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America's Cup: Decision to walk away from hosting widely crititised

by Richard Gladwell/Sail-World.com/nz 1 Apr 10:49 UTC
New Zealand got what was probably their last free show - 36th America's Cup, March 2021 © © ACE | Studio Borlenghi

The NZ Coalition Government has collapsed the hosting of the 38th America's Cup by refusing to fund its share of the Event.

Sail-World understands that the other two legs of the funding arrangement - from the private sector and the Auckland Council were largely in place, enabling the Event to proceed.

However, the April 1 announcement by the Ministry of Business Innovation and Employment (MBIE) that it would not contribute has caused that deal to collapse.

Contrary to claims by the Government Ministers that NZD$75million was sought, Sail-World has been told that the correct amount was around $40-50million from the Government and $25-35 million from the Council, with Private money making up the balance.

The Government's contribution in cash was approximately the same as the $40million invested in the 2021 America's Cup in Auckland. The costs are for a turnkey event delivered by Emirates Team NZ and America's Cup Event Ltd.

When the 2024 Hosting fell over the then Auckland Mayor claimed Team NZ were looking for a $90million package - which on investigation proved to be $30million of Event Fee and the rest was comprised of trumped up Council charges and services.

Following the 2021 America's Cup in Auckland and Economic Impact Report was produced for MBIE, using a method never used before or since for event assessment in NZ. The combination of six months of COVID Lockdowns, closed borders and the unique assessment method used resulted in the 2021 event showing a massive loss. Interestingly when the TV viewership figures were posted for Barcelona they were 941million for Auckland compared to 954million for Barcelona, indicating that despite the Government imposed constraints, the two events weren't that far off the same benchmark.

As reported in Sail-World on Sunday, Wellington-based MBIE had done little in over five month to progress the hosting bid, and the Government decision was predictable as soon as Emirates Team NZ crossed the finish line in Barcelona last October.

With the Government bleating about a lack of Major Events in the pipeline for New Zealand, today's decision to walk away from the low-hanging fruit of an America's Cup hosting is even less understandable.

The repetitive quoting of the $75million pricetag, is disputed by several media sources. It appears to be yet another example of Government fudging of figures, where in this case Wellington has added the Government Contribution to the Council Contribution and called it "Their" Contribution.

The figure was repeated ad infinitum by all Government messengers, including the Prime Minister and Ministers of Finance and Sport.

Unsurprisingly, the Hosting announcement received scant attention on the state-funded media channels. However, other indendent sources gave it lead story status.

Business leaders and commentators have been quick to criticise the Government's decision.

Hospitality NZ's Steve Armitage, previously with Auckland Council's Event arm, Auckland Unlimited said that the Government's rhetoric of fiscal prudence obviously plays well to the general populace, but I think it's only one side of the argument," he told NewstalkZB.

"I don't think it's reasonable to say that this is money that just goes into a black hole. Actually, the Event can help to bolster government coffers through GST revenue from the teams being here, and established over a period of time, investment in technology, and boat building componentry, even before you get to the visitation. So, in my view, this is one of those instances where you're actually making an investment to unlock the greater return over time," he explained.

Many are disappointed that the Government have done a U-Turn on their recent exhortations to grow the economy, create employment, add to tourism etc.

"We've heard consistent messages this year around the need to grow our economy, to lift visitor numbers, and also to move away from a culture of saying "No," Armitage continued.

"So my argument would be that this decision seems to run counter to that.

"But again, even if we were to say that hosting the Event here would generate half of the economic benefit that has been reported from Barcelona, which would be around a billion dollars. The GST take alone from that would be around $150 million.

"So you're doubling your money, and you can invest that into surgeries and fixing roads and so on. Again, it just seems like it's been a little bit of a simplistic assessment. In this instance, it would have been better to think about the longer term benefits from hosting the Event."

Leading investigative journalist and political comemntator, Paddy Gower labelled the decision to pull out of the America's Cup hosting as a decision is $1.9 billion epic fail

Viv Beck, Chief Executive of Heart of the City, expressed disappointment over Auckland's inability to host the next America's Cup due to the lack of government funding.

Interviewed by NZ Herald she described the situation as a "golden opportunity missed" for the city, highlighting the potential economic benefits and international exposure that hosting the Event would have brought.

Her view was that the America's Cup would have attracted thousands to Auckland's waterfront, boosting business for hotels and local enterprises during the Event. She also noted that it would have been an excellent opportunity to utilize existing infrastructure and achieve timely economic returns.

Beck has called for an urgent review of how New Zealand funds major events to prevent missing out on future opportunities. She stressed the need for a sustainable funding mechanism, such as a bed-night levy, to support major events without burdening ratepayers.

Auckland Unlimited's CEO Nick Hill issued a statement around 0900hrs NZT, at the same time as Emirates Team New Zealand's media statement.

The America’s Cup is a fantastic sporting event that provides significant benefits to the host city and country, so it is with great disappointment that Tataki Auckland Unlimited (TAU) confirms that Auckland is unable to proceed with a bid to host the next America’s Cup 38 in 2027, Hill said.

Auckland’s bid was contingent on a three-way funding partnership between Auckland Council, central government and the private sector. MBIE has informed TAU that the government is unable provide the funds required and on that basis the bid cannot proceed.

This situation again illustrates the need for a long-term sustainable funding model in New Zealand to support major events. Major events generate significant economic, cultural and social benefits for the country, including increased tourism, job creation and international profile.

The TAU team has worked incredibly hard to try and make this opportunity work for Auckland; we already have the infrastructure and major events expertise in place and really wanted to be able to host our sailors on home waters.

TAU, on behalf of Auckland Council, wants to reiterate the region’s support for Emirates Team New Zealand and any future America’s Cup events, the statement concluded.

Simon Bridges, a former Opposition Leader, and leader of the Auckland Chamber of Commerce told Sail-World: "The Auckland Business Chamber is disappointed by the decision. The America’s Cup represented a big economic opportunity for our city." It is hard to find a significant body in Auckland that supports Wellington's decision not to be a partner in the Hosting.

Curiously Auckland's long awaited multi-billion City Rail Project which has caused much of the disruption to central City business is due to come on stream in 2026. It is expected to transform public access downtown enhancing spectator experience at major events like the America's Cup, and also for Cup visitors to move easily beyond the America's Cup Village area - increasing the spread of the visitor spend.

Discussions are taking place on whether the America's Cup should be reorganized around a central world body. With 2027 as a transition year, the 2021 America's Cup seems likely to be the last Auckland sees of the Event.

The creation of an F1-style body to control the allocation of venues for the Cup and circuits for the AC40 class will inevitably raise event fees and accelerate the sport's European-centric drift.

New Zealand, with facilities that could host the America's Cup tomorrow, has walked away from a never to be repeated deal.

Interestingly, a day after the America's Cup hosting was spurned by the Government, Eden Park stadium executives outlined a request for Government assistance for $110million for upgrades to a "national stadium". The response from Auckland's Mayor was that the stadium already owed Auckland Council $50million. The day before Wellington's revised $4billion Cook Strait Ferry plan was announced.

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