Anger as Sydney's Gay Mardi Gras goes bust

Some are blaming it on infiltration by "straights"; others are pointing the finger at politically correct lesbians. Recriminations are flying after the group that organises Sydney's Gay and Lesbian Mardi Gras was placed in voluntary administration last week.

The move means that next year's carnival may not go ahead, leaving a gaping hole in the city's social calendar. The street parade and dance party had grown into the world's largest celebration of gay culture, attracting 750,000 people.

This year's Mardi Gras, however, saw a sharp decline in numbers, leaving it A$400,000 (£140,000) in the red. After months of financial uncertainty, a mystery benefactor offered to bail it out – but last week he changed his mind.

The demise of Mardi Gras not only robs Sydney's gays and lesbians of their annual hedonistic extravaganza. The event was hugely lucrative for local businesses, pouring A$100m a year into the New South Wales economy, and was also a big fund-raiser for the main Aids charities.

In the gay community, the knives are out. Several people have resigned from the Mardi Gras board, one of them accusing directors of living in "fantasy land". The board has been bitterly criticised for failing to appreciate the impact of 11 September on tourism. Many observers believe the event had grown too big and too commercialised.

The financial crisis mirrors an identity crisis for Mardi Gras, which was born as a defiant statement of gay rights in 1978. Police broke up the first march of 1,000 demonstrators, held to commemorate the Stonewall riots in New York.

Police officers now march alongside sequin-laden drag queens, which sums up Mardi Gras's dilemma. With the battles against homophobia largely won – thanks partly to Mardi Gras – the event has lost its political edge. Even the outrageous floats, traditionally led by Dykes on Bikes, a group of bare-breasted women on motorbikes, no longer shock.

David Mills, a journalist with the Sydney Star Observer, the city's main gay newspaper, cites several reasons for Mardi Gras's decline, including an ageing gay population that is less inclined to party. He said a more tolerant climate meant that gay people no longer needed an annual catharsis to validate their sexuality.

"There is a bit of nostalgia for the old days," Mr Mills said. "In the early years, being seen at Mardi Gras was an incredibly courageous thing to do. People who have been marching for 20 years are wondering why it doesn't feel exciting any more."

Others suggest the death knell was sounded when the carnival became so fashionable that straight people began attending in droves. So vehemently has this view been expressed in recent days that one participant in a gay internet chatroom pleaded for an end to discrimination against heterosexuals.

Most bitchily, some gay men are attributing Mardi Gras's woes to the decision to admit women in 1989. They say that a loss-making arts festival, which was added in recent years, is aimed at politically correct lesbians.

The organisers are blaming conservatives within the state's Labor government for its refusal to provide financial help. The acting state treasurer, John Della Bosca, said last week that the funds would be better spent on hospitals, roads and drought relief. The gay community seized on this as proof that discrimination is alive and kicking after all.