2. America's Cup Activity in Auckland

• 2.1 Overview
• 2.2 Economic Impacts
  • 2.2.1 Direct Expenditure
  • 2.2.2 Value Added and Employment
  • 2.2.3 Major Sectors
• 2.3 Comparison with 2000 Defence Impacts
• 2.4 Next Season
• 2.5 Other Impacts

2.1 Overview

The build-up to the 2003 Defence has been more intensive than the 2000 series. The strength of the Team New Zealand defence in 2000 meant that challengers had to accept that one-boat campaigns, or single-season build-ups, were unlikely to be successful. More substantial challenge campaigns have been developed, with larger budgets than in 2000, more expenditure on securing key personnel as well as yacht design and technology, and wider commitment to two-boat campaigns.

The result was an initial significant challenger presence in Auckland over the 2000/2001 season, and several syndicates establishing as substantial entities in Auckland for the duration of the build-up, challenger series and 2003 Defence. The Viaduct Harbour and Hauraki Gulf have seen continuous syndicate presence for the 2001/2002 season. Moreover, the "summer season" has been extended, with yachts practising on the Hauraki Gulf into the winter of 2002.

The major syndicates established in Auckland in the 2001/2002 year have been:

• Team New Zealand - 2-yacht campaign, 80+ shore and sailing crew, head-quartered throughout 2000/2001 and 2001/2002.
• Prada Luna Rossa - Punta Ala Yacht Club (Italy) - 2-yacht campaign, 100-strong crew, established base in Auckland for 2000/2001 season, and October 2001 through April 2002.
• One World Challenge - Seattle Yacht Club (USA) - 2-yacht campaign, 85-strong crew, established base in Auckland September 2001 through June 2002.
• Oracle-BMW Racing - Golden Gate Yacht Club (USA) - 2-yacht campaign, 110-strong crew, established base in Auckland November 2001 through June 2002.
• Alinghi Swiss Challenge - Societe Nautique de Geneve 2-yacht campaign, 97-strong crew, established base in Auckland November 2001 through June 2002.
• Victory Challenge - 2-yacht campaign, 75-strong crew, established base in Auckland September 2001 (first yacht) and expanded November 2001 (second yacht) through June 2002.
• GBR Challenge - 2-yacht campaign, 60-strong crew, established base in Auckland October 2001 through March 2002.
• Mascalzone Latino - 1-yacht campaign, 75-strong crew, shorter presence in Auckland March-April 2002.

In total, six of the nine challenger syndicates have had major presence in Auckland in 2001/2002, in addition to Team New Zealand, and one syndicate (Mascalzone Latino) was here for a short time (6-7 weeks). Of the other two challenger syndicates, Le Defi Areva (France) is based in France, and due in Auckland in August 2002, while Team Dennis Conner (USA) has been based in the US, and is also due in Auckland in August. The Illbruck Challenge (Germany) has withdrawn.

In addition, during the 2000/2001 season, the Prada, Oracle and One World syndicates were in Auckland, mainly in the December-February period, with yachts on the Gulf.

The substantial presence of defender and challenger syndicates in Auckland has meant a significant impact for the economy. This has been apparent not just in activity levels in the Viaduct Harbour syndicate bases, but in demand, especially for accommodation and services for the shore and sailing crews, as well as for marine services for syndicate activity. During the summer peak, there have been 430-500 challenger sailing and shore crew based in Auckland (not all members of the syndicate crews are in Auckland, with some specialist support personnel remaining in home countries).

In addition, the longer build-up period is believed to have resulted in more of the syndicate crews bringing family and friends to live in Auckland while they work on the yachts, effectively adding to the resident population, and spending on goods and services.

2.2 Economic Impacts

This activity has brought an estimated $62m of additional expenditure to the New Zealand economy, with the major share ($60m) spent in Auckland. This expenditure in the Auckland economy equates to $21m of direct value added, and $46m of total value added, and sustained 1,110 FTEs of employment in the 2001/2002 period (Table 1).

Table 1: Economic Impact for Auckland and New Zealand 2000-2002

The main features of the activity and expenditure have been:

2.2.1 Direct Expenditure

• Construction activity in the Viaduct Harbour as syndicate bases have been upgraded and expanded. Total expenditure is estimated at $6.3m for 2001/2002, and $8.1m in total (2000-2002).
• Syndicate expenditure on sailing and shore crews to provide for their accommodation and general living needs in Auckland, and travel to and from their homelands. Total additional expenditure in Auckland is estimated at $20.4m for 2001/2002, with the largest share going to the commercial accommodation sector. Expenditure for the total 2000-2002 period is estimated at $24.1m.
• Syndicates' other expenditure on sailing activity and preparations, including some capital purchases (such as support vessels), operating shore bases, operating and maintaining their practice yachts, and the expenditure associated with a limited presence of the super-yachts of syndicate heads. This expenditure is estimated at $23m for 2001/2002, and $27.0m for the total 2000-2002 period.
• Syndicate crews living and working in Auckland have also undertaken considerable personal expenditure, over and above the costs met for them from the syndicate budgets. This includes some meals, entertainment, travel, and shopping expenditure, and also the living costs of family members and friends associated with the syndicate presence. Total private expenditure by crew and families is estimated at $11.6m for 2001/2002, and $13.7m overall.
• The total additional expenditure in the New Zealand economy for 2001/2002 from all these activities is estimated at $62m, with the major share to the Auckland economy, and some $2m to other parts of New Zealand.
• The total additional expenditure over the 2000-2002 period is estimated at $73m, again with the major share accruing to the Auckland economy.

