Losing track record

THE chief executive of the Irish Greyhound Board has assured taxpayers his organisation got value for money from building a stadium and headquarters at Greenpark in Limerick.

Adrian Neilan said all proper buying procedures were followed. He said aspects of the project which appeared unusual were symptoms of difficult building conditions, the downturn in the construction industry, and an original mistrust of his organisation by the firm selling it land.

Mr Neilan said the IGB was not in financial difficulty and was able to turn an operating profit despite the recession.

He said arrangements the IGB sought from Limerick City Council to defer the payment of a development debt was done to get flexibility.

Regarding the larger debt pile attached to the IGB, Mr Neilan said he hoped to negotiate a sustainable repayment schedule with AIB before 2016.

The IGB said it had recently met with the bank, which said it was happy with its plan and will not require the IGB to sell property until prices recover.

the actual cost of the Limerick development

In Apr 2008, the IGB board approved a budget of €19.4m for the construction of Limerick greyhound stadium and the new IGB headquarters at Greenpark.

This did not include site costs, the licence fee for the car park, the site engineering work, the full planning contribution or the money lost on the abandoned effort on the Limerick/Clare border.

The downturn in the construction industry subsequently resulted in €6m worth of savings on the tender won by John Sisk.

But these saving were wiped out when the IGB was hit by costs which were not part of the original plan. The full and final cost of the Limerick development was sought under the Freedom of Information Act.

A document supplied, dated Oct 2011, had a final cost approval of €17m.

This did not include buying the site, legal fees, estate agent charges, finance costs, project management bills, the excavation of contaminated fill, and all the expenses related to the purchase of the Meelick campus.

A subsequent breakdown provided by the IGB put the cost at €20.75m. This did not itemise the bills but it did include the land.

The additional costs

Adrian Neilan said millions or euro in bills for filling the site, securing foundations, and getting use of an adjoining car park did not affect the total budget because of savings elsewhere. In particular, he said, the IGB was a victim of the building downturn.

“Clearly that free fill did not become available and IGB made the necessary changes to overall works to not only allow for fill cost but also to deliver a project that was 12% cheaper than planned in March 2008,” an IGB statement said.

At the June 2008 board meeting, where it was unanimously agreed to sign a sale contract with LRC, it was noted that the IGB would not have to fill the site. However, Mr Neilan said this was never part of the formal pact, despite the same issue causing particular problems in 2003. He said the offer was made by LRC as a “neighbourly” gesture.

A detailed press statement prepared by IGB said “LRC only committed to filling the site on a best effort basis that fill [material] would become freely available,” it said.

In addition, it said the arrangement was “clearly obvious to the people who were part of the decision to purchase the site”.

Mr Neilan said there was a clear understanding between the parties even though nothing was written down.

“[It was done on the basis that Mark McMahon] wanted to help as much as possible,” said Mr Neilan.

John Keane of Freeman Keane Associates managed the project up until planning stage. His company was paid by LRC but he managed the development on behalf of both sides.

Mr Keane said the deal surrounding the fill was based on the belief that suitable rubble would be available. However, because of the cessation of construction activity around Limerick at the time, there was virtually no suitable rubble available to the developers.

Limerick Racecourse Company and its chairman Mark McMahon have not commented on the issue.

The fill deal was first brought to the board in June 2007 when the then chairman, Dick O’Sullivan, said he had meetings with Mr McMahon.

He said Mr McMahon would fill the site once LRC received a licence. In June 2008, the IGB was told the value of the LRC’s commitment was €1.9m. This was €400,000 more than the estimate the IGB’s valuers put on the engineering work in 2003.

Built-in costs

The decision not to buy in 2003, Mr Neilan said, had soured relations between the two parties. He said the LRC initially took the attitude that it was “not going to deal with Bord na gCon again”. And he said the decision to allow the seller of the site, LRC, to appoint its own project manager was rooted in the IGB’s poor track record in this deal.

“Mark McMahon said that if the sale was all subject to planning ‘I want to put in place my own planning manager’,” said Mr Neilan.

“[Mr McMahon said] ‘if the sale is only consummated when the planning permission is delivered I am putting in place my own guy’. And we said we would agree to that.”

The IGB said it made a €53,000 payment to LRC as a quid pro quo for a contract condition which left the seller of the land liable for all bills associated with preparing the planning application.

The extra costs

In an email to the then project manager John Keane, Mr Neilan said he wanted the €1.2m the IGB was paying LRC for a licence to use the car park to be kept separate from the overall budget.

He said he wanted the focus on “pure building costs” as he was very worried about the budget overruns that existed in early 2008.

Mr Keane said he would keep the figure “below the line”.

In an interview with the Irish Examiner, Mr Neilan said that when the discussions on items which were to be kept “below the line” took place, he did not mean that they were to be kept separate.

He said the line referred to was the absolute acceptable cost of the project. If there were additional expenses the budget had to be lowered below that line before extra spending could be sanctioned.

Mr Neilan said he often had to use strong language in exchanges with members of the project team in the knowledge that it would help get the work done.

In particular, there was one exchange where Mr Keane wrote to others involved in the development to inform them that Mr Neilan “blew a fuse” at budget increases. Mr Keane had said Mr Neilan had to be talked out of pulling the project altogether.

Mr Neilan said he “had great reservations about the spend on the development” and was keen to find ways to lower the bill.

However, Mr Neilan said his comments in Jan 2008 were designed to stress the importance of bringing down the budget and withdrawing the planning permission application was never an option.

“[Pulling the project] would never have been a consideration because Limerick has the second highest dog pool in the country,” he said.

“[And] I fundamentally believe in time when this country recovers, when people are not scared out of their wits, people will come out to spend a lot of money.”

Low returns

In the first year of its operation, the new Limerick Stadium fell €500,000 short of its profit target.

It was a €350,000 improvement on the loss-making Markets Field, but it was well short of the €550,000 uplift in tote contributions and €250,000 in additional track receipts built into the first year of the critical cost/benefit analysis.

The IGB said this was acceptable because it has reduced prize money and costs associated with running the track through its redundancy programme.

It also said the investment could not be viewed simply in terms of its potential returns.

“Furthermore, IGB also need to take a commercial view not just within a stadium but also what the stadium can do to increase the level of greyhound ownership in the Mid-West region which provides significant economic return to the region,” it said.

Mr Neilan said the Limerick track would move to a three-night-a-week racing schedule and had great potential to deliver a return to the company that made such a substantial investment in it.


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