Wishes & Dollars, Whither AC?

Shedding more light on why a city in Italy, or Spain, or Rhode Island, or California, might want to host the next America’s Cup, the office of San Francisco Mayor Gavin Newsom today released the long-awaiting results of their economic impact report on what America’s Cup 34 could mean to the San Francisco Bay Area. [...]

19th July 2010.
By Kimball Livingston

Shedding more light on why a city in Italy, or Spain, or Rhode Island, or California, might want to host the next America’s Cup, the office of San Francisco Mayor Gavin Newsom today released the long-awaiting results of their economic impact report on what America’s Cup 34 could mean to the San Francisco Bay Area.

I’m on the road and don’t have time to parse the details, but the document speaks for itself. What’s even more important is a gathering momentum of believers.

When Larry Ellison’s big trimaran won the Cup in February, the follow-on was euphoria for the win, mixed with a wearing skepticism that the City and County and citizens of San Francisco could ever pull together to pay it off. What you see above could have passed for the collective image of San Francisco’s chances.

But the chances were never that. They’re not that now. I’ve been preaching that what supporters of AC-N-SF need most is to convince a skeptical public that we can pull this off, and at last I’m sensing a turnaround.

We can pull this off. It’s going to be difficult, and disruptive, and very cool.

MAYOR NEWSOM & BAY AREA COUNCIL ECONOMIC INSTITUTE ANNOUNCE RELEASE OF AMERICA’S CUP ECONOMIC IMPACT REPORT

Report finds economic impacts of America’s Cup could total $1.4 billion and create 8,840 jobs.

San Francisco, CA—Mayor Gavin Newsom today announced the release of a report commissioned by the City describing the economic impacts if San Francisco is named host of the 34th America’s Cup match. The America’s Cup is the world’s third-largest sporting competition, after the Olympics and soccer’s World Cup.

“Securing hosting rights to the America’s Cup is a prestigious and economically significant prize for any community,” said Mayor Newsom. “I am committed to the defense of the America’s Cup in San Francisco.”

The report, titled The America’s Cup: Economic Impacts of a Match on San Francisco Bay, was prepared by The Bay Area Council Economic Institute (BACEI) and Beacon Economics. It provides estimates of the economic impact of an America’s Cup match on the San Francisco Bay. The analysis of economic impacts is based on prior America’s Cups, specifically Valencia, Spain, which hosted the 32nd and 33rd America’s Cup regattas in 2007 and 2010, and evaluates direct quantifiable benefits which are unique to the venue of San Francisco Bay.

The report found that the increase in overall economic activity in San Francisco hosting the 34th America’s Cup could be on the order of $1.4 billion, almost three times the estimated impact of hosting the Super Bowl ($300-$500 million). Additional taxes alone to the City’s General Fund are expected to net more than $13 million, based on more than $24 million in revenue, and an estimated $11 million in tourism related costs. The potential increase in employment surrounding the event could be on the order of 8,840 jobs.

“Bringing the 34th America’s Cup to San Francisco Bay would be a huge boon for the Bay Area economy,” said Bay Area Council Economic Institute President & CEO Sean Randolph. “The America’s Cup could easily help jumpstart the economy by generating over a billion dollars in revenue and thousands of jobs for the Bay Area. The spillover effect for the region could be substantial.”

Oracle CEO Larry Ellison and his BMW ORACLE Racing won the 33rd America’s Cup on February 14, 2010, on behalf of the Golden Gate Yacht Club. The club and team are working closely to select the next racing location. They recently announced that San Francisco will be the sole U.S. city under consideration for the next match, scheduled for either 2013 or 2014.