2.2.2 Value Added and Employment

• The direct value added effect of this expenditure in 2001/2002 is an estimated $21m. for Auckland. The total value added (direct, indirect and induced) effect is estimated at $46m.
• The direct employment effect of this expenditure is an estimated 700 full-time equivalent jobs sustained. The total employment effect (direct, indirect and induced) is an estimated 1,110 FTEs sustained.
• The total value added over the 2000-2002 period is estimated at $55m for Auckland. The total employment effect is estimated at 1,330 FTEs sustained.
• The direct value added effect of this expenditure in 2001/2002 is an estimated $22m. for New Zealand, and total value added estimated at $55m.

Table 2: Economic Impact for Auckland 2001/2002

• The direct employment effect is estimated at 710 full-time equivalent jobs, the total employment effect is estimated at 1,240 FTEs sustained (Table 3).
• The total value added over the 2000-2002 period is estimated at $65m for New Zealand, while the total employment effect is estimated at 1,470 FTEs sustained.

Table 3: Economic Impact for New Zealand 2001/2002

2.2.3 Major Sectors

The main sectors which have benefited from the build-up activity have been:

• the commercial accommodation sector, with hotels and apartment complexes providing long-term accommodation and catering for the crews of major syndicates here over the summer, and short term accommodation for other visitors associated with the build-up. The calendar of syndicate presence in Auckland, together with data on shore and sailing crew sizes, suggests there were 100-105,000 person nights in 2001/2002 in commercial accommodation.
• the private accommodation sector has also had significant demand, from both syndicate crews choosing to rent houses and apartments privately, and the families and friends of crew members establishing in Auckland. The calendar suggests there were some 10-12,000 person nights in rented accommodation for 2001/2002.
• the construction sector, from the development and refurbishment of base facilities along "Syndicate Row" and in the Viaduct Harbour area.
• the marine sector, providing major items such as support vessels and spars to syndicates, as well as services to maintain the yachts, sails, spars and other equipment following breakages and general wear and tear from the intensive sailing programmes, and other facilities. As previously, much of the work on the yachts is undertaken by the syndicates' shore crews, with most of the expenditure on external suppliers for significant items requiring work or replacement. Also, at this stage the Team New Zealand yachts are under construction, and their impact on the economy is not measured in this 2001/2002 analysis.
• the retail and restaurant/hospitality sector, with revenue from the syndicates spending to maintain their crews, and also from the crews' private spending, especially those living in private rented or other non-commercial accommodation
• the transport sector, with revenue from crews travelling internationally to and from New Zealand, and within New Zealand (on holiday and sight-seeing breaks).

2.3 Comparison with 2000 Defence Impacts

The study of the 2000 Defence identified net additional spending impact of $92m in the build-up period before the 1999-2000 year, considerably more than the current estimate for 2001/2002. However, the major part of that net additional spending impact ($59m) was from construction expenditure in the Viaduct Harbour, with major public works undertaken in preparation for the event. The net impact from syndicate and other activity during the build up was estimated at $33m.

The current expenditure impact of $71m includes $8m of construction spending, which suggests the non-construction effect in the build-up has been around $63m. This is nearly double that estimated for 2000, and is broadly consistent with the higher level of syndicate preparation for this challenge.

2.4 Next Season

The 2000 study also showed that around 80% of the total impact of the event occurs in the year of the defence. While a broadly similar outcome is anticipated for 2003, the higher intensity of preparation and syndicate presence in the build up may mean that a higher share of the total economic impact of the event is generated by the build-up period.

2.5 Other Impacts

The 2000 study identified a range of less tangible effects on the economy, additional to the impacts measured by value added and employment. The America's Cup build-up has also contributed to these less tangible effects.

In particular, it has contributed a positive effect on the reputation of the marine sector, maintaining the focus on Auckland as a centre of marine sector and sailing excellence, and enhancing the credibility of the sector. While marine industry activity to build and service boats and super-yachts derives primarily from the sector's own reputation, the Cup build up does enhance this profile and reputation - just as Auckland's role as a key stopover in the Volvo Ocean Race in January 2002.

The ongoing international publicity around the event continues to increase awareness of Auckland and New Zealand as a visitor destination, with the nature of sailing as an "environmentally friendly" activity supporting New Zealand's desired image as an attractive and clean tourism destination.

The America's Cup, together with the Volvo Ocean Race Stopover and other events, has helped maintain the momentum for redevelopment of the Viaduct Harbour area, and the western reclamation. The Viaduct Harbour area is well established as a hospitality and activity precinct, an office precinct, and an area of residential apartments. While each of these activities has to be sustainable independently of the yachting activity, the interest and focus brought by the Cup build-up has certainly contributed to the development momentum.

Similarly, there is a sense of anticipation among the Auckland community about the forthcoming challenger series and Defence, with the opportunities to "participate" in the event as in 2000 by going out on the Hauraki Gulf, watching from the shore, or visiting the Viaduct Harbour. Generally, such anticipation may be simply a "feel good" factor, but does contribute positively.

Overall, the America's Cup build up to the 2003 Defence has generated a significant impact for Auckland. A substantially greater impact on the economy is anticipated for the 2003 year.