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America's Cup - Economic impact study says Cup worth a billion to NZ

by Sail-World and MBIE on 20 Nov 2017
Will Auckland be able to set its sails and reap the benefits of an America's Cup in 2021? Richard Gladwell
The Ministry of Business, Innovation and Employment (MBIE) has commissioned Market Economics to evaluate the potential economic impact of an Auckland-based 36th America’s Cup.

The report has been issued today, showing the basis of calculation of the benefits to Auckland and New Zealand.

Overall, there are few surprises in the report, which is in good alignment with similar exercises done after the 2000 and 2003 America's Cup in Auckland, and the recently released report by PwC on the 2017 America's Cup staged in Bermuda.

Not included in the report is the media exposure from the America's Cup Regatta, which was calculated in a report prepared for the former America's Cup Events Authority with a value of USD$80million ($NZD110million). ACEA's independent report determined the value of broadcast media coverage of the America’s Cup event to Bermuda. That report indicated that the exposure obtained had an Advertising Equivalent Value (“AEV”) of $80.9 million, which represents what Bermuda would have had to pay in order to achieve the same level of marketing exposure generated by the America’s Cup.

The MBIE report gives lie to claims made at an Auckland Council meeting in September when it was claimed by the meeting Chairman and noted by others that a report on which they were basing decisions indicated that the superyacht servicing industry was worth only $30million to Auckland, an amount which the Chairman indicated was too small to be of interest and not sufficient for a legacy use of America's Cup facilities for superyacht servicing. In the MBIE report, using current and 2000/03 data, they have concluded that on average 60 superyachts visit Auckland each year and spend on average $3million.

The provides for a total spend of $180million per annum - six fold of the figure bandied about in the Council meeting, and used for decision making by the Governing Body.

In summary the MBIE commissioned report estimated the following:

· From 2018-2021 provides between $0.6 - $1.0 billion in value add to New Zealand’s economy and an employment boost of between 4,700 and 8,300. The range reflects different assumptions around the number of syndicates competing, visiting super yachts, international tourists and the cost of hosting.

· Impacts positively on sectors like services, manufacturing (mainly around boat building and super yacht refits) and tourism, including food, retailing and accommodation.

· The cost-benefit analysis for the period of the 36th America’s Cup (excluding any future benefits associated with any new infrastructure, or ongoing benefits to the marine industry) is positive, ranging from 1.2 to 1.8. This cost-benefit ratio is for the economy as a whole; the costs included relate to all parties, including for example the Crown, Auckland Council, syndicates, Emirates Team New Zealand, retailers and tourism providers.

The economic evaluation does not capture any of the broader benefits associated with hosting an event of this scale, including showcasing New Zealand to international audiences (and associated reputation impacts), high performance sport outcomes, and participation and engagement of New Zealanders that may have “feel good” effects (increasing national identity and pride).

The study makes no assumptions around location or whether there are any incursions into the harbour or not. It does not, therefore, take account of any loss of value from reducing the available harbour space. At the time of commissioning, the location was undetermined.

The study is consistent with Treasury guidelines for studies of this kind. This is one input into the discussions between government, Auckland Council and ETNZ. Any decision needs to stack up for ETNZ, and the New Zealand ratepayers and taxpayers.

A full copy of the evaluation is available on MBIE’s website: click here

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