Select Committee on Public Accounts Minutes of Evidence

Examination of Witnesses (Questions 240-259)



  240. Page 22, paragraph 2.13(b). Even when ticket sales were something like 79 per cent down on predictions, towards the end of 1999, you still did not take heed. You still ploughed ahead. Why?
  (Mr O'Connor) That is a question for Mr James.
  (Mr James) It is the question I referred to earlier, that there was a compensating factor which had not been expected, that got £13.5 million of reservations for given dates which had not been expected and were not reflected in cash. I am afraid that is what persuaded people the figure was on course.

  241. You made a mistake.
  (Mr James) The evidence was there in terms of people voting with a booking, effectively a reservation rather than a paid booking but it was there.

  242. If we look at page 23, paragraphs 2.17 and 2.18, I read this and just thought it was unbelievable. Even before the Dome opened in November/December 1999 it was clear that the financial position was worsening all the time and that an extra £50 million was going to be needed because of cashflow problems. Why at this stage was the Millennium Commission still putting its hand in its pocket? Bells were going all the time; they were going ding, ding, ding, all the time.
  (Mr O'Connor) The choice we had at the end of January was to provide an extra £60 million or put it into insolvency, bankrupt it. Eleven months of the year were still to go, changes had been made, the best part of the year was still to come, we believed that the patient, although clearly ill in January, could recover.

  243. Were you ever told by the powers-that-be that it had to continue?
  (Mr O'Connor) No. Clearly the objective of the Commission and NMEC was to run an experience for 12 months but there was no immutable law saying the Dome had to continue. Clearly the economics of finishing it did not make sense; to stop it would have cost more money than to carry on.

  244. Was it ever an option to close?
  (Mr O'Connor) It was an option to close. As far as I was concerned, that was why I opposed the grants but commissioners took the view that the wider economic costs of closing meant that they should not.

  245. Were you ever mislead by Ministers?
  (Mr O'Connor) No.

  246. The report says that the Commission and the company tended to take what was being said in Parliament as the guarantee that funds were always going to be available.
  (Mr O'Connor) Yes, both parties said that.

  247. Did you take that as a guarantee?
  (Mr O'Connor) I took that both parties agreed that should we need more money for the Dome our life would be extended. That has been confirmed by this Government on several occasions. Each time we had to give more money I checked with the Government that they stood by that pledge and they have done so.

  248. So you knew you had an open chequebook or the Dome knew it had an open chequebook.
  (Mr O'Connor) It is not a matter of an open chequebook. We had the facility to provide grant. You could not take it that we would then automatically give a grant. We would look at each application and make a decision. We had the capacity to make a grant, we did not have to make a grant.

  249. The company got it wrong about visitor numbers but you also got it wrong about marketing as well, did you not? You did not put in enough money to advertise the Dome. I am coming back to what you said yourself.
  (Mr James) There were some very notable shortfalls in the marketing success which had been expected by certain of the ticket sales methods; particularly there was a major shortfall on the expectation of sales through the lottery which fell massively short. We were expecting something in the order of £17 million[22] overall. We got about £1 million at the outset from that one source and the Internet fell short by a factor of around about 90 per cent. Those were really big shortfall errors at the outset which reflected in the early stages. Then the marketing was extremely difficult at the beginning because there were undoubtedly quite justifiable criticisms of the way the Dome was being run on a day-by-day basis: queues for the body zone and other places, access. There were issues which had to be reacted to very swiftly. They were reacted to but of course during those first two or three weeks of January we got a big problem. We also had a major problem in that we were not intending to sell tickets at the door, which I think was a very big mistake. Eventually we corrected that in the third week of January and have been clocking 5,000[23] more or less every day ever since.

  250. You mentioned that people had not passed on by word of mouth but you also presumably expected that the press were going to do it for you free. It must have been a great shock to you when they turned on you.
  (Mr James) The press felt themselves very aggrieved on the opening night and we have some sympathy with the press.

  251. Why? They were not the only ones waiting to get in.
  (Mr James) I think the press prefer to be wet on the inside not on the outside. That probably got us off to a poor start with them and I would have a great deal of sympathy with them.

  252. How much do you put the situation you have down to the hostility of the press?
  (Mr James) We have been a big news story and the press have had a wonderful time with us. We have striven to take note of the criticisms they have been making and we have hoped and at times been fairly reflected in the improvements we have been making. We are not regarding the press as our enemy, we regard the press in this country as an inseparable element from any marketing programme. We think that we have hopefully interfaced with them as well as we can but we had an uphill struggle arising out of a bad beginning.

  253. How much have they cost you in terms of cash?
  (Mr James) I could not possibly comment, but we probably made our own problems to begin with by getting a very bad initial launch in terms of the customer reactions in those first couple of weeks. We needed time to recover, we had not had a pre-opening pre-run period with which to experiment and we had to go straight into it.

  254. Page 44, paragraph 31. Here it seems from day one that the management team lacked the expertise to run a successful operation. In fact warnings came in January 1997 from consultants, yet it took three years to do something about it. To be quite honest, I do not know the gentleman who came from Disney but at the end of the day appointing him has not made a great deal of difference. I know you are going to bite my head off, but at the end of the day there are only 4.5 million visitors and you still came back for more and more money. It did not make a great deal of difference. I could have run it.
  (Mr James) I would respond seriously to you on that that I would put an estimate of Mr Gerbeau's contribution to this as measurable in the best part of one million visitors we have achieved during that time. His contribution has been quite outstanding. I could list you specific things which he did which have improved it.

  255. That is fine. He has done all these things but at the end of the day it is still a failure in terms of having to be subsidised.
  (Mr James) We do not argue with that. We have accepted that this is a big disappointment compared to the expectations with which we began.

  256. When I read the report I thought to myself, what a shambles. There were no balance sheets, no forecast figures, no financial control. I have been involved in running a Labour Club and if our Treasurer had not produced a balance sheet which told us what to expect in projected finances or what was owed or what was not owed and what we owed in bills, we would have sacked him or her.
  (Mr James) You put your finger upon one of the most valid points here and I made that comment some several hours ago. There is no balance sheet as such mentioned in this because there was no need for a balance sheet in terms of the way that this was being run. This was seen as being something which had not to depend upon the surplus of assets over liabilities in its balance sheets against which to raise money. It had to depend upon the continuity of what effectively became a quasi—

  257. You cannot run an organisation such as that without knowing how much you are spending and how much you have spent and how much you owe. It is just impossible to do.
  (Mr James) You and I may agree on that but this is in fact something which was created not to make a profit and not to take funding in a traditional way from a conventional banking market.

  258. You cannot make excuses. They did not even know what they were spending.
  (Mr James) I am not making excuses for it, I am explaining what I think to be the reality of how it occurred.

  The Committee suspended from 7.30 pm to 7.40 pm for a division in the House.

Mr Davies

  259. May I first of all express prejudice and that is that I have been to the Dome twice with my family and we have had a great time. The point is that I live in London.
  (Mr James) But how many people did you tell.

22   Note by Witness: The figure is, in fact, £19 million, not £17 million. Back

23   Note by Witness: See footnote no.1, page 2. Back

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