World Cup a $1.25b boo(s)t

John Selkirk

BOOST: Staging the Rugby World Cup could boost the New Zealand economy to the tune of $1.25 billion as well as laying the foundation for significant future tourism inflows, a report by Deloitte says.

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Staging the Rugby World Cup could boost the New Zealand economy to the tune of $1.25 billion as well as laying the foundation for significant future tourism inflows, a report by Deloitte says.

It says the world's third-largest sporting event has the potential to generate massive economic gains, while capital expenditure costs are among the lowest for an event of its magnitude.

Looking to pointers as to what the economic and tourism impacts will be for New Zealand, experts suggest parallels can most easily be drawn with the 2003 tournament in Australia.

Deloitte's Sports Business Group estimated between 60,000 and 70,000 international visitors will flock to New Zealand for the seven-week event, compared to 65,000 who travelled down under in 2003 of whom 9 per cent vowed to return.

"Our analysis confirms the Rugby World Cup has the potential to deliver a significant economic benefit to a host nation," Sports Business Group partner Dan Jones said. "This can be achieved without the large-scale infrastructure development which can introduce increased cost and financial uncertainty to the hosting of a major sporting event."

Although Deloitte says the tournament has the potential to generate more than $5.5b in economic benefits, New Zealand's size and scale limitations coupled with its distance from Europe would probably dilute the gains.

The capacity of the stadiums that will host matches in 2011 is, on average, lower than those used in Australia, with around 400,000 fewer spectators expected at the 48 tournament matches.

"This will obviously have an impact on direct expenditure," Mr Jones said.

Ticketing is the key revenue source for the organising committee, he says, with the 2011 hosts projecting sales of about $265 million.

However, given that New Zealand will probably get a similar number of overall visitors, and assuming they will, on average, spend a similar amount of time in New Zealand to that spent in Australia, Mr Jones says the economic impact on New Zealand could actually be greater.

"The characteristics of the host economy are a key driver of the overall economic impact, and in this respect New Zealand is a smaller economy than Australia.

In this sense, hosting the RWC could have a relatively greater impact on New Zealand, as this impact will be more concentrated."

Direct expenditure from paying visitors is forecast to boost the economy by more than $500m whilst the combined direct and indirect impacts might rise above $1.25b, the report says.

With its large economic footprint, long duration and significant international visitor numbers, the tournament also delivers substantial tax inflows to a host nation's government.

For New Zealand, tax revenues of some $117m are forecast, two-thirds of which would be generated by GST.

In addition to the economic benefits, the Rugby World Cup presents wider benefits, such as the boost to a host nation's profile as a tourist destination, says International Rugby Board chairman Bernard Lapasset.

To put this in perspective, in 2007 the 48 games in France were beamed to more than four billion television viewers in 238 nations.

"This presents an opportunity for the host nation to achieve significant `place marketing' effects delivering indirect tourism impacts in the longer term."

RWC 2011 ECONOMIC IMPACT: Total direct economic stimulus of $1.25 billion; Generates over $534 million in additional gross domestic product; $502m in direct expenditure by international visitors; Around $117m additional tax revenue generated ;Anticipated total attendances of 1.5 million; Average attendances of 30,600 with stadiums 85 per cent full; Over 71,000 international visitors almost 30,000 from Europe; Major benefits for RWC hosts:Total economic impact up to $5.58b; Value added to economy through wages, profits and taxes $691m -$2.66b; Direct expenditure into host nation by visitors $532m $2.15b