AmCup tipped to make a loss due to impact of closed borders
NEW Zealand will suffer a loss on the $249.5 million it invested in the America’s Cup, but, over time, benefits will be realised, an event organiser says.
The 36th America’s Cup is what the Government calls a ‘‘mega-event’’, one of two on the horizon, the other being the 2023 Fifa Women’s World Cup.
The Government and
Auckland Council have invested $249.5m combined in the America’s Cup, the Government spending $136.5m and Auckland Council contributing $113m on public infrastructure. A further $20m is budgeted for downtown upgrades.
But Covid restrictions mean the event and those set to benefit from it will have to rely on largely domestic spectators, and the lasting image of New Zealand it projects to the world.
A 2017 forecast, which included errors when initially presented to decision-makers, predicted that the regatta would add between $600m and $1 billion to the New Zealand economy, and boost employment by 4700 to 8300.
Returns were estimated to be between $1 and $1.14 for every dollar spent. But over the long term (out to 2055) every $1 invested in infrastructure would generate approximately $7.50 of economic activity, the forecast said.
The 1999-2000 America’s
Cup contributed an estimated $640m ($981m when adjusted for inflation) worth of economic activity for the country. The 2003 regatta generated $529m
($745m when adjusted for inflation).
Between 21,500 and 26,275 international visitors were expected to arrive in New Zealand for this year’s event, but
Nick Hill, chief executive of Auckland Council’s economic development agency Auckland Unlimited, said that number was now likely to be zero.However, there were at least 200-odd members of the three overseas teams, and their families.
‘‘That is not trivial. There will be benefits, but they certainly won’t be the level that we initially calculated.’’
Hill said the investments that had been made, mostly in infrastructure, were still ‘‘worth every cent’’ and the benefits would be realised over time.
The closure of the borders meant there would not be the same level and mix of benefits that would have been expected otherwise, but there was still worthwhile investment – especially in infrastructure – in an important event, he said.
‘‘I have no doubt that Auckland and the CBD in particular will be way better off because of the America’s Cup. The cost impact to the council I would imagine the next time around would be a fraction of anything that’s been spent this time,’’ Hill said.
The America’s Cup was an opportunity for Auckland and New Zealand to connect with the international boating and marine community and reinforce its position as a market leader. He said that on average, a 30m to 50m yacht would spend about $1.8m while in New Zealand, and that rose to $6.3m for 70m-plus yachts.
The investment in new and improved infrastructure would enable Auckland to compete with international superyacht destinations due to increased berthing capacity.
Ministry of Business, Innovation and Employment manager of major events Susan Sawbridge said the 2017 economic assessment was based on a number of assumptions that had changed, including the number of syndicates expected.
Five overseas syndicates had signed up to challenge Emirates Team New Zealand for the America’s Cup but Malta Altus Challenge and Stars + Stripes Team USA withdrew, leaving just Luna Rossa, New York Yacht Club American Magic and Ineos Team UK to compete.
‘‘On top of this, Covid-19 will have a significant impact given the border closure,’’ Sawbridge said.
As a result the economic return would be much lower than originally forecast, she said.
No revised forecast would be made and the return of investment on the event would not be known until it was over.
The economic assessment in 2017 helped to support the investment into the event, she said.
MBIE had contracted an external provider to produce an ‘‘impact evaluation report’’ which would be publicly available once completed, she said.