Budget Extract: Costs For Hosting America’s Cup

By the end of the current 2014/15 fiscal year, Government will have spent $4.66 million on America’s Cup related expenses, and in the upcoming 2015/16 fiscal year, the Government will budget $11.7 million, Finance Minister Bob Richards said during Friday’s [Feb 20] Budget speech.

Speaking on this year’s expenses, the Minister said, “By the end of the current 2014/15 fiscal year, Government will have spent $4.66 million, which includes $1 million in sponsorship, $3.1 million in capital infrastructure costs and $0.6 million in operational expenses for the ACBDA and the Ministry of Economic Development.

“As this expenditure was not anticipated during the initial preparation of the 2014/15 budget, it will be addressed through a supplementary estimate.”

“The claim that the America’s Cup will cost the Bermuda government $77 million is false,” the Minister said. “That statement assumes that the America’s Cup in Bermuda will be an abysmal failure with no sponsors.”

After the announcement was made last year that Bermuda will host the America’s Cup, the Government said they “conservatively estimate that Bermuda will benefit from additional on-island spending of approximately $250 million from hosting the event,” and 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.”

An extract of Minister Richards Budget speech follows below:

Mr. Speaker, total costs associated with hosting the 35th America’s Cup fall into two categories:

• Investment in Bermuda infrastructure and services over the next three years, which is estimated at $37 million, and

• Sponsorship of the event over three years as part of Bermuda’s bid package, which includes $15 million in direct sponsorship and a $25 million sponsorship guarantee. For clarity, this sponsorship guarantee is not money spent by the government, but rather an underwriting of private sponsors. That underwriting will be reduced as additional commercial sponsorships facilitated by Bermuda come on line and by a proportion of admissions revenues earned up until August 2017.

The claim that the America’s Cup will cost the Bermuda government $77 million is false. That statement assumes that the America’s Cup in Bermuda will be an abysmal failure with no sponsors.

That type of thinking only guarantees failure as an outcome. Government funding for both of these categories will be spent in Bermuda as part of our agreement with the America’s Cup Event Authority providing an additional stimulus to Bermuda’s economy. It is not money spent on “mega-rich overseas elites”, as one critic said.

By the end of the current 2014/15 fiscal year, Government will have spent $4.66 million, which includes $1 million in sponsorship, $3.1 million in capital infrastructure costs and $0.6 million in operational expenses for the ACBDA and the Ministry of Economic Development. As this expenditure was not anticipated during the initial preparation of the 2014/15 budget, it will be addressed through a supplementary estimate.

In the upcoming 2015/16 fiscal year, the Government will budget $11.7 million for America’s Cup-related expenses — $4 million will be sponsorship money that the ACEA will spend in Bermuda and $4.9 million will be allocated for capital infrastructure and site preparation.

The remaining $2.8 million will fund operational costs, including the ACBDA, Ministry expenses and costs associated with the World Series Events in October.

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