18th August 2018
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Mareel’s financial management to be examined

SIC officials have embarked on the task of trying to establish what went wrong during the construction of cinema and music venue Mareel.

On Thursday, chief executive Mark Boden met with Shetland Arts director Gwilym Gibbons to discuss how its provision of up to £600,000 in “bridging finance” will work in practice.

There has been some confusion caused by political leader Gary Robinson’s statement that the money was neither a grant nor a loan. The council says it will hold the £600,000 and issue sums of money only when required by Shetland Arts to meet its “immediate, short-term financial commitments”.

Mr Boden said: “I am reassured by my first meeting with SADA’s management that we will be able to work together on the due diligence exercise. There is a lot of work to get through in order to be able to provide a comprehensive picture to members in February.

“However, I’m confident that we will find a way to secure the considerable investment of public money that has been made in Mareel. We will keep members – and the public – informed as this process goes ahead.”

Mr Gibbons said it had been a “very positive and constructive meeting”. He and his staff are committed to working with council officials “to safeguard everybody’s investments in Mareel and ensure that Mareel continues to be a success”.

SIC officials will examine the financial management of the £12 million project, which went £1.2 million over budget. They will also look at its ongoing income and whether the venue can really buck the trend for public buildings in Shetland by paying for itself.

On Thursday Shetland Arts issued a statement saying the contract administrator put around two-thirds of the 18-month delay down to “the actions or inaction” of contractors DITT.

There are also questions over the role played by the SIC’s “Mareel sounding board”, set up in 2008 to keep councillors informed about the project’s progress. In September last year, a report from development director Neil Grant stated that the building’s construction remained within budget.

In a letter to The Shetland Times, councillor Jonathan Wills said he hoped that “with a new business plan, Mareel can trade out of its current troubles”.

He said better-than-expected cinema attendances gave “grounds for a little optimism”. More than 30,000 cinema tickets have been sold in the first three months. But Dr Wills suggested: “Those who support Mareel will also have to put their money where their mouths are, by paying for more tickets and probably also by becoming financial patrons of the venture.”

He said the latter was a common method for helping to fund projects such as the renovated Kelvingrove Museum in Glasgow and the National Portrait Gallery in Edinburgh.

Mr Gibbons said that, while the business plan was constantly being monitored and aspects may be tweaked, “on the whole” he is very pleased with the level of income being generated so far.

“I think it’s too early to be making any significant changes in the way that we’re operating. On the whole we are really pleased with how well, financially, Mareel is working. There is a caution – these are the first months – but our focus is to ensure it operates with no additional local subsidy.

“I understand that there is scepticism and that people might see the challenge that’s there as difficult. Our job is to make what is currently successful more successful.”

About Neil Riddell

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16 comments

  1. Gordon Laurenson

    Why don’t they think of having a friends of Mareel with people investing some funds say £100 each then offering a discount for events or such like with the monies being paid back anytime it was needed. This would encourage more people to use Mareel and help everyone interested in the future of the facility.

    Reply
  2. Karl Simpson

    I would certainly advocate a membership type scheme whereby supporters paid an annual fee of say £50. The benefits of such membership could be priority access to tickets in advance of general sale, newsletters, perhaps 10% discount on cafe bar, etc. If say 1000 people became members, that would be £50,000 per year coming in from the people who support it.

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  3. ian tinkler

    Karl, Say a membership type scheme £50 per year, use Mareel café bar twice a wk., spend £10 each time @ 10% discount. Safe yourself in discounts £120 per year, net loss to Mareel of £70. 1000 people on such an arrangement would be a net cost to Mareel £52,000!!!. It’s already £1.2 million down, not a very good idea. How about a collection box in Mareel for Freefield and free music tuition for our kids.

