Media release: Hosting America's Cup barely worth it, new figures show

21 December, 2017

Wellington (21 December 2017): The New Zealand Initiative welcomes today’s correction by the Ministry of Business, Innovation and Employment (MBIE) to its previous estimates of the economic benefits of hosting the America’s Cup.

On 22 November 2017, MBIE released the results of its cost-benefit analysis. At the time, it concluded that the degree to which benefits exceed costs stood at between 1.2 and 1.8 (depending on a host of factors).

These optimistic figures were widely reported in media. The alleged net benefit of the Cup was relied on by key decision makers including Economic Development Minister David Parker and Auckland Mayor Phil Goff.

The New Zealand Initiative's Research Fellow Sam Warburton reviewed MBIE's numbers and found a serious mistake. He pointed out to MBIE that the actual benefit-cost ratio was more likely to be between 0.98 and 1.13, meaning that the America’s Cup would barely break-even.

Today, MBIE has confirmed the error, and with access to more data, finalised its benefit-cost ratio at between 0.997 and 1.14
Said Sam Warburton: "As in every public project, cost blow-outs and optimism biases are a possibility when hosting the America's Cup. A benefit-cost ratio of just around 1 is not a sufficient basis for committing taxpayer's money to this event."

"Though it is regrettable that MBIE did not pick up the error earlier, we are grateful for MBIE’s assistance and responsiveness to our critique."


Sam Warburton is available for interviews, please contact:

Chelsy Blair, Operations Director
The New Zealand Initiative
Phone: +64 4 4990790
Mobile: +64 27 464 1059

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