Rugby World Cup: Expecting return on stadium 'pipedream'

Photo / Richard Robinson

The Eden Park upgrade is like a family of four buying a bus because some relatives are visiting, says an economist.

Others also questioned the wisdom of investing in stadiums for supposed legacy returns, but a senior consultant who contributed to a Rugby World Cup-commissioned report said it would be "missing the point" to count the capital investments as costs.

Out of $1.2 billion spent on investments around New Zealand that will back the Rugby World Cup, $555 million has been on stadium upgrades.

A survey of economists and their research, published in a United States journal, said the rare argument on which economists agreed was that stadiums produced underwhelming returns.

"Economists reach the nearly unanimous conclusion that 'tangible' economic benefits generated by professional sports facilities and franchises are very small; clearly far smaller than stadium advocates suggest," it said.

The article, by Dennis Coates and Brad Humphries in 2008, looked at 43 studies and questionnaires of economists.

University of Canterbury economist Eric Crampton said that expecting stadiums to produce economic returns was false hope.

"As usual when countries bid for events, we promised all kinds of inefficient investments in stadiums ... These investments never, ever, ever pay off," Dr Crampton said.

"They're always a massive waste. The economic literature is overwhelming.

"Folks here will say 'Oh, but here it'll be different'. They're wrong. The stadium investments will not pay off."

Councils and stadium promoters always presented great returns, but their figures were "typically found to be about 10 times a defensible figure", Dr Crampton said.

In the United States, labour strikes cancelling months of baseball matches failed to produce any discernible effect.

"If the benefits of stadium investments were as big as promoters claim, we'd have expected baseball towns to fall into ruin with the Major League Baseball strikes."

And stadium works had not just been brought forward - they were being expanded beyond their normal capacity requirements, he said.

Before its upgrade, Eden Park sold out only about once a year for All Blacks tests. "It's amazing. It's like buying a bus for the normal motor transport of a family of four because they have a few relatives visiting."

But accounting and consulting firm Deloitte's partner for corporate finance, Paul Callow, said the Rugby World Cup had been a useful catalyst for capital projects that would have needed to be done anyway.

Mr Callow has researched the subject as a contributor to a Rugby World Cup-commissioned report on the event's economic benefits.

Rugby stadiums in New Zealand would always have some matches, and "who knows what benefits might follow from that?"

The success of Wellington's Westpac Stadium was a good example because it attracted benefits that nobody could have been predicted, Mr Callow said.

The venue has brought to Wellington major concerts that would have been unthinkable in the park it replaced, has stolen the Phoenix from Auckland, and has allowed for the thriving Rugby Sevens tournament every year.

The stadium's latest annual report says it made a net surplus of $3.6 million, and its Economic Impact Report identified a $52.4 million contribution to the Wellington economy.

EDEN PARK
* Original capacity: 47,000 (for rugby).
* Capacity after $256 million upgrade: 50,000 (plus temporary seating for 10,000).
* Sellouts to 47,000 (historically): Once a year.