America’s Cup Series Economic Impact Report

February 25, 2016

[Updated with video] The Louis Vuitton America’s Cup World Series was “an amazing weekend that exceeded many people’s expectations,” said Minister of Economic Development Dr. Grant Gibbons, who said that “$8.6M was injected into our economy by the event, with 70% of that coming from overseas sources, including visitor spending.”

In providing an overview of the economic impact of the event, Dr Gibbons said, “In October 2015, Bermuda successfully hosted a Louis Vuitton America’s Cup World Series.

“This dramatic event not only provided residents and visitors with a taste of the excitement that will come in 2017 – but also gave us a snap shot of the potential economic impact that hosting the America’s Cup is having on Bermuda.

“The ACBDA team has undertaken a review of the economic impact of the October World Series event on Bermuda. The Report was produced by a consultant seconded to the ACBDA by a local accounting firm.”

Dr Gibbons said that more than 10,000 people attended the Event Village on Front Street throughout the weekend and an estimated 550 boats, holding around 5,000 spectators, took to the waters of the Great Sound.

Chart extracted from the ACBDA’s report:

Fullscreen capture 25022016 35401 PM

“It was truly an amazing weekend that exceeded many people’s expectations… But was it an economic success? The answer is yes, and here’s why,” continued Dr Gibbons.

“$8.6M was injected into our economy by the event, with 70% of that coming from overseas sources, including visitor spending.

“There were many Bermudian beneficiaries of this economic stimulus including restaurants, retailers, hotels, taxi drivers, security firms, boat charterers, hospitality workers, plus many small business owners and entrepreneurs.

“The international media coverage delivered a global audience of over 8 million total viewers, representing an “equivalent advertising value” of $14.1 million – a huge positive contribution to Bermuda’s international visibility in major tourism markets.

“Our original forecast for the October World Series event, prepared in 2014, before we won the bid, projected an additional spending impact of $1.7 million. The current report measuring economic activity created from this event estimates the actual spending at $8.6 million.

“In other words, the actual returns far exceeded initial projections. This is clearly a very good result that builds on the overall benefit of hosting the America’s Cup, the teams and all related events,” said Dr Gibbons.

Infographic provided by the ACBDA

LVACWS 2015 Infographic

Also speaking at today’s press conference was ACBDA Chairman Peter Durhager, who said, “An estimated 1,499 visitors, including the media and competing team members, to came to Bermuda for the Louis Vuitton America’s Cup World Series.

“This represented an 18% increase compared to a typical week in October. It is important to note that this figure does not include team members from Oracle Team USA, Artemis Racing or Softbank Team Japan who were already resident in Bermuda.These visitors accounted for 3,730 hotel room nights and $2.6M in hotel revenue, which is a 43% increase compared to a typical week in October.”

“The original forecast called for $1.7 million in economic activity and the actual figure is estimated at $8.6 million,” Mr Durhager said. “To summarize, an additional $135,000 was spent and a further $6.9 million was generated over the original forecast.”

Minister Gibbons full statement follows below:

Welcome…
In the Fall of 2014, in order to support our preparations for the bid to host the 35th America’s Cup, we produced a projected Economic Impact Analysis for Bermuda.

This analysis examined projected revenues and expenditures over a two and a half year period. In round numbers those projections forecast a potential investment of $77 million generating approximately $250 million in additional economic activity for the island as a result of hosting the 35th America’s Cup.

In October 2015, Bermuda successfully hosted a Louis Vuitton America’s Cup World Series.

This dramatic event not only provided residents and visitors with a taste of the excitement that will come in 2017 – but also gave us a snap shot of the potential economic impact that hosting the America’s Cup is having on Bermuda.

The ACBDA team has undertaken a review of the economic impact of the October World Series event on Bermuda. The Report was produced by a consultant seconded to the ACBDA by a local accounting firm.

Today, I am pleased to introduce the Report – but before doing so, I’d like to make a few observations.

