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Why the America's Cup is the oldest and richest prize in sport

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May 21, 2007

Why the America's Cup is the oldest and richest prize in sport

Why the America's Cup is the oldest and richest prize in sport

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May 22, 2007 In a fascinating study, Allianz, the main sponsor of BMW ORACLE Racing, has released details of a report into the economic impact of participating, winning and hosting the America's Cup, the oldest trophy in international sport. The report takes into account a range of factors such as infrastructure investment, international visitors, media, sponsor, business, construction, accommodation, hospitality, retail, entertainment, transport and logistics and the conclusion is that it provides a massive fiscal injection. The report makes interesting reading. If Alinghi won the Cup and took it to Dubai, the economic impact for Dubai would be US$10 Billion. If BMW ORACLE Racing were to win the Cup and take it to either San Francisco or Newport the corresponding economic impact would be US$9.9 B or US$4.5 B. Total economic return for hosting the 33rd America's Cup in Auckland, New Zealand would reach US$1.75 B, however Emirates Team New Zealand could expect to generate increased revenues if it chose to host the event in Dubai. Total economic return from Luna Rossa winning and then hosting the America's Cup in Genoa, Italy would be in the region of US$3.75 B. Right now, the most likely scenarios involve Luna Rossa and Emirates Team New Zealand will fight out the final where they will win the right to take on Alinghi.

It’s hard to fully appreciate the magnitude of a major sporting event and its economic impact on a city – ten of thousands of people choreographed to near perfection to support the staging of the event and hundreds of millions of spectators via television. It does for an economy what providing for a war used to do – a massive fiscal injection.

In terms of truly large sporting events, the Olympics and the FIFA World Cup stand out clearly as first and second, but they only happen every four years. Formula One happens 18 times a season and was a clear third until Allianz, the main sponsor of BMW ORACLE Racing, commissioned a report into the economic impact of participating, winning and hosting the America's Cup, the oldest trophy in international sport. The report makes interesting reading. If Alinghi won the Cup and took it to Dubai, the economic impact for Dubai would be US$10 Billion.

If BMW ORACLE Racing were to win the Cup and take it to either San Francisco or Newport the corresponding economic impact would be US$9.9 B or US$4.5 B. Total economic return for hosting the 33rd America's Cup in Auckland, New Zealand would reach US$1.75 B, however Emirates Team New Zealand could expect to generate increased revenues if it chose to host the event in Dubai. Total economic return from Luna Rossa winning and then hosting the America's Cup in Genoa, Italy would be in the region of US$3.75 B.

The 2007 Cup is getting to the pointy end over the next few weeks, and Luna Rossa Challenge leads BMW ORACLE Racing 3-1 and Emirates Team New Zealand enjoys a 3-1 advantage series lead over Desafío Español in the Louis Vuitton Cup. The first team to win five races advances to the Final, so it’s looking like Luna Rossa and Emirates Team New Zealand will fight it out for the right to take on Alinghi.

The Allianz Economic Report conducted in co-operation with Professor Tom Cannon, Dean of Buckingham University Business School and a leading expert in sport and business finance has taken into account the following factors in order to draw the conclusion found in the report: infrastructure investment; syndicate communities, international visitors, regatta organisers, media, sponsors and business, construction, marine sector, accommodation, hospitality, retail, entertainment, transport and logistics.

The America's Cup offers the biggest prize in world sport, and is the third largest international competitive sporting event behind and similar to Formula I. Commenting on the Allianz Economic Report Professor Tom Cannon stated: "I have been conducting studies into sport for many years, but I was genuinely surprised by the size of the prize in the America's Cup. A sport competed for by millionaires and billionaire has developed into an event which delivers billions of dollars to the winning syndicate and its chosen city."

- Over the four year cycle of the America's Cup the set up costs for each of the 12 competing teams has averaged US$100m, making it the largest investment by teams in an international sporting competition. With total investment by the teams breaking the unprecedented US$1 billion Mark

- If Alinghi won the 32nd America's Cup and took it to Dubai, where it conducted winter training the economic impact for Dubai would be US$10 Billion

- If BMW ORACLE Racing were to win the Cup and bring it home to the USA to either San Francisco or Newport the corresponding economic impact would be US$9.9 Billion or US$4.5 Billion

- Total economic return for hosting the 33rd America's Cup in Auckland, New Zealand would reach US$1.75 Billion

- However Emirates Team New Zealand could expect to generate increased revenues if it chose to host the event in Dubai

- Total economic return from Luna Rossa winning and then hosting the America's Cup in Genoa, Italy would be in the region of US$3.75 Billion

- Success by DESAFÍO ESPAÑOL 2007 would bring an additional US$1.5 Billion into the Spanish economy in direct and indirect effects in the short to medium term of hosting the 33rd America's Cup- generating around 22,500 jobs

About the America's Cup

The America's Cup is the oldest trophy in international sport. First contested in 1851, the America's Cup is the most prestigious prize in sailing. Dominated by the Americans with 24 consecutive Defences by the New York Yacht Club, the 132-year winning streak was ended by the Australians in 1983. American Dennis Conner won the Cup back in 1987 and the US defended twice more in San Diego until Team New Zealand won the Cup in 1995. The New Zealanders defended once in 2000 before the Swiss Challenger Alinghi won the trophy in 2003, taking the Cup back to Europe for the first time since 1851. The Swiss have selected Valencia, Spain, as the venue for the 32nd America's Cup in 2007.

To obtain the Allianz Economic Report into the America's Cup and further information on Allianz's global sponsorships go here.

About the Author
Mike Hanlon After Editing or Managing over 50 print publications primarily in the role of a Magazine Doctor, Mike embraced the internet full-time in 1995 and became a "start-up all-rounder" – quite a few start-ups later, he founded Gizmag in 2002. Now he can write again.   All articles by Mike Hanlon
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