- In excess of 95,000 overseas visitors will inject a little over $782 million into the country's economy, resulting in a boost to GDP of $411m.
- Longer term impacts have been quantified as $1.44b per annum.
Firstly, the economic impact figure. There has been a lot of interest in this 'magic figure' in recent months. I've been on record as saying that I'm not a believer, and for what I think are obvious reasons. The major reason is that economic impacts are not the same thing as economic benefits. A benefit is something that is net of cost. The additional spend attributed to an event does not constitute a benefit to an economy of the same value.
Interestingly enough, it is a little below the revised official projections in June, 2006 of a boost to GDP of $507 million (although the original projections in May 2005 suggested a $408m boost to GDP).
What I find particularly interesting about this measure is that the official projections of June 2006 predicted an influx of 71,000 overseas visitors, then the March 2010 forecast of overseas visitors was projected as 85,000 visitors. The Reserve Bank came out in August with a report containing a new estimate of 95,000 visitors, and now the Mastercard report thinks it could go even higher still. Wow! Is there, or is there not, a global economic crisis happening at the moment? Is the New Zealand dollar not trading at historically high levels? Amd do we realistically expect that these don't matter and that even more people will come in their droves to watch our Rugby World Cup?
And while we are on the economic impact figure, there is a wealth of research that has shown that large sporting events rarely generate anywhere near the economic impact that is promised. Even if the economic impact of $411m actually materialises (I'd say it is unlikely, but let's say it did), it would add no more than 0.2% to the nation's Gross Domestic Project. That is not a misprint. It is a very, very small impact. Surprising, really, that it gets the coverage it has received thus far.
Now to the long term benefits. Eric Crampton, at his blog, Offsetting Behavior, has posted an interesting summary of the long term impacts and his thoughts. I agree with Eric's points wholeheartedly. For mine, can we really expect that the Rugby World Cup will be responsible for this number? Have we, or have we not, already hosted major tournaments and events in this country before? We already have a reputation - isn't that why we are hosting this World Cup? While I can appreciate that this reputation can certainly improve as a result of a successful tournament (and likewise, be adversely affected by an unsuccessful tournament), I don't agree that the tournament itself is the sole driver of these benefits.
The rest of the report contains a number of far-reaching points, including the economic benefits associated with the America's Cup regattas. My own research has cast very serious doubts as to the nature of the benefits associated with these regattas.
The advice I have when it comes to reading these reports is akin to caveat emptor with a tweak - let the reader beware.