More than 10,000 people attended the Event Village on Front Street throughout the weekend, where they were treated to a host of local products, entertainment, food, and family activities provided by Bermuda suppliers and vendors.

On the Sunday, an estimated 550 Boats, holding around 5,000 spectators, took to the waters of the Great Sound where they witnessed spectacular racing in near perfect conditions.

Sir Russell Coutts, CEO of the America’s Cup Event Authority, said that Bermuda’s “Super Sunday” illustrated exactly why Bermuda was chosen as the host venue for America’s Cup finals in June 2017.

It was truly an amazing weekend that exceeded many people’s expectations… But was it an economic success? The answer is yes, and here’s why:

  • 1. $8.6M was injected into our economy by the event, with 70% of that coming from overseas sources, including visitor spending.
  • 2. There were many Bermudian beneficiaries of this economic stimulus including restaurants, retailers, hotels, taxi drivers, security firms, boat charterers, hospitality workers, plus many small business owners and entrepreneurs.
  • 3. The international media coverage delivered a global audience of over 8 million total viewers, representing an “equivalent advertising value” of $14.1 million – a huge positive contribution to Bermuda’s international visibility in major tourism markets.

Our original forecast for the October World Series event, prepared in 2014, before we won the bid, projected an additional spending impact of $1.7 million. The current report measuring economic activity created from this event estimates the actual spending at $8.6 million.

In other words, the actual returns far exceeded initial projections. This is clearly a very good result that builds on the overall benefit of hosting the America’s Cup, the teams and all related events.

The important thing to remember about these numbers is that they represent just one part of the ongoing impact of the America’s Cup’s on Bermuda. This is a two-and-a-half-year journey that began with the announcement of Bermuda as host in December 2014 and continues through the activities in the summer of 2017 and the legacy value beyond.

The economic benefit of the Louis Vuitton America’s Cup World Series, while important, reflects only part of the impact. The sense of collective energy and excitement and the pride we all shared at having been challenged with a difficult task and then exceeding expectations is something we cannot value in economic terms but which is important throughout our community.

We are happy to share with the people of Bermuda the economic data that has been collected about the event.

I would now like to welcome to the podium Mr. Peter Durhager, chairman of the ACDBA, who will provide additional detail on the Report and the economic impact of the Louis Vuitton America’s Cup World Series Bermuda.

-

ACBDA Chairman Peter Durhager’s full statement follows below:

Thank you Minister.

On behalf of the Board, team and volunteers of America’s Cup Bermuda, I am pleased to present this review of the economic impact of the Louis Vuitton America’s Cup World Series held in Bermuda from the 16th – 18th of October, 2015.

This review is not intended to be a full economic impact assessment – it is intended to highlight first-level data the ACBDA has captured in order to evaluate the success of the World Series for Bermuda. We have only focused on economic activity that can be directly attributed to this event and have not considered any secondary spending or indirect economic benefits that might ordinarily be accounted in a full economic assessment.

In that light, this assessment can be considered conservative.

We would like to acknowledge the associations, businesses and individuals who gathered or provided the information necessary to produce this review.

To them all, we are sincerely grateful.

There are three areas I will focus on today, and they are:

  • 1. How the economic activity was generated, or where the money came from.
  • 2. How the money was spent or the cash flow into Bermuda’s economy, and;
  • 3. The media exposure Bermuda received as a result of the event.

Overall Economic Activity

The economic impact of the Louis Vuitton America’s Cup World Series event came from a variety of sources, including spending by:

• travelling Fans and other visitors
• competitor Teams
• America’s Cup commercial partners and sponsors,
• the international media
• Bermuda general public
• the ACEA
• the ACBDA
• the Bermuda Government and other taxpayer funded entities.

As the Minister mentioned, we estimate that the event generated $8.6M in economic activity.

Where did this money come from?

Visitor spending

Approximately $6.1 million, or 70% of the total spend, was injected into Bermuda’s economy from overseas sources.

