By Paul Lewis
11 Jun, 2024 06:02 PM
It has been claimed Barcelona could benefit by more than $2 billion from Emirates Team New Zealand taking its defence of the America’s Cup to Spain.
Paul Lewis is a veteran sports journalist who has written four books and covered Rugby World Cups, America’s Cups, Olympic & Commonwealth Games and more.
OPINION
You’ll excuse me if I belly laugh at the news that Barcelona will benefit to the tune of more than $2 billion from the upcoming America’s Cup.
In New Zealand, this is, of course, seen by some as “look what we’re missing out on”. But, as is always the way with econometric studies predicting vast treasures for those staging major events, it is devoid of any balance or reference to the record of such predictions when it comes to a little matter called accuracy.
At best, these economic predictors are a stab in the dark made by people wearing sunglasses and a black sack over their heads. At worst, it’s a fantasy. Pronouncements like Barcelona’s are made to justify the money governments and sponsoring companies put into hosting events such as the Olympics, World Cups and, yes, America’s Cups.
The Sydney Olympics of 2000 trumpeted they would haul in nearly $9b in revenue. Result: a loss of $6 million. So it goes – football and rugby World Cups, Olympics and America’s Cups all make a great deal less than claimed; nearly all lose money.
The wonderful old philosopher, mathematician, historian and all-round intellectual, Bertrand Russell, once said of his favourite subject: “Mathematics is the subject in which we never know what we are talking about, nor whether it is true.” Amen.
No one knows for sure how much money will accrue. There are too many intangibles, too many unknowns, and too many ungovernable fluctuations for anyone to say precisely what value will arise. The incalculable factor is what good it does to a country’s long-term economic benefit when viewed warmly by those watching from afar.
Even then, some awful liberties are taken with matters such as viewing numbers. The 2011 Rugby World Cup in New Zealand stood to benefit from a one-off increase in GDP of between $550m and $2.4b, according to the expensive consultants lined up by World Rugby (then the IRB). The consultants said the previous World Cup had been watched by more than 4 billion people in 238 countries.
The Herald on Sunday, in 2010, put this claim to the test with a panel of experts. One, Victor Matheson, a sports economist from a Massachusetts university, was surprised at the figure of 238 countries, saying: “Considering the United Nations recognises only 192 nations in the world, Deloitte has apparently invented over 40 new countries, all of which seem to be rugby fanatics.”
Turned out the consultants had confused “broadcast territories” with “countries”. Okay, we all make mistakes but this is also redolent of the kind of optimistic padding that comes with these things.
Matheson has studied pre and post-event benefits around major events and told the Herald: “Almost without exception, scholarly research finds that the promoters’ claims of economic benefits are wildly exaggerated. They can always find ‘consultants for hire’ who will provide eye-popping but utterly false numbers.”
So, while we are all sad and/or angry that the 37th America’s Cup is not being run in our marine backyard, the promise of riches has been well overstated. We all know New Zealand’s economy is unwell; even Smith & Caughey’s is closing down, for Pete’s sake, and Simon Bridges’ suggestion that Cup money might have saved the old girl and other failing businesses is laughable when you look at what Auckland’s inner city has become.
Also, sponsorship from New Zealand wasn’t filling the coffers. Emirates Team NZ boss Grant Dalton pointed out that many Kiwi sponsors, after Covid, wanted a clawback provision in contracts so, if the regatta was cancelled, they got their money back – effectively meaning the team couldn’t spend it.
Another reality was the government didn’t want to plonk multi-millions into it – and there has been little mention of the role of the Ministry of Business, Innovation and Employment’s role in antagonising Dalton and the team so much they sought new hosts.
Overseas sponsors wanted their dollars to apply in their country and Spain and Spanish companies offered far more. Folks, that’s professional sport. The team went where the money was, a concept not unknown in those circles and small countries unable to afford events such as the Olympics. Dalton was also backing his vision of the Cup as a flexible, global event – like Formula 1 – which does not belong to any one country.
It’s sad because we may never see the Cup here again in our lifetime – or mine, at least. We can blame the combative Dalton all we like but he chose to keep the team together by following the money and to avoid running an underfunded Cup campaign which would likely see it lost.
Once it is lost – as it inevitably will be – this version of Team NZ is almost certain to fold. Will we ever see another? If governments don’t want to fund it, it looks unlikely. There are several wealthy Kiwis who might get behind another post-Dalton team, but will they have the stomach for the fundraising and controversy over an elitist sport funded by the taxpayer?
Even if another rises from the ashes, wins the Cup to bring it home, just – please – don’t try to tell us all how much money it will make, when most of us know it will run at a loss borne by the taxpayer.
COMMENTS
Paul H
5 days ago
Interesting article. For mine the America's Cup has been nothing but a hoax perpetuated on the NZ public and has cost the taxpayer plenty. The only people who have really benefited are an elite few who paid themselves and their mates over the top salaries. Ask the people who got sucked into buying over priced sections up Red Beach way back circa 1988 (I think) - "imagine watching the America's Cup racing from your own backyard" or some other similar advertising blurb used to suck you in.
At least the Sail GP racing is proper yacht racing and IMHO a far superior visual spectacle compared to the America's Cup. I for one hope we never see the America's Cup competed for on these shores again.
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Bruce C
5 days ago
We could not hold the cup here, because the environmentalists would kick up such a stink about this and that and of course the endangered dolphins in the oceans could be hurt and the environmentalists speak for the dolphins. We have seen it before and as sure as night follows day it would happen again.
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Mark J
5 days ago
Grant Dalton stole this from NZ. It was a given that the hundreds of millions and public support over decades invested in Team NZ would guarantee that if we won the cup we would host it. It was stupid of councils and government not to put this is writing but I guess no one thought this guy would be so distastefully greedy and unpatriotic. Never had the the class of Peter Blake. Never will!
