Regatta delivers half a billion dollars to economy

12 December 2003 Media Statement

Regatta delivers half a billion dollars to economy

The America’s Cup Regatta 2003 in Auckland injected an extra $529 million into the New Zealand economy, according to an economic impact study released today by America’s Cup Minister Trevor Mallard and Tourism Minister Mark Burton.

“Team New Zealand’s historic achievement in bringing the America’s Cup Regatta to New Zealand had a significant spin-off that has benefited the whole country," Trevor Mallard said.

Based on the latest economic modelling, both the 2000 event and the 2003 event each generated around half a billion dollars of extra economic activity into the New Zealand economy, with the 2003 event sustaining a slightly larger impact overall than the 2000 event (which generated an extra $495 million).

“The study well and truly demonstrates the value of the last two America’s Cup events to New Zealand, with major benefits for our marine, accommodation and hospitality, retail and entertainment, and transport sectors," Trevor Mallard said.

"This level of pay-off certainly made the government’s investment of around $10 million into Team NZ and an economic leverage fund in 2003 worthwhile.”

The study shows that between 2000 and 2003 an extra 9,360 full-time equivalent jobs nationally were created, and that while 85 per cent ($450 million) of the extra economic activity was generated in Auckland, there was still a substantial effect in other regions, mainly as the international visitors travelled to other parts of the country.

Mark Burton said the event had been a catalyst for global media exposure and new levels of international visitor, trade and investment awareness.

“This has successfully reinforced New Zealand as a sophisticated and attractive destination.

“Tourism New Zealand’s presence at the Louis Vuittton Media Centre and work with international journalists has been a very cost-effective method of promotion generating the sort of publicity that money can’t buy. Both Tourism NZ and Trade NZ have worked domestically and internationally with the media to showcase the best of our boatbuilding, food and wine, fashion and music industries,” Mark Burton said.

Questions and answers are attached. The full report is at www.tourism.govt.nz

Questions and Answers – America’s Cup 2003 Economic Impact Report

What was the total economic impact of the America’s Cup 2003 event?

The America’s Cup 2003 regatta had a significant positive impact on the New Zealand economy generating $529 million of total value added.

What was the economic impact for Auckland?

An estimated $450 million (85 per cent) of the economic impact was generated in the Auckland economy. The total additional economic activity sustained 8,180 full-time equivalent jobs – equivalent to approximately 1.6 per cent of employment in the Auckland region in 2002.

This reflects the concentration of the key sectors which serviced the America’s Cup event in Auckland. Most of the impact (74 per cent) was in the 2002-03 year ($391 million) corresponding with peak syndicate activity, and because almost all the spectator and media activity focused on the Louis Vuitton challenger series rather than the America’s Cup defence in March 2003.

Which sectors provided the greatest contribution?

International challenger syndicates ($171 million) and visiting superyachts and other yachts ($155 million) were the highest contributors to expenditure.

Which sectors were the main beneficiaries?

The main sectors to benefit from the additional demand were:

- Marine ($143 million)

- Accommodation and hospitality ($92 million)

- Retail and entertainment ($132 million)

- Business and household services ($48 million) (such as legal, accountancy and other consultancy services)

- Transport ($47.5 million)

How many people visited the Viaduct Harbour area during the event?

The official Viaduct Harbour visitor monitor showed 3.26 million people visited the Viaduct Harbour area during the event, of which 32 per cent were international visitors. Spending by visiting spectator groups accounted for around $206 million.

Why was different economic modelling used in this study, compared to the study carried out on the 2000 event?

The 2003 report used different multipliers. This is mainly because the structure of the economy has changed and the latest data only became available in 2001. Both studies used the best data available at the time.

The study to assess the economic impacts for the America’s Cup followed the methodology established for the 2000 America’s Cup assessment. This methodology was rigorously peer reviewed and developed to ensure a comprehensive assessment of the economic benefits.

What is the effect if the 2003 economic models are applied to both studies?

The 2000 event study identified a total economic impact of $640 million to the national economy. If we apply the 2003 economic models and multipliers to the 2000 event study and directly compare the results, the key conclusions are:

- Both the 2000 event and the 2003 event generated significant economic benefits to both New Zealand and Auckland economies. Both events generated around half a billion dollars of economic impact, with the 2003 event generating $529 million economic impact compared to the $495 million generated in 2000 event.

- The 2003 event sustained a slightly larger impact overall than the 2000 event.

- The 2003 event required much less expenditure on storm water and public infrastructure around the Viaduct Harbour as the necessary infrastructure was already in place.

Timeframe for the study

The study covered the period from the end of the year of the 2000 defence (30 June, 2000) until the end of the year of the 2003 Defence (30 June, 2003). The results are reported for the total period, and for the 2002-03 year, as well as the build-up period throughout 2000-02.

How is economic impact calculated?

The study to assess the economic impacts for the America’s Cup followed the methodology established for the 2000 America’s Cup assessment. This methodology was rigorously peer reviewed and developed to ensure a comprehensive assessment of the economic benefits. The study measures how the event resulted in increased economic activity, stimulated directly by the expenditure of participants and hosts, which then flowed throughout the economy to expand total regional and national GDP and employment.

This report measures “net” economic activity and does not include expenditure that would have taken place even without the event.

The key measures of economic impact are the direct and total value added to the economy in a given year (contributing to GDP) as a result of increased spending, and the increased work opportunities associated with it (measured as full-time equivalent years of work, or FTEs).

Will the results of this study influence the government’s proposal to make an economic and trade investment in a Team New Zealand Challenge for 2007?

The government's proposed trade and tourism investment in Team New Zealand is contingent on the following specific conditions being met:

- Team NZ decides to mount a challenge in Europe;

- Team NZ raising substantial funding from the private sector; and

- An assessment showing trade, tourism and economic benefits to this country from leveraging trade and tourism events off the next regattas in Europe.

How much did the report cost? And who paid for it?

The report was commissioned by the Ministry of Tourism and produced by

Market Economics Ltd at a cost of $187,500 with peer review. Auckland City

Council provided a financial contribution of $20,000 towards the cost. The

Ministry of Tourism has undertaken previous studies related to the event and

these are available on www.tourism.govt.nz

Why did the Government commission a report?

The Government considers good basic research a fundamental when analysing impacts upon our national economy. Projected impacts are valuable, however, the Government recognises that being able to identify the tangible economic impacts gained from hosting the second America’s Cup event are equally important. The report provides a valuable planning tool when considering hosting future major events in New Zealand.

How much did the government invest into the America’s Cup 2003?

There was a $5.6 million (gst inc) sponsorship by Brand New Zealand of Team New Zealand and a further $5 million leverage fund to enable our tourism, trade, cultural, sporting and investment agencies to fully maximise the exposure and opportunities created by the America’s Cup event.

However, the government contribution goes far deeper than a financial contribution – a whole range of departments, including Immigration, Customs, Transport, and Inland Revenue were all actively involved to facilitate the smooth running of the event from amending statutes to arranging visa waivers.

The America’s Cup Economic Impact Report is available in PDF format from the

Ministry of Tourism’s website www.tourism.govt.nz .