The types of services these AC visitors consumed include:
Hotel rooms, restaurant meals, corporate hospitality events, transportation, charter boats, and shopping at the event village and other retailers. This figure includes only spending which occurred in Bermuda, to Bermuda parties. As such it represents direct investment into the Bermuda economy.

Local spending

The event also generated spending by Bermuda entities in relation to:
• staging the America’s Cup Concert
• Infrastructure investment by telecommunications companies to increase bandwidth for the event
• Hosting of the event – social, operational and technical support by Bermuda public bodies.

This outlay by Bermuda parties is estimated at $1.2M and when combined with expenditure from overseas parties, generated $7.3 million spent within Bermuda which otherwise would not have occurred.

General Public Spending

It is more difficult to measure local expenditure by the general public in relation to the event, for two reasons:
1. We did not have the benefit of a comprehensive survey to capture this data, and;
2. It is difficult to assess whether spending by the general public was specifically due to the World Series, or if it may have occurred in any event, either now or in the future.

Here’s what we do know.

Local banks reported an additional $4.7 million in spending during the World Series week, as compared to an average week in October.

Using measures to ensure a fair and prudent estimate we have only included a total of $1.3 million of general public spending in the final figure of $8.6 million, another indication of the conservative approach to this report.

Bermuda Costs And Revenue

Of course there were various costs incurred, and revenue earned by Bermuda Public bodies in staging the event.

We estimate total costs to be $916,000 and the direct government revenue to be $281,000, resulting in a net cost to Bermuda of $635,000.

The costs included:
• Security, clearing the Hamilton docks and event village, event staging, telecoms, floating docks, utilities, waste management, equipment rentals, insurance and health and safety.

The revenue was generated principally through airport taxes, hotel occupancy taxes and the tourism levy.

In the discussion of costs, we acknowledge the contribution of Bermuda’s volunteers, who committed their time and their talent to delivering the event.

We estimate that 4,000 hours were volunteered and the value of that time, plus the value of waived fees and charges, is about $600,000. While this value is not factored into the economic impact, it represents a significant reduction in operating costs, and our sincere gratitude goes out to those people and their contribution to the success of the event.

Comparison To Orginal Economic Impact Assessment For Ac35

In the original economic assessment for the America’s Cup, the estimated budget of $77 million included a provision for $500,000 in net costs related to hosting the World Series event. As indicated previously, the actual net cost was approximately $635,000. The additional cost can be attributed to the increased scale and activities surrounding the event.

This increased scale created significantly more economic activity than projected.

The original forecast called for $1.7 million in economic activity and the actual figure is estimated at $8.6 million.

To summarize, an additional $135,000 was spent and a further $6.9 million was generated over the original forecast.

The Cash Flow

The economic activity created by the Louis Vuitton America’s Cup World Series produced revenue for a wide spectrum of the Bermuda economy and specifically in the important areas of our tourism industry and local retailers, service providers and entrepreneurs.

I will now provide some detail on how the money generated by the event flowed through the Bermuda economy.

Tourism Impact

An estimated 1,499 visitors, including the media and competing team members, to came to Bermuda for the Louis Vuitton America’s Cup World Series.

This represented an 18% increase compared to a typical week in October. It is important to note that this figure does not include team members from Oracle Team USA, Artemis Racing or Softbank Team Japan who were already resident in Bermuda.These visitors accounted for 3,730 hotel room nights and $2.6M in hotel revenue, which is a 43% increase compared to a typical week in October.

Local Business Impact

Where possible, we have identified revenue generated by the many service providers and entrepreneurs engaged in the production of the event.

Some of the highlights included:

• $300,000 in charter boat revenue, including an ACEA charter of two public ferries which took 530 Bermuda school children to see the races for free
• $320,000 by Event Village vendors
• $1.5 million in retail sales, according to the October Retail Sales Index
• $400,000 in additional revenues for restaurants, which represents an average increase of 25% on regular activity, and:
• $2.8 million for event production services, including $2.1 million by the ACEA. These services include: Hospitality, catering, printing, event staging, audio and video, Team Zone set-up, promotion and entertainment.