    Reply
  4. Ali Inkster

    If it is found that incompetence is the reason that there has been an overspend and when not so long ago SA mouthpiece was claiming no more funds would be required.
    Will those responsible be given their P45s, and told not to let the door hit them in the backside on their way out? Or will they be allowed to sail of into the sunset with a nice fat pay off as is the usual with anyone involved in public sector screw ups on this islands of ours.

    Reply
  5. Gordon Laurenson

    They need immediate cash Ian

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  6. ian tinkler

    “They need immediate cash, Ian”, Gordon, Mareel has just been given half a million pounds plus. Can I have a discount season ticket @10%? Go every day. Save myself a fortune, be cheaper than Sky.

    Reply
  7. Karl Simpson

    Ian, don’t be so quick to dismiss ideas or possible solutions to help a problem. There are thousands of organisations throughout the UK and world which successfully and profitablly utilise membership or loyalty type schemes. Rest assured these firms do not employ these schemes to lose money!

    Very often the customers who join such schemes use the products more thus bringing in more money throughout the year for the organisation as well as providing a timed cash injection.

    Reply
  8. Stuart Fox

    Ian, Ian, Ian. Not often you make me smile!

    If I was a paid up member and spent £20 a week in the cafe then I’d spend £936 over the year, receiving £104 discount in the process!

    If the other 999 members did the same then the cafe bar would have taken in £936,000, plus the £50,000 membership money makes a total of £986,000! And all they’ve had to give up is £54,000 from their PROFIT MARGIN!

    I think they’d bite your hand off for those kind of figures! 🙂

    Reply
  9. Johan Adamson

    I thought they meant, as patrons, that you sponsored, say, a seat, so you paid a capital amount and then you maybe got your name on a plaque somewhere. I once worked for a CA who was one of the founder members of the Festival Theatre in Edinburgh (it was an abandoned cinema which they brought back to life) and every now and again the staff would get free opera tickets (if he couldnt go). It was great. Local communities have been buying shares to keep local shops open, same idea.

    So the money seems to be a short term loan, paid back to the SIC either by the above method or because they dont end up owing DITT so much? I think I get it now.

    I like the cafe bar but I wish they would give you a proper cup with your coffee though and not a tumbler. Its a bit embarrasing for visitors.

    Reply
  10. ian tinkler

    Stuart, to survive Mareel will need a turnover of a lot more than £936,000, which would not cover running costs. Think about Mareel’s overheads, wages (dozens of people!), the interest on the loan of £60k, industrial rates, maintenance, film rental, utilities and especially the cost of high end artist’s et al. . . Ask SADA what is their breakeven point is in running costs? I bet they will need every penny they can raise, discounted rates when insolvent are not a clever move, even if 1000 people used Mareel twice a wk., after overheads, just how could Mareel pay back a loan of £60k. Not something to smile about.

    Reply
  11. Ewen Adamson

    There are so many things wrong with Ian’s sums it’s hard to know where to start. He tried to do a few basic calculations and failed miserably. It makes you wonder what the financial plan for Mareel would have been like if he was involved…..

    Reply
  12. Ali Inkster

    I spoke to a fellow the other day who had been to mareel to watch a film, 24 customers and 7 staff, with staffing levels like this Stuart £50,000 is the profit margin.

    Reply
  13. John Fraser

    1,000 life time memberships at £600 each giving members a quarterly newsletter, priority booking for all events an invite to an annual member’s event and their name engraved on a member’s board in a prominent position inside the building. £600,000 secured without passing round the begging bowl.

    Reply
  14. ian tinkler

    One thing for certain Ewen, it would be hard to have done much worse!

    Reply
  15. Brian Smith

    A friend and I once went to a film in Inverness, Ali, where there were two customers and two members of staff. But the key thing I noticed is that there wasn’t a pile of Invernessian Jeremiahs predicting the end of the world as a result.

    Reply
  16. Ali Inkster

    Thanks for pointing out that the cinema in Inverness manages to get by with considerably fewer staff Brian, some thing that should consider before calling a strike if Mareel has to lay folk off.

    Reply

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