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.
Emirates Team New Zealand’s AC75 sailing on Auckland’s Hauraki Gulf, although we may never see the actual America's Cup here again in our lifetimes.
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.