Media Exposure

One of the benefits identified to Bermuda for hosting the America’s Cup was the global media coverage.

The World Series has provided an excellent indication of how that exposure is impacting Bermuda. An independent report, commissioned by the ACEA, indicated a total TV audience of 8.1M including:

• 1.4 million viewers of the live and tape-delayed broadcasts of the races.
• 6.7 million viewers were reached through other television coverage including TV news and sports magazine programmes

From that total figure, 1.92 million viewers were reached in the UK, 3.8 million across Europe and 350,000 in the US.

The report also assigned an ‘Equivalent Advertising Value’ of $14.1 million for this level of media coverage.

Social Media Impact

It is interesting to note that the report also provided social media data for the America’s Cup in 2015, these include:
• 71 million impression on the America’s Cup Facebook Page, and;
• 10.8 million impressions through the America’s Cup Twitter account
• Videos of the event generated over 2 million views on Facebook and YouTube

This does not include activity on the social media pages of the six competing teams or other America’s Cup focused accounts.

Conclusion

In wrapping up this review I am happy to report that the Louis Vuitton America’s Cup World Series exceeded expectations.

A simple but useful way of evaluating the costs described versus the revenue generated is that Bermuda public bodies invested approximately $600,000 to create $8.6 million which flowed through our economy in awide variety of transactions, and where a full 70% of that was derived from overseas spending.

More importantly, it delivered tangible revenue to the sectors of our economy that were identified as most likely to benefit from hosting the event.

Specifically tourism, retail, local service providers and entrepreneurs. This activity, coupled with $14.1 million of value in media exposure, illustrate the significant impact of the event and represents an excellent return on our investment.

-

The full Impact Assessment follows below [PDF here]

americas cup click here 2

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Comments (41)

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  1. interesting says:

    Constantly heading about America’s Cup is getting old, particularly when the OBA government uses it to deflect from other issues such as IMMIGRATION and EDUCATION. But than again, this appears to be their only priority.

    • Noncents says:

      @ interesting..

      If the Gov’t didnt release these reports, the opposition would use it as an opportunity to spread misinformation that their supporters are so quick to eat up.

      The PLP love to talk about the money spent on the America’s Cup but never acknowledge the fact that it is an investment to secure future revenues. Interestingly, they take the opposite approach when criticizing the airport redevelopment. All they want to recognize is lost revenue without spending any time discussing the cost savings that will be realized.

      • Another job well done by One Bermuda Alliance…”Keep the winds in your sails” or as said in cricket, ” stick to the wicket and the runs will come” :-)

        • Mixitup says:

          Another?? Maybe I missed something, what was the first?

        • The Original Truth™ says:

          Are the fumes of that brown stuff on the end of your nose getting to you again Ray?

          $8.6M is snot in a bucket and doesn’t even put us close to breaking even with what we will have to invest totally. Plus we didn’t make the money we are investing. Remember BDA is broke! We burrowed this money! Burrowed money comes with interest! So what a load of people saw the event. This doesn’t guarantee us a tourist boost. All the other place AC has been have more to offer after the AC. We are giving away our lunch money in hopes we’ll get dessert. We’ll be up the creek if we don’t at least break even.

          $15m event fee to the America’s Cup Events Authority

          $25m underwrite to cover any sponsorship shortfall by ACEA.

          $14m for site preparation and infrastructure for docks and America’s Cup village

          $11m operation expenses for the America’s Cup village.

          $12m to cover transport costs, security, emergency services, insurances and legal bills.

          • Lois Frederick says:

            Tell me where all this “burrowed” money is? It would be a good time to dig it all up!

          • TOP HEAVY says:

            What was our return on investment on these PLP Tourism “great ideas” & Contributions?

