Cup may be a poisoned chalice

MICHAEL FIELD AND JOSH MARTIN
Last updated 10:34 16/09/2013

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Take a deep breath and beware of the big money hype if yachting's America's Cup returns to Auckland, financial analysts warn.

As Team New Zealand moves close to match point there is already speculation that the next cup series will bring over half a billion dollars in financial gain to the country.

Don't believe it, says Shane Vuletich of Covic, specialist in economic evaluation of tourism and major events, who warns numbers already being used are far too large.

"Politicians are usually pleased when a big number comes along and when an independent company says that, they are not in a position to doubt it," he says.

Last year's Volvo Ocean Race was wildly over-sold.

People were counting the dollars spent by everybody who went through the Viaduct village despite the fact that 98 per cent of them would have been there any way.

"You have got to demonstrate that the money is caused by the event, that it would not be present without the event. Measurement is really critical."

Some sectors of a community want to use the big numbers just so they get the event, but ratepayers and taxpayers have to pay for it.

Vuletich says the spectator visitor benefits of the America's Cup will be "reasonably modest". The bigger return will come off teams coming to compete.

"I would say take a deep breath. Don't get caught up in the old numbers, which are a gross overstatement, and let's take a fresh look and build a business case accordingly."

He says money payback would be well down on his list of cup benefits anyway. Feel-good matters more.

"Sometimes you miss the point by just focusing on the financials."

Institute of Economic Research economist Shamubeel Eaqub says the economic benefits of a cup regatta in 2017 would be based on "over-hyped studies that are proven to be absolute b........ after the fact."

Post-event evaluations often show a loss in gross domestic product from large sports events.

"There are risks money will be lost, not gained," Eaqub says.

"There are legacy benefits, of course but for Auckland it just brings forward infrastructure projects that were going to happen anyway."

Massey University finance lecturer Sam Richardson says the San Francisco regatta under- delivered in terms of both tourist numbers and spending.

"These figures come from consultant reports that commonly overestimate the positive aspects, like visitor numbers, understate or omit the event's associated costs and as such produce numbers that are optimistic at best."

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- Fairfax Media

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