Snedden Slams New Zealand Herald's $500 million Rugby World Cup deficit claim

Martin Snedden, Chief Executive of Rugby New Zealand 2011 (RNZ2011) has responded to claims, published in the New Zealand Herald newspaper, that the 2011 Rugby World Cup would run up a $500 million defecit.

In a written response to the New Zealand Herald feature Snedden stated "what should have been a really useful, robust analysis of New Zealand's hosting of RWC 2011 ended up being a distorted and misleading presentation.

The New Zealand Herald report claimed that the expense of staging the event would outweigh the financial benefits.

It quoted University of Auckland economics professor Tim Hazledine as saying the financial benefits of the Rugby World Cup could be considerably lower than anticipated if normal tourism spending for that period was deducted, Hazledine stating "in total, you can find about NZ$150 million actual money-in-the-pocket benefits to New Zealand."

In his rebuttal, Snedden went on to state "when I first read the articles, three major errors jumped out at me straight away.

"First, the $1,200 million cost figure correctly included the tournament's operational costs of $310 million, but then, inexplicably, ignored our forecast income of $268 million generated from match ticket sales.

"Second, the Herald reconstructed history so that the Otago Stadium construction cost of $198 million could be included as a RWC 2011 cost despite the possible hosting of matches having played little or no part in the ultimate decision to build. That's why we allocated Dunedin's three RWC 2011 matches to Carisbrook.

"Third, where on earth did the alleged RWC 2011 expenditure of $130 million on 'ports and airports' come from? Are they talking about long-planned upgrades to the Auckland, Wellington and Christchurch airports? If so, were these capital improvements really because of RWC 2011 or, as is more likely the case, was the timing of this expenditure largely coincidental?

"Those three errors, just by themselves, made a huge difference to the purported $500 million deficit.

"The reality here is that a lot of money is being genuinely spent on staging RWC 2011, both in terms of the tournament itself and the leveraging activities such as the nationwide REAL NZ Festival. The net cost of these is probably in the vicinity of $80 to $120 million.

"Then there is the much greater capital expenditure on infrastructural upgrades. Some of this, such as the redevelopment of Eden Park and AMI Stadium, is directly attributable to RWC 2011. Some is quite clearly not, despite how such expenditure might have been packaged up. All this has resulted in improvements to assets that will continue to serve our communities long after RWC 2011 has come and gone. There are no 'white elephants'. In most instances, RWC 2011 has simply acted as a catalyst to accelerate improvements that would have occurred anyway, albeit possibly a little bit later.

"Future events such as the FIFA U-20 World Cup and Cricket World Cup 2015 will enjoy these benefits with no additional capital outlay. 

"Quite simply, expensing this capital expenditure over a six week tournament as the Herald has done is disingenuous and misleading.

"Balanced against any such expenditure are the benefits generated from hosting the event.

"In straight dollar terms there will be an immediate and sizeable direct economic benefit. The Reserve Bank recently estimated this at $700 million. A report commissioned by the NZRU in 2005 put the figure at $500 million. The latter was based on 66,000 international visitors. Based on actual current offshore match ticket sales, we are now expecting at least 85,000 visitors, with an average 23-day length of stay. In that respect, these estimates, which are based on actual sales activity to date, look credible."

15th April 2011 - SNEDDEN OUTLINES ECONOMIC BOOST OF RUGBY WORLD CUP