            *Faith Based Tourism
            *Beyoncé Concert
            *Africa Diaspora Tourism Project
            *Tuckers Point SDO
            *St. Georges Golf Course CLOSURE

            Or maybe we should look into what these contracts really cost us:
            * GlobalHue
            * Port Royal Gold Course Renovation

            • The Original Truth™ says:

              Deflection of the matter on PLP’s poor investment choices is lame and doesn’t debate the point at hand. I’m not a PLP zealot nor an OBA one. So like agent Friday would say, “just the facts”.

              Hopefully you are not alluding to $8.6M being ROI. It doesn’t even cover the investment cost.

          • Zevon says:

            Yeah, we know. So far it is doing better than expected, which is good for Bermuda. So far it is more successful than expected. Which you hate to see, because you really want it tio fail. We know. You want it to fail miserably, and even if it succeeds you will pretend it failed, because that is what makes you feel better. We get it.

    • Double S says:

      Good news is always bad for some I guess…

      Can’t be that tired of hearing about it as you clicked on this article, read it and then posted underneath it…

      PS: There are other articles on immigration and education on here and elsewhere.

    • Lois Frederick says:

      Get used to it!

  2. Informed Bermudian says:

    It concerns me that this and the airport redevelopment appear to be all the OBA is banking on to solve the economic and employment problems.

    This $70m+ investment needs to see a serious ROI for me to view this as anything more than an event that benefits Bermuda far, far less than the politicians want to pretend it will.

    • serengeti says:

      So why don’t you read the article and find out for yourself whether or not it was a worthwhile ROI?
      Too much trouble?
      Afraid of what you might find?

    • Onion says:

      …other than everything else they’re doing:
      - Fixing Bermuda’s immigration legislation
      - Fixing the Planning and Immigration departments
      - Bermuda Business Development
      - Bermuda Tourism Authority
      - Fixing the budget
      …and everything else.

      If you can’t see the forest from the trees then I can’t help you.

    • My 10 cents says:

      8.1 MILLION people checked out Bermuda in one way or another world-wide— the majority of those who probably never even heard of us!

      Don’t you think that exposure is worth something? Immediate payoff? Not necessarily — but down the road, absolutely!

    • Rich says:

      $8.6 million return on 635K of net costs?

      Not too shabby in terms of ROI.

    • Lois Frederick says:

      You forgot the new hotel about to be built in St George’s too.

    • wahoo says:

      They are also banking on find $800M dollars.

  3. My 10 cents says:

    Good Job OBA…Keep it coming!

  4. Build a Better Bermuda says:

    I really want someone to naysay this… I mean serious, do try. $8.6m on a $.6m investment… Please, oh please complain about how the total cost of around $70m being spent on majority local businesses over 3 years could be better spent…

    • inna says:

      $800m spent on what again??

      • TOP HEAVY says:

        $800 Million is the amount that is “unaccounted for” , it may have never been “spent”.

    • MA$E says:

      Greetings just another usual naysayer here ,
      So $8 million greatly needed dollars in activity. Awesome !!! but when you consider the Newport to Bermuda race with little to no marketing or funding generates $11.7 million it does make you wonder.
      Also the ” media exposure ” is a little concerning …hmmm 8.1 million TV viewers over 104 countries with only only 2.5% from the US ? Yet the Americas Cup Authority boasts on their website that 270 million viewers watched the races in San Francisco ? So are the viewership number down or is the 270 million an over inflated number ? Are we to expect AC 2017 to draw an extra 262 million viewers ? I thought Bermuda being in an ideal prime time tv broadcast time zone was meant to boost viewership ?
      Oh well …. its not like we are closing schools or raising taxes to unsustainable levels
      while barely addressing the increasing public debt.

      All that said Shaggy did put on a great concert. :)

      #Troll

      • A few queries says:

        Won’t even close to closing the deficit (needed to pay down debt) if the biggest Government expense. As it stands it is unsustainable but untouchable.

