Organisers said the inaugural Mudtopia could be considered a success, but it's future is still in jeopardy.

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Mudtopia organisers are still looking to wash their hands of the controversial festival after an inaugural year loss of more than half-a-million dollars.

In a report on the Rotorua Lakes Council-run event, council arts and culture manager Stewart Brown recommends council explore "opportunities to support an event specialist who may wish to own and deliver the Mudtopia festival in the future at no risk to council".

BENN BATHGATE/STUFF A total of 15,000 tickets were given away.

Brown also recommended council enter into talks with the Ministry of Business, Innovation and Employment Major Events to cancel its $1.5m Mudtopia Investment Agreement.

The December 2017 festival attracted controversy when it was revealed that taxpayer cash would be used to import mud from Korea, a fact acknowledged in Brown's report.

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BENN BATHGATE/STUFF The report into the Mudtopia Festival acknowledged the negative publicity the planned acquisition of Korean mud caused, including a visit from the Taxpayers' Union.

"Media activity surrounding the Boryeong mud purchase impacted on the festival's marketing campaign and affected our ability to gain sponsorship and other funding support," he said.

Brown said 14,000 people attended the festival and that from a 'festival experience view point', "the event could be considered a success".

But the festival only sold 1500 tickets, 12,000 tickets were given away to residents and 3000 to sponsors and suppliers.

The festival lost $570,387 and incurred a further $170,000 in capital expenses.

Brown also cited the festival date, between December 1-3, as a possible factor for the low ticket sales.

"Our assessment, in discussion with MBIE officials, is that the Mudtopia Festival still has the potential to be an exciting addition to the Rotorua event calender, and because of this we will continue to explore opportunities to deliver the event in a different way," Brown said.

"However, given the failure of the event to attract acceptable revenue levels and the high fixed costs, we do not believe that the current council-owned model should continue."

Councillors will vote on the recommendations at a meeting on Thursday.