Govt backing of America’s Cup team pays dividends
21 August 2008 Media Statement
Govt backing of America’s Cup team pays dividends
The government’s $33.75 million investment in Emirates Team New Zealand boosted the New Zealand economy by around $2 for every dollar of public funding, Associate Finance Minister Trevor Mallard said today.
An independent report on the government's 2003 investment in the team’s challenge for the 2007 America’s Cup shows a significant impact on the New Zealand economy.
Just as importantly, the Market Economics report shows there were less tangible but significant benefits from the event in terms of New Zealand’s marine industry.
"The report shows the America’s Cup continued to provide an ideal opportunity to showcase New Zealand’s boat-building, sailing and design talent and it’s also good to know the projected return on the government’s investment was better than we expected," Trevor Mallard said.
The report shows the kiwi team’s cup preparation, which began in April 2003, and the subsequent race to be the challenger in August 2007, added an extra $62.2m-$74.4m to New Zealand’s gross domestic product (GDP).
The challenge for the America’s Cup meant 750-900 more full-time-equivalent jobs over the America’s Cup campaign nationwide.
The direct and total return to government in the form of additional tax revenue from the campaign was between $32.4 million and $39.4 million.
The return on the government’s investment in Emirates Team NZ was greater than a 2003 estimation of $35-$53m, partly because a greater share of the team’s funding ended up coming from overseas.
The report found the team’s 2007 campaign helped sustain the momentum of America’s Cup activity in the marine sector and meant expertise stayed in New Zealand instead of transferring to overseas syndicates.
A copy of the report can be found at www.tourismresearch.govt.nz/amcup
Q & A
How was the
economic impact measured?
The economic impact measures
the net additional contribution to New Zealand’s GDP from
the extra expenditure in this country by Emirates Team NZ.
It is measured in terms of additional expenditure, the value
added component of that expenditure and the employment
effects.
How was the taxation impact measured?
The
taxation impact measures the net additional contribution to
New Zealand’s tax revenue from the extra expenditure by
Emirates Team NZ, including GST on goods and services
consumed, Customs GST paid by the Team, GST on goods and
services consumed by the crew community, the PAYE on
syndicate wages and salaries, the ACC contribution by
Emirates Team NZ, and the company tax generated from the
additional turnover of businesses selling goods and services
to Emirates Team NZ and from contractors earning income in
New Zealand. In addition, as the Emirates Team NZ
expenditure effects flow on through the economy, more tax of
each type is generated.
Do these impacts relate solely to
the government funding contribution?
No. Government
funding was not the only source of funds for Emirates Team
NZ but it was a critical key or trigger to attract other
funding for the challenge. Therefore, the economic and tax
effects arise from the total Emirates Team NZ expenditure,
and are the combined effect of both government and sponsor
funding.
What was the timeframe for the impact
study?
The study measured impacts between April 2003 and
August 2007.
What did the 2003 study into potential
sponsorship impacts indicate?
The 2003 study estimated
that the total value added arising from the Emirates Team NZ
campaign would range between $35-$53m.
Why were the actual impacts, as outlined in the 2008 report, higher than than those predicted in 2003?
The 2008 report indicates total value added of $62-$74m. This is higher partly because a greater share of funding came from overseas than originally estimated. The key benefit of this is that, once overseas expenses are paid for, there is a greater amount of net additional offshore funding available for expenditure in the New Zealand economy.
ENDS