Auckland's Santa Parade will lose funding from the city's tourism agency after this year in favour of more ethnic and modern events.

Despite several commercial sponsors supporting the Farmers Santa Parade, and more than 1000 volunteers helping to make it happen, the event will run this year at a major deficit, Newsroom reports.

The parade - which celebrates its 85th birthday this year - fell short $78,000 last year, Newsroom reported, and is set to make a $100,000 operating loss in 2018.

Auckland Tourism, Events & Economic Development (ATEED) has pulled out of funding the event after this year, Farmers Santa Parade general manager Pam Glaser told Newsroom.

ATEED is still listed as a "major sponsor" on the Auckland Santa Parade website, along with Auckland Council and Heart of the City. But, looking to the future, the tourism agency will favour more diverse events that draw people to Auckland from across the country.

ATEED's general manager of destination, Steve Armitage, says the decision also reflects Auckland Council's search for alternative revenue streams to reduce the dependency on ratepayers.

The agency's investments are guided by the Destination AKL strategy, the ATEED Destination Plan and Auckland's Major Events Strategy 2018-2025. Under the agency's new major events strategy, the Santa Parade will lose funding.

To grow Auckland's tourism industry in a sustainable way, Mr Armitage told Newsroom ATEED is interested in events that are gaining more popularity each year, such as the Pride Parade, Chinese Lantern Festival and Diwali.

"The Auckland Pride Parade is continuing to see solid growth in terms of attendance at the parade and attracting visitors from outside of Auckland which we believe also has good potential to expand further," he said.

The Santa Parade, on the other hand, is a "one-off event that takes place over a few hours on one weekend a year and is not really targeted to attract people in from out of the city, it's more about allowing local residents the opportunity to celebrate Christmas".

The Pride Parade has come under fire over event officials banning police from wearing their uniforms during next year's parade. It resulted in Auckland Pride board member Matty Jackson resigning in protest.

This year's Auckland Santa Parade will take place from 1-5pm next Sunday (25 November) starting from Queen St's Aotea Square.

Newshub.