$22.5 million in extra funding for America's Cup was needed for the event to proceed

Economic Development Minister David Parker said many people might consider the America's Cup a "rich man's sport." Photo / Mark Mitchell

The 2021 America's Cup would not have gone ahead if it was not for the Government's most recent $22.5 million funding top-up, says Economic Development Minister David Parker.

He has also called on the Auckland Council to agree to provide a further $14.5 million to ensure the event goes ahead.

Yesterday, Parker announced that Cabinet had approved the additional America's Cup funds, following higher-than-forecast costs for wave breaks and dredging work.
Auckland will host the boat race in three years' time.

The extra Government funding brings the total amount of Crown spending on the event to $136.5 million, with a further $98.5 million coming from Auckland ratepayers.

Parker told media this afternoon that if the Government had not stumped up with the additional funding, the event would not have been able to proceed.

"Although we understand some people's scepticism given that it is a subsidy for a sport that not everyone has top of the pops, we thought on balance that the economic case justified the investment."

He said many people might consider the America's Cup a "rich man's sport".

But the economic benefit of holding the race in Auckland, which the Government estimates being between $500 million and $1 billion, outweighs the costs, Parker said.

"[The cost/benefit ratio] has been watered down – but we still think that overall it's worthwhile."

Massey Senior Economics Lecturer Sam Richardson said the extra funding for the event would unquestionably worsen the cost to benefit ratio, as it's simply more costs for the same predicted benefits.

He said any additional funding from both central Government and Auckland Council comes with opportunity costs – "that is, taxpayer dollars that could have been spent elsewhere".

"Ultimately, the event still remains on a razor's edge as far as benefits and costs are concerned. What will ultimately determine the event's economic viability is the projected spending (and associated benefits) from visitors."

And the overall cost/benefit of the event could worsen still, if the Council decides to provide an additional $14.5 million worth of funding on Thursday.

Parker said the council should "absolutely" green light the funding.