are also
mentioned in the memorandum we have been discussing those with
Greenwich and those are longer term proposals, a scheme which
we will continue to work with them. In terms of the issue of the
building site obviously that will need to be managed very carefully
but we are confident it can work with the Dome opening on the
timetable we have described.
(Mr Hands) The site itself is about 63 acres we have
bid for. It is approximately about another million square feet
of building which we would want to put in over a five to ten year
period which will produce about another 2,000 jobs, but that is
a long term project.
Mr Faber
272. We have learned one thing from you, Mr
Hands, which the rest of us have been dying to know which is the
Body Zone cost £30 million. We had not been able to find
that out as a Committee and I do not think there is a journalist
in England who had been able to find that out either. Thank you
for telling us that. Do you think that was money well spent?
(Mr Hands) No.
273. It is a bit of a damning indictment though
of what is in it at the moment that you are prepared to spend
£200 million basically to enhance 70 per cent of the Zone.
I did not quite understand what you said about the structure.
You said you would keep the structure but when you said you would
get rid of the Zones, did you mean you would knock down the structure
of the Zones as well, you would keep the building?
(Mr Middleton) No, we are talking about the internal
structures of the Zones themselves.
274. You would keep the core?
(Mr Middleton) We would keep the core that the Zones
are housed in, whichever one it is, but the content that is in
there at the moment we would change pretty extensively.
275. You could spend £200 million fully
enhancing that up to 70 per cent?
(Mr Swinney) Actually we will fully enhance 100 per
cent of the place. What we will be bringing in over time is about
70 per cent of new content within the Dome. There will be new
artists, new attractions, things like that.
276. I am genuinely not aware what the answer
to this is. What degree of interest is the Government planning
on maintaining in your operations subsequently if you are successful
in the bid and over what period of time?
(Mr Hands) We have been asked by the Director of Competition
to keep the actual commercial terms confidential but in general
terms there is a profit sharing arrangement.
277. The Government will continue to derive
revenue from this project?
(Mr Hands) Over time subject to the project being
successful, yes.
278. What degree of leverage have they got?
Obviously the fact is there are two of you left in the competition
and they are happy with both of your bids. What degree of interest
will they maintain in the content of the Dome?
(Mr Hands) We are very insistent with regard to content
that we have what can only be described as editorial control.
279. You have complete editorial control?
(Mr Hands) Yes.
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