Council row over disputed claims that Leisureland is losing €12,000 a week

Galway Advertiser,

Branded as a “noose” around Galway City Council’s neck, an audit report has found that Leisureland continues to lose money suffering a loss of more than €620,000 last year. However, this figure is being disputed by councillors on the facility’s board of directors who maintain the deficit is actually €180,000.

The financial position of Leisureland was revealed in a statutory audit report which was presented at Monday’s Galway City Council meeting. It noted that Leisureland, a 100 per cent subsidiary of the council, had made a loss of €683,474 in 2011 with income at €1,892,988 and expenditure of €2,576,462, and a loss of €626,879 in 2012 with income of €1,599,401 and expenditure of €2,226,280.

Local government statutory auditor Mary Keaney found that “the net cost to the council of €627,000 is significantly higher than the €100,000 provided in the council’s budget for 2012”. She therefore recommended that a “realistic budget be set” for future years, one that reflects the anticipated costs against which Leisureland’s performance can be monitored.

The report continued: “Only draft accounts were available for this company at the time of the statutory audit of the council and an audit report was not therefore available. The auditor of Leisureland confirmed in correspondence that the accounts of the entity were prepared on a going concern basis on the ‘assumption of the continued support of its parent - Galway City Council. The company has sustained deficits in the current period and previous periods, however the balance sheet does not show liabilities in excess of assets’. This comment reflects the fact that the company continues to be solvent because Galway City Council continues to fund its annual net cost.”

In his response city manager Brendan McGrath made assurances that both the council and the Leisureland board of directors are “acutely aware that the facility is struggling to break even”. He added that Leisureland management is striving to reduce costs further and that energy costs in 2012 and 2013 have been reduced considerably due to the installation of a CHP unit. Mr McGrath further explained how the board of directors is reviewing proposals in order to maximise the income generated and the amount of the council’s subvention of the facility will be reviewed during the preparation of the budget for 2014.

First to air his disappointment was Cllr Billy Cameron (Lab) who described this subsidiary of the council as a “noose around our neck”. He then asked why Leisureland cannot be run more like the Town Hall which is a successful cultural space in the city.

“€627,000 is of huge concern but it’s not accurate,” said Cllr Peter Keane (FF) who denied that the board of directors and Leisureland management were shirking their responsibilities. Cllr Keane, who is a board member, said: “The perception is that Leisureland is some financial noose around the neck of Galway City Council but this is wholly incorrect and is unfair. The correct deficit figure for the Leisureland facility in 2012 was €399,000 and this included a bill for €78,500 for commercial rates which the present Government has decided to levy on local authority facilities, and it also includes a provision for legal fees of €140,000 for a case taken against Leisureland which we actually won, and this raises questions in itself. When the figure is netted out Leisureland operated a deficit of approximately €180,000 in 2012, which is an achievement in the context of the Public Service Obligation on Galway City Council to operate the facility and is in line with the average cost to the council of operating other community centres throughout the city.” Cllr Keane also told the chamber that for every €1 taken in 60 cent is paid out in wages.

Chairman of the Leisureland board, Cllr Donal Lyons (Ind) pointed to the fact that for 10 years the fees charged to local swimming clubs for use of the facility has not been increased and that the new heating system has brought about savings in the region of €100,000 since it was installed 18 months ago. “There are challenges for the board in terms of operation of this public facility at Leisureland but I am confident that the 20 per cent deficit reduction in 2012 can, and will, be improved upon in 2013 and beyond,” said Cllr Lyons who also reminded the chamber that it was up to every member to promote this city facility.

Both Cllr Neil McNelis (Lab) and Cllr Catherine Connolly called for a presentation to be made as soon as possible.

Director for finance and IT, Edel McCormack, denied that the figures were inaccurate explaining that they include loan charges that do not appear on Leisureland’s books. She noted that Leisureland is operating in a different economic climate compared to the Town Hall and that its biggest issues were the pricing and concessions. It was further explained that there is a minimum staffing requirement due to health and safety regulations but there was the possibility of reviewing opening hours. Regarding the €140,000 in legal fees for the court case which Leisureland had won, Ms McCormack confirmed that provision had to be made for the costs in 2012, that the council was awarded costs, and that no payment has been paid

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