Sunday, 24 July 2011

Rugby costs

Massey's Sam Richardson agrees that estimates of economic benefits from the Rugby World Cup are nonsense:
Dr Richardson, who researched public spending on major sporting events for his PhD, says the $507m to $700m bandied about is a lofty and unrealistic figure.

His study of 11 major sporting events in New Zealand found only three had any significant positive effect on the local host economy’s gross domestic product during the event itself – the 1999 Netball World Championship in Christchurch, the A1GP motor race in Taupo and the 2005 British and Irish Lions rugby tour.
I don't know anything about the netball championships or the motor race, but I'd be surprised if any substantial public funds went into the 2005 tour.
“Maybe the Government shouldn’t talk about economic impact,” he says. “I do not think we should be using economic impact as a justification for hosting sporting events. Maybe we should forget the magic figures and focus on the long-term benefits.”

Dr Richardson is sceptical of any argument that suggests we are going to get something tangible out of hosting events. “The bottom line is yes, we are going to bring in visitors, and yes, they will spend money. We also know that the taxpayer will pick up a sizeable chunk of what is expected to be a loss of around $40 million.

“To justify this, what becomes more important is what New Zealanders think of the event, and our enjoyment. If anything it is the value of the ‘warm and fuzzies’ and our perceptions and experience of the event that is a more defendable measure of success.”
If warm fuzzies are the potential external benefit justifying government investment, we're on very shaky ground. It's a possible market failure, sure, but one reasonably solved privately by sponsorship arrangements and merchandise sales.
Dr Richardson, of the School of Economics and Finance at the Manawatu campus, says the benefits associated with participation might be a better rationale for wanting to host the events than purely economic impact.

“FIFA has selected New Zealand to host the 2015 Under-20 Men’s World Championship. As hosts we get the right to participate, which is huge for us, especially as it is something that can improve the quality of our football.”
I'm pretty sure the All Blacks would have been in RWC regardless of whether we're shelling out to host. As for FIFA, I hope that we're not going to invest any substantial public funds on the basis that that's the payment necessary to get FIFA to let us play.



1 comment:

  1. Even back in the 50s and 60s we young things thought visits by the Queen were BS.. but then, we also knew that all the river bridges she would ride over would be painted, and we reckoned that was a good thing.

    The same sort of thing happens to our place when we know distant cousins are visiting, and as many a farmer will tell you.. the annual visit of the Farm Discussion Group mightn't bring too many pearls of wisdom, but the dead lambs get removed, the woolshed gets swept out for the lunch and the fences repaired and gates swung.

    The same thing is happening with the RWC.. it might be dumb to try to justify it in terms of money, but its equally dumb to cast the event in terms of a $40 million cost too because its not about money but perception of ourselves and cleaning the place up.