Costs and Opportunities to Northland from America's Cup Loss

24 February, 2003

ENTERPRISE NORTHLAND : MEDIA RELEASES 2003

An economist who produced an in-depth study of the economic impact on New Zealand of the 1999/2000 America 's Cup says its loss will cost Northland at least $16 million a year in economic benefits.

However, Auckland-based investment banker and market economist Dr Brent Wheeler , says this loss will be at least partially offset by positive long-term impacts that Northland will continue to enjoy from New Zealand having hosted the America 's Cup.

Team New Zealand manager Ross Blackman last week put the economic benefits to New Zealand of having held the America's Cup since 1995 at between $2.6 billion and $2.7 billion, including the value of publicity from more than 1500 journalists in Auckland to cover the present defence

Dr Wheeler, who was asked by Enterprise Northland to provide an overview of the likely impact of having lost the Cup, identified two negative impacts.

"Ross Blackman's figures suggest that over the eight years New Zealand held the Cup, an average of $325 million a year in Cup-related economic benefits were pumped into the New Zealand economy.

"Anecdotal evidence and estimation suggest that at least 5 percent of this ($16.25 million a year) would have directly benefited Northland.

 "A second negative affect from New Zealand losing the Cup may be that Northlander's spend less because they are less optimistic. This is much more difficult to quantify, but might affect willingness to invest and take risks."

However, Dr Wheeler says the estimated loss of $16 million a year in economic benefits is an estimate of the gross loss.

"I think there are two economic dynamics which work to reduce this figure. The first is that not all the economic benefits relating to positive promotional exposure that Northland has received through the America 's Cup will be lost," Dr Wheeler said.

"My judgement is that Northland did a good job of wringing two forms of promotional leverage from the Cup. The first created instant but long lasting impressions and aspirations that were, or will be, acted on. The other form required constant persuasion"

The second form - which required ongoing promotion - has gone with the Cup. But the first - a place on the map - will have put Northland to the front of many minds and will not be lost."

The other economic dynamic that Dr Wheeler says could reduce the loss is a reversal of a trend that some tourism operators have noted whereby the number of Auckland visitors to Northland reduced when the America 's Cup regatta was on.

"This apparent distortion should disappear and domestic visitor numbers revert to their long-run trend."

Dr Wheeler suggests that this reversal might also provide opportunities for Northland.

"New Zealanders still underpin the Northland tourism industry. Maybe there is an opportunity for the region to increase its share of this market through active promotion in the wake of the America 's Cup."

Enterprise Northland chief executive Brian Roberts has welcomed Dr Wheeler's analysis.

"Obviously it would have been good to keep the Cup. However Dr Wheeler's observations regarding Northland's success in exploiting it while it was here are gratifying."

"His suggestion that there are opportunities for the region to fight for tourism spending that might otherwise go back to other regions in the post America 's Cup environment is timely. We have been working on updating Northland's tourism strategy over recent months and we will ensure that this opportunity is considered as part of the new strategy."

For further information:
Dr Brent Wheeler
09 379 2344

Brian Roberts
Chief Executive Office
Enterprise Northland
025 958 308