An investigation into the running of Moray Leisure Centre over the past 25 years has highlighted the flawed funding agreement between Moray Council and the company in charge of the centre.
The internal report was ordered to find out what went wrong with the organisation after it was almost forced to close its doors in December due to cash-flow problems.
It was eventually saved by the council who gave it a £120,000 cash lifeline to keep it alive.
Now, a report written by council auditors has shed light on why the leisure centre has suffered such severe financial difficulties in recent years.
It revealed that “In hindsight, 25 years was too long a period to expect the initial funding agreement to operate in a manner acceptable to all parties, all the more so when reflecting on societal changes and the financial downturn and its impact on the public sector during that time”.
The council committed to paying Moray Leisure Ltd, who ran the centre, an assured grant in the sum of £300,000 for its first year up until March 1994 before giving them a further income related grant of up to £75,000 annually afterwards.
However, since then, the council’s funding of the centre has remained at the same level despite it facing increased cost pressures.
The centre’s business plan for the period 2006 to 2009 forecast substantial increases in energy costs and reported that with the building being over 12 years old, the pressure on the repairs and maintenance budget increased annually.
In a report published in 2011, it was discovered that Moray Leisure did not budget for major lifecycle maintenance, as it appeared to them that the council would provide funding for this as and when required.
Moray Council drafted a Service Level Agreement during this time to establish a new funding system to “enable Moray Leisure to deliver the services and quality specified by the council” and it was hoped that this would supply fairer funding to the centre and help them with increased running costs.
However, the Moray Leisure Board rejected the agreement due to additional obligations for the centre beyond those contained in the original funding agreement.
It is not clear what level of discussions took place around it due to the board meetings being infrequent and minutes held lacking detail.
The centre continued to receive the annual grant from the council up until recently, when the council was forced to bailout the centre after cash-flow problems caused the centre to come close to bankruptcy.
Now, with the council’s sports and leisure trust, Highland High Life (HHL) running the centre now, it has been given a two-year reprieve.
Keith and Cullen councillor Donald Gatt believes that it remains to be seen whether the leisure centre has a sustainable future.
He said: “The jury is still out whether or not the leisure centre has a future.
“I’d like to hope it does but it remains to be seen whether the cashflow problems can be solved.
“The council are still supporting it and the results will speak for itself.”