The Sydney Gay and Lesbian Mardi Gras faces an awful dilemma: go under or go corporate, writes Liz Morgan

As Ireland's festival season gets into top gear, the bad news from Down Under is that the Sydney Gay and Lesbian Mardi Gras (SGLMG) looks like it's tottering off to the breaker's yard.

After 25 years, the gloriously outrageous annual pageant of high camp is drowning in debt. On August 2nd, the SGLMG went into voluntary administration with debts of almost 500,000 Australian dollars. And without a knight in shining armour appearing soon, the curtain could fall on the world's biggest gay party.

Organisers blame a host of factors: the fall-off in tourist bookings after the September 11th attacks; soaring public liability insurance costs; falling business sponsorship. The biggest problem, they say, is that the appetite for massive all-night dance parties is waning.

SGLMG raises most of its money from the Sleaze Ball, a monster of an all-nighter which draws huge crowds. But lately Sleaze has been dubbed a commercialised rip-off and seasoned party-goers complain that too many heterosexuals are getting in on the act. What was once the de rigueur event for any self-respecting queer, Sleaze has increasingly been boycotted by the gay community.

Tensions over the "party" versus "political" aspects of Mardi Gras are not new. "As a homosexual, I have always detested the Gay Mardi Gras nonsense, particularly since so many non-gay trendies seem to have jumped on the wagon," declared the late Nobel-Prize winning author Patrick White in 1984.

The administrator's first priority is to find enough money to stage October's Sleaze Ball to ensure Mardi Gras makes its silver anniversary in February.

The first Sydney parade was held in 1978. In defiance of police orders, about 2,000 marchers were confronted by a police force determined to uphold the law at all costs. Dozens were arrested and some badly beaten.

In two years, the parade developed a taste of the pageantry for which it is now renowned. With the talented Peter Tully as artistic director and a workshop in which to transform fantasies into reality, out went the banners and placards and in came the high heels, sequins, feathers and reveal-all costumes. With the backing of gay-friendly businesses, the event blossomed into a fun carnival which people weren't afraid to attend. It grew like topsy, becoming more and more outrageous each year. Soon the month-long Mardi Gras had a film festival, theatre shows, art exhibitions, debates, picnics, a fair and much more. Visitors came in their thousands and spent millions. As the money poured in, so did endorsements from politicians and the public. Mardi Gras was one of Sydney's biggest sources of pride - and cash flow.

Over 7,000 people now take part in the parade and some 500,000 line the streets to cheer them on. The economic clout is undisputable. Official figures for the last couple of years put the take at 100 million Australian dollars (€58.3 million) and upwards.

"It's a big public relations setback for Sydney. It's shown all around the world," says South Sydney council spokesman Rohan Conners. But what also concerns the council, and activists, is the political and cultural loss if the festival goes under altogether or is "rescued" by a commercial operator.

"There are so many dimensions that could be lost," says Diane Minnis, a member of Rainbow Labour and a veteran of the 1978 beginnings. "Are the commercial interests going to get the support of the gay community? I don't think so."

The council is keen to acquire the intellectual property rights to the Mardi Gras and Sleaze Ball and hold them in trust until something can be worked out. The alternative, which appals most supporters, is that the whole shebang will be bought by an events management company.

This, they say, could spell the end for the less-publicised aspects of Mardi Gras, in particular the AIDS prevention campaigns. "Mardi Gras provides us with a range of opportunities to deliver health promotion messages to our target populations," says Adrian Lovney, president of the AIDS Council of New South Wales. "Seating at the Mardi Gras parade is our largest single source of income," says Peter Brennan of the Bobby Goldsmith Foundation, a charity which helps about 1,200 HIV-positive people every year.

With two months to go until the Sleaze Ball, there is every chance a generous patron will be found, but right now the Mardi Gras is looking like a rather tired drag queen limping to the finishing line of the parade.