Kevin C
5 days ago
In reply to Mark J
I suspect most people are more than happy to see it held off shore. Further away the better really.
Not sure if I agree with the comment about this version of TNZ folding when eventually the cup is lost. If the set up is more like F1 as planned then why should a team fail unless the sponsors bail? Sure, personal would change as they normally would every cycle but hopefully TNZ has become one of the premier brands in the sailing world so would continue.
Kevin C
5 days ago
In reply to Stuart B
Can't really be like F1 when the racing is held in only one place every 4 or 5 years. F1 happens in numerous countries every year.
Pim V
5 days ago
Guess we have to wait and see if Barcelona will bid again for the the next America Cup after this one is done. That would be a good indication.
Robert E
5 days ago
You can debate the quantum of the economic benefit all you want, but the principle that the economic benefit would outweigh the investment required from local and central government is highly likely to be true. Sadly we dont have the vision to invest in these wealth generating events for our nation, we see it as a "cost". Barcelona and Spain clearly see it as an "investment". Having been recently to Barcelona you can clearly tell who has the world class waterfront and infrastructure, and who is a 3rd world nation at the bottom of the Pacific. Auckland has lost the Americas Cup, Sail GP, no test cricket since 2018, and the list probably goes on for what we have missed out on. All significant economic earners for any 1st world city. Here we just build cheap apartments and let the private developers run off with the short term profits.
Andrew R
5 days ago
In reply to Robert E
Please indicate specifically who has gained what and by how much?
I suspect the gains - if any - have been made by the insiders who want these events - certainly not taxpayers who have no say in what funding they may or may not be liable.
Patrick G
5 days ago
In reply to Andrew R
When a sporting event is shown on TV throughout the world, people see where it is being hosted and the surrounds of that city. A portion of those people will then holiday in NZ in the future, this is called advertising.
Kevin C
5 days ago
In reply to Robert E
Surely if there had been massive, and measurable, economic benefit every time it had been held here everyone involved would be keen to go again?
Tom H
5 days ago
It's nice to have a realist in the house.
Paddy G
5 days ago
This is an interesting read, it's not as if anyone other than the gullible who hold the public purse strings will buy into the economic argument, most of us know it is an expensive marketing ploy that is much more fun than promoting our commerce or industry.
My most fervent hope is that the television production is better than the embarassing effort at the last cup, comparin it with the Bermuda production (also a small country) our broadcast was probably best described as amateurish or homely, not like the racing which was excellent.
Richard C
5 days ago
Considering Auckland already had paid for and built the infrastructure to support the Americas cup, losing it overseas for $2M was a very bad outcome for NZ. Gains would have been multi-fold more than that in both tangible and intangible ways.
That aside, Dalton seemed to have far more decision making rights than he should have. it was the RNZYS cup, they should have made the call and been supported by the government to keep it here.
Alexander M
5 days ago
Guess we have to wait and see if Barcelona will bid again for the the next America Cup after this one is done. That would be a good indication.
Robert E
5 days ago
You can debate the quantum of the economic benefit all you want, but the principle that the economic benefit would outweigh the investment required from local and central government is highly likely to be true. Sadly we dont have the vision to invest in these wealth generating events for our nation, we see it as a "cost". Barcelona and Spain clearly see it as an "investment". Having been recently to Barcelona you can clearly tell who has the world class waterfront and infrastructure, and who is a 3rd world nation at the bottom of the Pacific. Auckland has lost the Americas Cup, Sail GP, no test cricket since 2018, and the list probably goes on for what we have missed out on. All significant economic earners for any 1st world city. Here we just build cheap apartments and let the private developers run off with the short term profits.
Andrew R
5 days ago
In reply to Robert E
Please indicate specifically who has gained what and by how much?
I suspect the gains - if any - have been made by the insiders who want these events - certainly not taxpayers who have no say in what funding they may or may not be liable.
Patrick G
5 days ago
In reply to Andrew R
When a sporting event is shown on TV throughout the world, people see where it is being hosted and the surrounds of that city. A portion of those people will then holiday in NZ in the future, this is called advertising.
Kevin C
5 days ago
In reply to Robert E
Surely if there had been massive, and measurable, economic benefit every time it had been held here everyone involved would be keen to go again?
Tom H
5 days ago
It's nice to have a realist in the house.
Paddy G
5 days ago
This is an interesting read, it's not as if anyone other than the gullible who hold the public purse strings will buy into the economic argument, most of us know it is an expensive marketing ploy that is much more fun than promoting our commerce or industry.
My most fervent hope is that the television production is better than the embarassing effort at the last cup, comparin it with the Bermuda production (also a small country) our broadcast was probably best described as amateurish or homely, not like the racing which was excellent.
Report
Richard C
5 days ago
Considering Auckland already had paid for and built the infrastructure to support the Americas cup, losing it overseas for $2M was a very bad outcome for NZ. Gains would have been multi-fold more than that in both tangible and intangible ways.
That aside, Dalton seemed to have far more decision making rights than he should have. it was the RNZYS cup, they should have made the call and been supported by the government to keep it here.
Alexander M
5 days ago
Sadly, as a small agricultural country we just cannot foot it with larger countries with more productive, varied economies.
We produce basic, top quality raw agricultural products and then sell it off without doing what will really add value to it.
Milk powder and timber logs being prime examples.
Without progressing to really adding value to our raw products we will always be a small, nice , place on the S. Pacific.
Adam B
5 days ago
Nz public should boycott the cup. That fact it was taken away shows exactly where their loyalty lies. Don’t bother even reporting on it please.