        Simple and plain. And look at the reaction when the furlough day option was sought to be extended.

        Until then expect to pay for all the cost cutting that we rally, march, protest against and prevent from taking place.

        Can’t have it both ways unfortunately. And sad to say there are many that think nothing is wrong and that the status quo is acceptable and sustainable.

      • Bermyman says:

        Comparing TV viewership is like comparing and world cup qualifier game to the worrld cup. AC 45 is not the main event. Read the economic impact report which is available from the last America’s cup, it will help you gain perspective.

        • MA$E says:

          correct huge difference. the point being the 5 weeks of Americas Cup racing in 2017 would need to do 33 times the ratings of the LV Races to simply match the 34th Americas Cup.
          a spike in ratings like that with the main event 18 months away seems very unlikely

      • My 10 cents says:

        Wait til JUNE 17… & the world will be focused. The LV World Series (this past October) is a new race… I believe only a few years old. SO yes, 8.1 million is HUGE!

        Does that answer any concerns?

      • Build a Better Bermuda says:

        Actual value return could be calculated for around $20m, $6m in foreign spending into Bermuda and $14m in TV coverage and advertising., the Newport and Marion races do provide great returns as well for very little cost, but it also comes with a much more limited viewing audience. As for tackling debt, that is no small task, and strides are being made, but should that mean we pass up the chance for such an economic boost to the economy, a stimulus that has already brought new sources of sports tourism. Already we have had several new sailing events to our calendar, so the payoff is expanding. This preliminary event was just a sample of what is to come, the audience smaller than what the main event will bring.

  5. rhonda says:

    The Fox reporting on the status of Hens.

    They are All well and multiplying.

  6. wahoo says:

    This is awesome news.

    To put it in perspective what return did we get for the music fest thingy? Did we get figures? No?

    Faith based tourism? No?

    Grand Atlantic? Nothing?

    14 years of plp B.S.? $2.5Billion in debt.!

    • Mixitup says:

      Beats 1 billion in 3yrs.

      • Time saver says:

        Multiply the inherited budget deficit by three and voila!

      • No Brains says:

        To cover the debt genius .

      • Build a Better Bermuda says:

        Still a result of the PLP, only way for the OBA to have prevented further borrowing would have been to stop the deficit in th is first year… and the only way to have done that would have been to layoff a huge number of civil serpents, cut all funding from most of the social programs and grants, raise taxes across the board, and privatized many services. All of these would only have made the economic situation worse. This because of a legacy of financial mismanagement and recklessness by the PLP who cared more about looking like they were helping the people, rather than making sure that what they were doing could actually be sustainable. Even now they ‘Vision 2025′ is a continuation of this mentality, even now, they are promising that as government they would return to a policy of borrowing with a deficit, that would only lead back to their practice of having to borrow more to pay back their borrowing, then borrow more again to pay back that borrowing. At least the OBA is committed to breaking this failed philosophy.

  7. paperboy says:

    Congratulations to all involved – particularly the committed volunteers who made so much of this happen without any direct costs to ACBDA or ACEA. It demonstrates how capable Bermudians are in hosting ourselves and the world.

    I encourage ACBDA to talk more about the impact of volunteerism on this event and future events – it is not only about the money and yes the money is very important.

    Very powerful graphics in the report easy to read and helpful- I hope we see more of this as we move towards 2017. They help us connect the dots around this significant sporting event and the collateral opportunities sailing presents to Bermuda.

    Wishing everyone continued success.

  8. Lois Frederick says:

    Cue Rhonda doubting the authenticity of the numbers…

    This just a hint of things to come. Great job!

  9. hmmm says:

    The OBA are saving Bermuda FOR ALL OF US!!!!!!!!!!!!!!!!!!!!!!

  10. Make a new plan Stan says:

    6.7 million people watched this on sports news programs and other related programming……so a highlight reel during ESPN Sports Center or something like that……that’s excellent!

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