AC35: Spend on Island to reach $250 million
Bermuda will benefit from $250 million in additional on-island spending from hosting the America's Cup, Dr Grant Gibbons told the House of Assembly yesterday.
The Minister for Economic Development also revealed that Government will receive additional gross revenues of $14 millions from tax and duties.
“Based on available economic impact studies of former host venues, including San Francisco, Valencia, Spain, and Auckland, New Zealand, we conservatively estimate that Bermuda will benefit from additional on-island spending of approximately $250 million from hosting the event,” Dr Gibbons said.
“The additional spending is anticipated to come from the operations of the America's Cup Event Authority on island, the teams taking part over the next three years, spending by sponsors on hospitality and associated activities, additional visitors, media, regatta officials, super-yacht visits, and event-related government spending.
“Conservative estimates suggest that Government alone will receive additional gross revenues of $14 million from taxes and duties, which will help offset the operational and infrastructure expenses involved in hosting the event.”
Dr Gibbons told the House of Assembly that the America's Cup would bring a substantial economic stimulus and that all sectors would be positively impacted by the international event. He also provided a detailed outline of how the event would be budgeted over the next year.
“The capital costs for Government associated with site preparation, enhancements to buildings and docks, moorings, utilities and services are estimated to be about $14 million over three years,” he said.
“In addition, expenses related to the operation of the America's Cup Village, including additional utility usage, sanitation, parking, professional fees, project management and demolition have been budgeted at $11 million over three years.
For both capital and operational expenses, the majority of the spending will occur in 2016 and 2017.
“Other additional operating expenses that the Government will bear include the costs associated with establishing and staffing an administrative team, to be known as the America's Cup Bermuda (ACBDA) team, to work alongside the America's Cup Event Authority.
“Costs for transport, additional ferry and bus services, security, emergency services, insurance and legal costs have been budgeted at $12 million over the next three years.
Dr Gibbons said that Bermuda had needed to commit a “credible amount” to hosting the event at an early part in the America's Cup bid process.
“Our initial bid included a commitment to spend $5 million per year over three years,” he said. “Our agreement with the America's Cup Event Authority, therefore, includes a sponsorship fee of $1 million in 2014, $4 million in 2015 and $5 million in each of 2016 and 2017.
“By agreement, these funds will be provided in Bermuda dollars and will be spent in Bermuda.
“The Government has provided additional sponsorship, specifically, a guarantee of $25 million to the America's Cup Event Authority against commercial sponsorship by companies and organisations that wish to gain marketing and hospitality benefits from the events.
“The guarantee will not be assessed until August 2017, and commercial sponsorships facilitated by Bermuda in co-operation with the America's Cup Event Authority between now and 2017 will count against the $25 million guarantee.
“More precisely, and in line with customary practice in the event industry, 30 per cent of new commercial sponsorship funds received between now and then will be deducted from the $25 million.”