The America’s Cup might be returning to NZ and local newspapers are already weighing in on what it means for the economy:
As Team New Zealand moves close to match point there is already speculation that the next cup series will bring over half a billion dollars in financial gain to the country.
Don’t believe it, says Shane Vuletich of Covec, specialist in economic evaluation of tourism and major events, who warns numbers already being used are far too large.
Vuletich and TVHE’s straight-talking Shamubeel Eaqub—”the economic benefits of a cup regatta in 2017 would be based on ‘over-hyped studies that are proven to be absolute b…….. after the fact.’”—are absolutely right: major events don’t tend to be good financial investments. What surprises me is that this is worth reporting. The only relevant question is whether New Zealanders get enough enjoyment from hosting to cover the expense.
It’s a bit like going on holiday: it’s only a bad use of money if you don’t end up enjoying the break. The financial return is hugely negative but that’s fairly irrelevant when one’s enjoying a hike in the French Alps or lounging on the beach in Mallorca. What we really need to ask is whether the public gets sufficient enjoyment from hosting events like the America’s Cup.
The obvious answer is ‘yes’, nations compete to host events and have done for as long as historical records exist. Hosting is incredibly prestigious and competitive, which suggests that there is no shortage of benefit from hosting. It isn’t as if the legacy of hosting large events is unknown, yet cities and nations continue to bid huge sums for them despite that. After the London Olympics last year, “eight out of ten said it was worth the extraordinary cost, even as cuts to public services began to bite.”
Against that there are the public choice arguments. Perhaps it is the politicians who get to bask in the glory of the events they’ve organised, while taxpayers pick up the bill. If the bill is small enough not to influence voting decisions then it could still be worthwhile for the politician to bid for the event even if it is costly to voters. In addition, the benefits may be highly salient to the public, while the costs are largely hidden within the Government’s Budget plans.
Those considerations militate in favour of providing further information to the public about the costs of hosting. However, as Vuletich points out, misleading estimates of the financial benefit should have very little influence over hosting decisions. So long as people know what they’re paying for the thrill, we shouldn’t worry too much about the money.