Tuesday, 8 November 2011

Spark the economy, build a stadium...

I have to admit, I have wondered for some time about when this was going to happen. And now it has.
The Govermment has announced that it will contribute $5 million and underwrite the cost of the new temporary stadium to be built in Christchurch in time for a rugby test to be held next year in the city.
"We are delighted for the residents of Christchurch that they will have a venue capable of hosting major international concerts and sporting fixtures. Christchurch has not hosted an All Blacks Test match since the Bledisloe Cup match in August 2010," NZRU Chairman Mike Eagle said.
The two-yearly Tri-Nations rotation policy doesn't appear to get a mention here (Christchurch usually hosts a Tri-Nations test against Australia or South Africa every two years, and last did so in 2010, meaning 2011 was an 'off-year' for the city). One cannot forget the loss of Rugby World Cup matches - more on this below.
Christchurch is a sporting city, as evidenced by its long and illustrious history of sporting achievement. The earthquakes have had a devastating impact on the home of rugby and cricket in the city, AMI Stadium, with liquefaction and earthquake damage posing very real doubts over the stadium's long term future. The country's second largest stadium was recently upgraded in 2009 to the tune of some $40 million for the Rugby World Cup. The earthquakes resulted in the city losing its seven matches to other cities around the country. The Crusaders, the local professional rugby franchise (and the most successful franchise in Super Rugby), were forced to play all of their games outside of Christchurch in the 2011 season, with games from Timaru to London! The team defied all odds and a punishing travel schedule to reach the Super 15 final, being narrowly defeated by the Queensland Reds. The region's ITM Cup team (Canterbury) has won the past four NPC/ITM Cup titles, making the Canterbury region the country's rugby stronghold in recent times.

The long term future of AMI Stadium has meant several options have been considered for a rugby facility in the city. The Canterbury Rugby Football Union owns Rugby Park, which has a capacity of some 6,000 (which pales in comparison to AMI Stadium's capacity of 45,000). The city also has QEII Stadium, which has hosted international football recently. Today's decision to temporarily rebuild the city-owned Rugby League Park in Addington, a facility with a planned capacity of 17,000 (extendable to 26,000) represents an important step in rebuilding the sporting side of Christchurch. Of particular interest is the Christchurch City Council's (ratepayer) contribution - $1.15 million, or 5.75% of the planned cost of the new facility. This is low by international standards, but we will wait and see what the final cost (and the final council contribution) is in due course before passing judgement.

In the story linked above, the comments (while not always reflecting the wider sentiment) show the polarising nature of such developments. Interestingly enough, the NZIER has just released their latest Insight publication, which surveys the Canterbury region after the earthquakes. A quick scan of this document reveals some real concerns for the region, including a fall in population, employment and wider economic activity, including retail spending and the accommodation sector, alongside rebounding construction activity and growth in exports.

A fair question to be asked at this juncture: is $20m on a stadium the best use of limited taxpayer funds? The answer to this is of course contentious and depends on one's point of view, but independent economic analysis the world over shows that if you are expecting an economic rebound, you'd be best to channel the funds elsewhere. The 2007 paper by economists Robert Baade and Victor Matheson on the role of professional sports in the economic development of New Orleans in the wake of Hurricane Katrina makes several important points, points that policymakes would be well-advised to heed.

It doesn't seem that economic gain is the motivation for building this facility, which is heartening from my point of view. Nonetheless, it seems fair to assume that this development is at the very least an attempt to 'reposition' Christchurch to it's once-prominent place as a feature of the country's sporting landscape. Given the loss of the Rugby World Cup matches, perhaps the city is in need of a renewed focus on top-flight sport to generate the feel-good benefits that sporting success is commonly associated with. If these benefits exceed the cost, then $20 million on a new stadium might well be considered money well spent.

This from Prime Minister John Key in the Stuff article at the top of this post:
"Restoring the opportunity for Cantabrians to support their major sporting teams is an important part of the recovery and rebuilding of Christchurch," Key said.

"Cantabrians have had to endure so much over the past 14 months ... Today's announcement about the new stadium is fantastic news.''
Okay - so it is being perceived as a feel-good thing. Fair enough. Of course, some might argue that $20 million would go a long (and maybe longer) way in other sectors, and they would have a fair point. Sports is typically a very small sector in any city's economy (usually between 0.5 to 2% of a local economy), and as such the gains to be generated from spending in this area should be tempered with realistic expectations.

1 comment:

  1. As a Christchurch economist this looks to me like a bloody expensive feel-good!! And if the feel-good is worth $20 million why not prove it by getting people to freely donate the money? There is no need for taxpayer or ratepayer money to be used.