EDINBURGH'S world-famous Hogmanay celebrations are facing a huge shake-up after the event made a big loss for the second year in a row.
About 10,000 unsold tickets and the need to run extra advertising campaigns led to last year's celebrations making a loss of more than £500,000.
Now a number of flagship events face being axed or dramatically scaled back under plans to reduce th
e burden on the taxpayer.
Cuts are being examined both this year and next, despite last year's programme being scaled back and the budget for the event being pegged in the face of rising costs.
No major events sold out last year for the first time, despite good weather on the night of Hogmanay and a promising weather forecast.
The Scotsman can also reveal that the estimated economic benefit from the capital's Christmas and Hogmanay festivities has shrunk, from an estimated £53 million in 2002-3 to the current £32m from the most recent festival.
Unique Events, the Edinburgh firm with the contract to produce the celebrations, is to be handed more responsibility for the four-day programme on condition that it sticks to an agreed budget.
The council, which has put £1.4m into the festival in recent years, had taken many elements in-house, with mixed success, according to insiders.
One source said: "The council has been heavily involved in the management of both Christmas and Hogmanay, and this has not resolved the financial headaches surrounding the festival, particularly over Hogmanay.
"The situation has reached a bit of an impasse. There is no more money available for Hogmanay from the council's budgets, but the costs keep rising and there is a greater need to spend money marketing the programme because of the economic slowdown."
Expensive open-air events on 30 November and 1 January are thought to be the most under threat, and the number of stages at the street party could be cut to try to save money.
However, insiders at the council say they are likely to resist any attempt to reduce the 100,000 capacity of the street party, despite thousands of tickets being left unsold last year.
Last year saw the scaling back of the fireworks display and the scrapping of outdoor events in Holyrood Park in a bid to save money.
But the budget overrun is thought to have dwarfed the £300,000 loss the festival made the year before, when the Hogmanay street party was still recovering from a previous cancellation due to bad weather.
Steve Cardownie, the city council's festivals and events champion, said: "Edinburgh's Christmas and Hogmanay programmes are envied across the world.
"The winter festivals are the only festival programmes still managed from within the council. This presents a unique set of problems in that we are bringing lots of people into the city for these fantastic events at a significant cost, yet the council doesn't generate any of the additional income that comes to the city.
"The council assumes all the risk associated with producing these massive events. The producers currently have no responsibility for ticket sales or marketing their events and this is not sustainable given the council's current financial predicament."
Pete Irvine, director of Unique Events, declined to comment yesterday.
His firm has recently been awarded a contract to run and promote events in Edinburgh's new-look Grassmarket following its multi-million-pound makeover.
