Examination of Witnesses (Questions 280-299)
WEDNESDAY 15 NOVEMBER 2000
MR ROBIN
YOUNG, MR
M O'CONNOR AND
MR D JAMES
280. May I ask you something about balance sheets
again? I know you have explained the whole nature of the beast
does not lend itself to balance sheets. At the same time, is it
not the case from what you said about there being no balance sheets
that you end up with this organisation almost going into serial
bankruptcy, all the time saying they are at the edge, they need
some more money, and that is no way to plan any sort of business?
(Mr James) I had not realised the extent to which
I was giving the impression there were no balance sheets until
my colleagues gave me a bit of a mild kicking on that during the
break. In fact of course, as I well know, there were balance sheets.
The point I was making was rather different. I was saying the
balance sheet was not being addressed and used by the board as
the means of balancing it out against its cash flow, what I call
the integrated financial model. The balance sheet existed but
was not being used in the traditional manner and not being used
as the means of assessing the surplus value which you could go
to your banker and offer as security.
281. There were management accounts showing
cash flow and the sort of things you would normally expect.
(Mr James) They had a cash flow and they had a balance
sheet. They did not integrate them in one model; that was the
error.
282. You mentioned that £13 million reservations
were made without any deposit. Why was that not simply changed?
(Mr James) They knew it was happening, but they assumed
that it was a British characteristic that you liked to put your
name down for a ticket on a certain day and then pay for it when
you got nearer to it.
283. You mentioned the figure of £13 million.
Of the £13 million how many did not show?
(Mr James) I could not give you the precise number
but a very high proportion of them did. The other thing we changed
at that time was that originally we were only going to accept
bookings on a three-month rolling basis, so that we were not actually
selling tickets ahead for the rest of the year, which was another
marketing mistake at the beginning. There were plenty of them.
284. Mr O'Connor you mentioned that people making
projections did not have much idea about running theme parks and
therefore you employed Deloitte & Touche. What experience
do they have of theme parks?
(Mr O'Connor) Deloitte & Touche are one of the
very large consulting companies who have a specialist division
concerned with the leisure industry. We turned to them for advice
on the business plan put to us by NMEC.
285. Can I confirm the numbers they generated,
the eight to 12 million? Was that projection generated without
knowing what the price was or the marketing mix or clear idea
of what the product on offer was?
(Mr O'Connor) The NAO report summarises the caveats
in so far as a lot of things had not been settled at that point:
the price, the content. Their assumption was on the basis of a
family-friendly price being picked and the content being of the
standard to which we had aspirations[25].
286. Do you have figures on the regional sales
levels? Can you give me some idea what proportion of people come
from London versus Wales, for argument's sake?
(Mr James) I am advised that we are unable to provide
a geographical split due to the variety and location of the various
ticket outlets we have. I am afraid we cannot give you a regional
breakdown.
287. Can you not provide a note to the Committee?
Why not?
(Mr James) I think I am being advised that this is
information which is not available in any database at the moment.
May I just validate that?
Chairman
288. I am advised that Ministers have responded
that this information is not available simply on commercial confidentiality
grounds. Those limitations do not apply to this Committee. If
they are available and they are being withheld, we should like
them please.
(Mr James) We will undertake to review this and write
to the Committee with such information as we have[26].
Mr Murphy
289. I want to ask primarily about visitor numbers
and publicity but start with a question about GEN36. Did it oversee
the other attractions, millennium celebrations which have been
so successful, the Lowrie in Salford and the one in Edinburgh
and the Botanic Garden in Wales and the big idea in Irvine which
are all well above the projected visitor numbers?
(Mr Young) No, it did not. GEN36 was particularly
to oversee the Government's role in relation to a millennium festival,
which is retranslated as meaning the Dome.
290. Who did? Who made those predictions?
(Mr Young) The other projects were part of the Millennium
Commission's programme which Mr O'Connor will happily talk to
you about.
291. The one set of visitor figures that this
group was involved in was just wildly inaccurate. Everyone else
on those other major projects seemed to get it right. Is that
correct?
(Mr Young) Yes, but you could not say GEN36 invented
those figures. They oversaw the process.
292. I am aware that there is a shared responsibility
in all these figures. Reading the report, notwithstanding what
you said about having some great days recently, as far as I can
tell 25 October was the busiest day for the Dome with the figure
of 40,188 visitors. Perhaps I should ask: what was the busiest
day?
(Mr James) We have had one day at 43,000. I would
take advice on that. It was 42,000 and a few.
293. You made a point there that over a ten-day
period you achieved 350,000. Was that recently during the floods
and the trains and everything else?
(Mr James) It was just before and it was during one
of our peak periods which was the half-term holiday. During the
half-term, which is a great demonstration that when the children
are available and when they can get there, we do get very good
figures.
294. You said that the 15 to 30 million ballpark
figure could be ignored in terms of our discussions here about
the specifics of the Millennium Dome, that figure from July 1995.
Even on the figure earlier in 1995 of 15 million and then the
figures of February 1996 of up to 16 million paying visitors or
paying customers, even on your best day of 42,000 and a bit, even
on your best series of ten days over the half-term break, you
would not have achieved that 15 or 16 million figure at all.
(Mr James) Exactly and that is precisely why I introduced
the subject of the double ticketing for the day because that demonstrated
how it was expected to have occurred. It was an early recognition
of a marketing failure, but we could not see it until we had started
trading.
295. On 18 January 1996 projections were identified,
and perhaps this is the most accurate advance prediction which
existed, that we could expect 10 million paying visitors to the
Dome on 18 January 1996. Could you tell me what changed by February
1996, a couple of weeks later, to take it from 10 million, to
the prediction between 10.9 and 16 million? That was only two
weeks. What changed in that period?
(Mr James) I cannot comment on that because I have
not looked at the difference between those reports.
(Mr O'Connor) I think you are talking about 1997.
296. Nineteen ninety-six; 18 January 1996 and
February 1996. This is in a supplementary memorandum submitted
by the Millennium Commission. They are not my figures.
(Mr James) The only market research data which I have
available at that time suggest that in December 1996 the report
that was provided by ERA suggested a range of 10.9 to 16 million[27].
297. When was that?
(Mr James) That was December. Then they did a further
review in January 1997.
298. I am sorry to interrupt but the memorandum
we have been provided with as a Committee says February 1996 not
December.
(Mr O'Connor) I am sorry, I think we may have been
responsible for that memorandum and I think it is an error. It
should say 1997. The ERA report said 10.9 to 16 million in November
1996. The business plan which was produced by the predecessor
to NMEC, Millennium Central Limited, in December 1996 suggested
13.5 million. NMEC was then formed and they started off with a
business plan of 10 million in January 1997 and increased it to
12 million in May 1997. That formed the basis of their business
plan which they put to us for approval.
299. Do you understand the confusion? My correction.
It was a memorandum submitted to the Culture, Media and Sport
Select Committee, not this Committee, which said that in February
1996 the ERA report identified 10.9 to 16 million.
(Mr Young) The memorandum should have said 1997. Apologies.
25 Note: See evidence, Appendix 4, page 000,
(Pac 00-01/13). Back
26
Note: See Evidence, Appendix 4 page 000 (PAC 00-01/40.) Back
27
Note: See evidence, Appendix 4, page 40, (Pac 00-01/13). Back
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