Rugby World Cup: Windfall claims kicked into touch

Shamubeel Eaqub. Photo / Brett Phibbs

Economists have picked that estimates of Rugby World Cup benefits will tumble once the tournament is finished.

Against the Herald's count of $1.2 billion in costs for stadiums and other investments backing the Cup, the Government has cited a Reserve Bank estimate of $700 million in direct economic returns.

The estimate has been calculated by multiplying 70,000 visitors by the expected average spend depending on country of origin.

But economists chipped away at the figure yesterday, agreeing with University of Auckland economics professor Tim Hazledine who proposed a revised benefit of $150 million in a Herald article yesterday.

"Those [official] numbers are far too large to be meaningful. The Rugby World Cup was never that big. People got really excited about it because it's something to hang your hat on," said New Zealand Institute of Economic Research principal economic Shamubeel Eaqub.

"People have blown this event out of proportion."

Mr Eaqub has studied other major events to find that economic estimates invariably plummet in the aftermath.

"When you look at major events like this, there's a big divergence between the statistics done before and after. Those done before the events tend to be designed to promote them," Mr Eaqub said.

"The people who sponsor those [statistics] projects choose what kind of analysis you do beforehand - and those studies are all about the assumptions you make. It's because you're looking for a reason to host the event."

The estimated benefit typically fell to about a tenth in post-event analyses, and the rise in visitor spending was mostly invisible on graphs, he said.

"If I didn't tell you when the event took place, you couldn't pick it out [on a graph] with the naked eye."

The All Blacks' prospects were better than the tournament's, he said.

"Let's have fun and hope the All Blacks win - but don't put any hope into a great economic windfall because it's just not happening."

Mr Eaqub suggested an increase in visitor spending between $200 million and $250 million.

Goldman Sachs economist Philip Borkin compiled his study of World Cup benefits last year - and proposed a total $280 million in visitor spending excluding international airfares.

Some World Cup visitors would have come to New Zealand at another time instead, and other tourists would have decided to stay away from high room rates and other effects of the tournament, he said.

The boost in tourism during the event was offset by the loss of visitors before and after, a phenomenon seen for the 2003 Rugby World Cup.

In the case of the 2005 Lions Tour, arrivals from Britain fell slightly before the event and remained sluggish in the months after.

Meanwhile, the official commissioned report done by Horwath Asia Pacific in June 2006 estimated there would be $476 million in spending by 66,000 international supporters, 2500 international media and 2500 corporate guests and VIPs.

This amounted to a $507 million contribution to GDP, the report said.