KELLY HODEL / STUFF
OPINION: What is the most valuable brand in the world?
The answer depends on who you ask. Forbes Magazine places Apple at No.1 (US$183 billion), ahead of Google. But the specialist consultancy Brand Finance puts Amazon (US$150b) on top of the heap, valuing Apple at a mere US$146b.
This is because a brand name is hard to value. It is an estimate of trust, good will, customer loyalty, reliability and other factors.
In the case of Apple, customers pay a substantial premium to own the latest gadget because they think Apple is best. Amazon is very different, with a reputation for great value. People happily shop online without checking out bricks-and-mortar stores.
So despite being hard to assess, brand value is hugely important to many companies. Building brand value is hard, takes time and can cost a lot of money. However, losing brand value can happen very easily, very quickly, and cost even more money.
Fonterra’s botulism scare hurt the company even though it turned out to be a false alarm. Tiger Woods’ advertising appeal took a hammering when his sexual liaisons were exposed. Ford’s reputation for reliability was damaged in the 1970s when its Pinto model kept bursting into flames. It was revealed the company knew about the defect but estimated the cost of fixing it was more expensive than paying out for the resulting deaths.
What is the brand value of Hamilton City Council?
I am not going to try to put a figure on it, but I can confidently say the value has fallen in the last decade. One reason for this is the Claudelands Events Centre.
The building cost $68.5 million and opened in 2011. According to the council-commissioned 2009 business case, it was supposed to host 316 events in its first year and generate a $1.1m surplus. It sounded like a great investment.
But according to a $30,000 review initiated by Julie Hardaker when she was elected mayor, those figures were not accurate. To quote a news article of the time, “Hamilton City Council staff told the original author of the business case, Campbell Consulting, to increase the already optimistic number of events in the business plan by up to 50 per cent.”
The review also found revenue projections were increased by up to 11 per cent and operating costs were reduced by up to 9 per cent. “Council staff had been unable to explain the variation.”
Perhaps if councillors had been told the truth, the project may not have gone ahead. Is this the reason the numbers were adjusted?
Even that review was optimistic. It projected a $1.5m deficit, with losses continuing until at least 2015. Later news reports have recorded a deficit of around $10 million per year, which Councillor Garry Mallett notes is over 7 per cent of our total rates take.
Cr Mallett wants to sell the centre for $1, a complete write-down of its now over $70m capital cost, as it has already required upgrades. This would be a great move to save us ongoing costs, except no buyers are coming forward – not surprising, given the terrible investment returns.
The decision to build Claudelands was flawed. With a massive expenditure programme scheduled for the next 10 years, what confidence do we have that the council’s commitments are based on trustworthy information?
The level of faith the public has in council staff has nosedived as rates have gone up. If the council were a business, the damage to its brand value would be considered serious. But it is a monopoly protected by legislation. We have no choice and no protection, as there appears to be no accountability for council’s mistakes.
Council may not need to care about brand value, but it should still care about the values that make up a brand. Trust, good will, integrity and accountability are still essential to the proper operation of any organisation, and council needs to start restoring these values.
The Hamilton Residents & Ratepayers Association wants a council that we can all respect.
* Andrew Bydder is a spokesman for the Hamilton Residents & Ratepayers Association and a local architect.