The Eden Project is one of the most visited and reputable tourist attractions in Cornwall and arguably in the UK. For a project that has only been operating for 16 years, it is now more visited than the Houses of Parliament with a staggering number of more than 960,000 visitors in 2015. With over 400 employed staff and a total contribution of an estimated £805m into the local economy, they must be doing something right. But how can this be possible when the project is situated in the poorest county in England?
This is what first-year students of the Exeter Business School wanted to investigate in their Boot Camp excursion program. Upon first visiting the project, we were dazed by the ambitious construction of the biome domes, a new experience for many of us. Most people don’t even know that the project was constructed on a reclaimed Kaolinite pit. Understanding the history of the land is crucial in comprehending the Eden Project. The pit which mined kaolinite for over 160 years was, and is still, used in many consumer goods such as toothpastes, ceramics, paper, as well as light bulbs. This geological location gave Cornish mining industries, such as The English China Clay, the resources to produce around fifty percent of the world’s clay between 1910 until 1999. In that year, it was eventually acquired by Imerys, a French company (valued at £756m) who moved most of their operations to Brazil. Consequently, this led to the loss of thousands of jobs and a significant loss of revenue to the local economy; a possible contributing factor to Cornwall’s low GDP.
The site was then largely abandoned, how is it possible then that the Eden Project took shape with no obvious opportunities or close resources, representing more of an isolated island with no prosperous horizons? The answer lies with the principal co-founder Tim Smit whose dream was to change the world through restoration and conservation. Obtaining initial funding for the Eden Project was essential, and would not have been possible without it. Tim knew this, and first tried convincing many large organisations to invest millions in this single project, all declined. His last major plea was to the Millennium commission where he asked for funding in the sum of £37.5 million. They declined since it was deemed a very uncertain project with too high risks and costs. Tim, however, did not take no for an answer and left the commission and told the press and his partners that he indeed managed to secure the funding needed. This made massive news, and preparations went underway, in the subsequent weeks the commission heard the support and gratitude surrounding the deal and therefore decided it was too late to inform the public that no funding was agreed and pledged the 37.5 million. Tim took the extraordinary risk to follow his dream and if had not succeeded, would have left a sour ending to the project.
Tim’s aspiration, drive, dedication and vision were one of the major contributing factors to the success of Eden. However, could this be identified as a business anomaly? Under normal circumstances, he would not have received the funding and the Project would not even be here. Tim could not have tried again with the funding request, this was a one-off success, this was a business anomaly. Even Dan Ryan (one of the program curators), in his presentation of the history of Eden, stated that “it (The Eden Project) defies business logic.”
From an entrepreneur’s point of view, this is was a massive success as his idea was now fuelled by the financial necessities and ready for take-off.
However, another way of evaluating Eden’s success is looking at their financial accounts and this can tell a completely different version of events. There are two different ways to look at Eden’s financial history-They claim that “Trading cash surplus signals a fourth successive year of profit for the Eden Project” for the 2016/2017 fiscal year, however various fiduciary sources voice losses after interest, depreciation, and deferred grant releases. So is Eden making a profit or are they making a loss?
Looking at Eden’s report and financial statements as of the period of 31st March 2017, they made an operating profit of £1,653,000 compared to £1,823,000 in 2016. It’s a strong figure and many would believe that they are financially stable. However, looking at the operating profit after interest, depreciation, and deferred grant releases, made a loss of £589,000 and £655,000 in 2016. To put that in perspective for every £1 of turnover they made a loss of approximately 35.63p and 35.9p in 2016 (which is 35.6 and 35.9 percent, respectively) how can we have two versions of what their profit is?
Simply put, in accounts, you can use operating profit to show levels of profit before including certain expenses like depreciation or interests, but you still include expenses like labour costs, utility costs etc. In this case, it is very misleading, not to include it and inflating their profitability outlook. It is important to consider major elements, the first being that they are a charity, which receives a significant amount of funding through private funds and donations, the second is to look at consolidated or group accounts because there are subsidiaries and various other companies which form part of the Eden Trust.
If their financial accounts depict uncertainty, what could possibly be their future?
Two main developments are currently ongoing, one domestic and one international; The Eden Project is creating a hotel called rather inventively the Eden Project Hotel which hopes to open in 2019 and will offer 109 bedrooms as well as additional support to their renowned educational programs. The buildings are designed similar in nature to the whole site, with sustainability and energy efficiency as a key element.
The second includes more exciting plans with a new international project called the Eden Project International, which applies the Cornwall Eden Project model but reshaping it to each specific location in keeping with the needs of the land and people.They are constructing in China, Australia, United States Of America, Northern Ireland to say a few, but each design is unique and specific to their surrounding; sharing a slice of paradise
The future of the Eden Project in Cornwall may seem uncertain and, based on the evidence, the Eden Project is a business anomaly in isolation. This does not mean it is a bad business model because as a group, they have taken elements of the original model, improved and transposed it to a completely new situation where it is effective and investors around the world willingly support this project as the potentials can be realised, it shows that they can as a business be a more sustainable and a profitable model for the future.