Additional highlights from The America’s Cup: Economic Impacts of a Match on San Francisco Bay include:

· The economic benefits of bringing the America’s Cup to San Francisco would come primarily through expenditures by racing syndicates, and through spending on hotels, restaurants, and retail and other services by both domestic and overseas visitors and Bay Area residents.
· The economic benefits of the race will extend to the greater Bay Area, particularly the neighboring counties of Napa, Sonoma, Marin, and Alameda through related visitor and maritime activity.
· This increase in output and employment would likely yield a benefit to the state and local government coffers of nearly $85 million.
· Looking beyond the Bay Area, California’s economy would see increased economic activity of $1.4 billion and the U.S. economy as a whole would see increased economic activity of $1.9 billion and support an increased creation of 11,978 jobs.
· A local successful defense of the America’s Cup will likely lead to additional such events in the future. San Diego, for example, was the host to three successive America’s Cups in 1988, 1992, and 1995.

San Francisco’s America’s Cup effort has enjoyed generous donations of expertise and resources. The same is true for the report as it was funded by donations from Catholic Healthcare West, Clear Channel Outdoor, Hathaway Dinwiddie Construction, Port of San Francisco, Recology, San Francisco International Airport/San Francisco Convention & Visitors Bureau, San Francisco Chamber of Commerce, United Airlines, and URS Corporation.

Summary of key indicators from BACEI/Beacon’s America’s Cup Economic Impact Report:

The America’s Cup is the world’s greatest sailing competition and the oldest active trophy in international sports, with a history extending back to 1851. And it is the world’s third-largest sporting competition, after the Olympics and soccer’s World Cup.

The economics benefits of bringing the America’s Cup to San Francisco would come primarily through expenditures by racing syndicates, and through spending on hotels, restaurants, and retail and other services by both domestic and overseas visitors and Bay Area residents.

Analysis of economic impacts from prior America’s Cups, specifically Valencia 2007 serves as starting point for this analysis. This analysis makes a number of assumptions: the infrastructure costs and spending will be several billion dollars less (Valencia built a massive marina and channel, hotels, transit etc); spectator attendance will be considerably larger (SF is already an established international destination and amphitheater allows for better viewing); the media’s presence will be larger (broadcasting the races is likely to be significantly more desirable for the international media); the presence of super yachts will be smaller (SF not a tradition super yacht destination due to weather and Pacific location).

Increase in economic activity in SF/Northern California of $1.4 billion. This is three times the estimated impact of hosting the Super Bowl ($300-$500 million)

The increase in employment resulting from preparing for and hosting the 34th America’s Cup is on the order of 8,840 jobs. (The jobs will be widely distributed across occupations – food care and serving –related occupations benefit the most, accounting for nearly 25% of all jobs created; and average annual wage for the jobs created is $59,724 – this is substantially below the average wage in San Francisco of $75,000.

This increase in output and employment would likely yield a benefit to the state and local government coffers of nearly $85 million.

Additional taxes alone to the City’s General Fund are expected to net more than $13 million, based on more than $24 million in new tax revenues and an estimated $11 million in tourism related costs.

The economic benefits of the race will extend to the greater Bay Area, particularly the neighboring counties of Napa, Sonoma, Marin, and Alameda through related visitor and maritime activity.

These estimates are consciously conservative and evaluate economics impacts for which there is factual basis and which would be unique to the venue of SF Bay – the impacts are focused on direct quantifiable benefits as opposed to more indirect benefits.

A local successful defense of the America’s Cup will likely lead to additional such events in the future. San Diego, for example, was the host to three successive America’s Cups, in 1988, 1992, and 1995.

[Editor's note: Three successful matches on San Francisco Bay is optimistic. Then again, Rhode Island Sound had quite a run . . . ]


About the author:

Kimball Livingston

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Kimball Livingston is a former senior editor, and now editor-at-large, for SAIL. His work also has appeared in Sailing World, Cruising World, Soundings, and more. Over three years, Kimball sailed the Centennial Transpacific, Centennial Newport-Bermuda, and 100th Chicago-Mac. His blog posts appear courtesy of his website www.KimballLivingston.com.
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