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America's Cup - Economic Impact report shows big boost for Bermuda

by Richard Gladwell on 9 Nov 2017
The America’s Cup produced significant benefits for Bermuda, with a spend that was under budget - 35th America’s Cup Richard Gladwell
The report from PricewaterhouseCoopers on the economic benefit to Bermuda of the 35th America's Cup has been released over a week late.

It is good news for the deposed Government vindicating their decision to back the regatta - which was a major undertaking for the British Offshore Territory with a population of 64,000.

The economic outcomes also mirror those achieved in New Zealand in 2000 and 2003 and will bring a high degree of comfort to those charged with evaluating the investment and returns from the 2021 America's Cup slated to be staged in Auckland, provided sign-off is achieved on or before August 2018.

The report shows that there was an actual spend of $240million (USD) and a further $90million to come in the next five years. The total of $330million equates to $500million NZD - and compares favourably with the economic impact of $550million from the 2003 America's Cup staged in NZ and $650million NZD from the 2000 regatta.

However the 2017 America's Cup had only six teams compared with the ten or so who competed in New Zealand in 2000 and 2003.

Rule of thumb has it that approximately half of the team's budget spend occurs in the country of the Cup. That ratio doesn't completely align with the PricewaterhouseCooper's assessment, however two of the teams were late to arrive in Bermuda, while the other four Oracle Team USA, Softbank Team Japan, Landrover BAR and Artemis Racing were in Bermuda for up to two years before the start of the America's Cup regatta.

Also pleasing for the former government is the information that the America's Cup expenditure came in at $12.7million (NZD$18million) under budget.

The original budgets announced in the Bermudian Parliament called for an event fee of $15million - paid in three installments, a sponsorship underwrite of $25million and the balance of the $77million being spent on infrastructure. (All amounts in Bermudian dollars which has parity with the USD).

The report was due to be released on October 31, 2017, but was delayed until yesterday when it was released by the local events authority America's Cup Bermuda or ACBDA.

The Royal Gazette reports:

The America’s Cup will generate a $330 million boost to the island’s economy, while the event itself came in nearly $13 million under budget, the ACBDA announced this afternoon.

The $336.4 million impact on the island’s Gross Domestic Product includes a predicted $90.8 million in future tourism spending over the next five years from the exposure Bermuda received from hosting the event.

The sailing spectacle, which was originally forecast to cost the island $77 million, ended coming in $12.9 million under budget, according to an independent Economic and Social Impact Assessment on the event conducted by PricewaterhouseCoopers.

“This represents a 525 per cent return on investment, including future tourism revenue,” a ACBDA statement said. “That is, for every $1 of the $64.1 million spent, $5.25 will be returned back into Bermuda’s economy, generating extra revenue for local businesses and residents and additional wages for local workers.”

The 62-page PwC report reveals that the America’s Cup generated $194.3 million incremental on-island spending in 2½ years from January 2015, which resulted in a $245.6 million boost to GDP.

The majority of the additional on-island spending came from the competing sailing teams and organisers, their support crew and families living and working in Bermuda and totalled $116.4 million.

Of the $194.3 million spent on island for the event 29 per cent went to hotels and restaurants, 14 per cent to real estate and rentals, and 13 per cent to the construction industry.

ACBDA chairman Peter Durhager said: “The indisputably positive economic outcome of Bermuda hosting the 35th America’s Cup is a clear example of Bermuda’s potential and proves that we can deliver large-scale projects under budget, on time, and at a world-class quality level, when the right combination of skills, good governance and transparency are present.

“We managed a $77 million budget down to $64.1 million, while still achieving resounding success. This is the benefit of strong public-private sector collaboration.

“The greatest economic value to Bermuda hosting the America’s Cup came from the 450 team members and organisers who moved to Bermuda with their families, living and working in our community, buying groceries, cars and bikes and renting homes from Bermuda landlords.”

For the full report from the Royal Gazette click here

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