19 Sep 2013

Cup boost prospects downplayed

1:34 pm on 19 September 2013

A finance strategist is predicting only a modest economic boost for New Zealand if Team New Zealand wins the America's Cup.

New Zealand needs to win just one more race for that to happen.

The America's Cup regattas in Auckland in 2000 and 2003 were conservatively worth a total $1.2 billion to the economy.

It is yet to be seen if San Francisco realises the $US1.4 billion economic bump that was predicted there.

First NZ Capital director of economics and strategy Chris Green says any boost needs to be driven by a general economic improvement.

He says that would have to be underpinned by rises in employment and wages.

"Probably the biggest effect is likely to be the positive feel-good factor that we may see as a result of taking the cup, and that potentially has implications in terms of how people would view their consumption spending," he says.

However, he says estimates of the value of such events tend to be wound back.

He says a predicted boost in tourism surrounding the event may just result in a "substitution effect".

"People that were potentially coming to New Zealand defer their travel, given that they expect prices to be higher," says Mr Green.

If you're hosting an international event, airfares go up, hotel accommodation becomes more expensive. So usually the overall effect, certainly from a tourism perspective, tends to be more muted than you initially anticipate.