Life And Society / Economy

Counting the benefits of big events

05:00 am on 6 June 2023

There are promises of a huge global television audience, a boost for the profile of women's football, and big spending by fans descending on New Zealand - but do forecasts about the economic benefits of big events actually add up?

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Official mascot Tazuni during the 100 Days to Go event for the FIFA Women's World Cup at Eden Park. Photo: photosport

The FIFA Women's World Cup kicks off here and in Australia from next month, and some big figures are being bandied about as to the economic benefits to New Zealand. 

A projected worldwide television audience of 1.2 billion-plus, nearly 30,000 fans descending on us, value to the economy of more than $200 million, and a promised explosion in interest in women's football. 

But can we really believe the figures? How do we measure the gains? Will the government get its $55 million investment back? And what about the intangibles that can't be quantified? 

The Detail talks to one man whose job it is to lure events to Auckland; and another who pokes holes in the formulas and reports being used to justify spending money to make money. 

Eric Crampton is the chief economist at the New Zealand Initiative. He says economic impact assessments have no credibility among academic economists - but they are good at producing very large numbers. 

More accurate are cost-benefit analyses, which take more realistic factors into account. 

The latter has been used with the World Cup, but Crampton says the maths is still in the risky zone. 

"You have to worry a little bit about the [return] margin that's put in there - it's a 1:1.2 ratio - are there other things that the government isn't spending money on that would have more than a 1.2 to one ratio? You think about the Pharmac budget for example. What are we foregoing here? 

"Isn't there more important things for the government to be spending its money on?" 

Crampton asks if these sorts of festivals and events should be put on more of a paying basis. For example, the tickets to games for the World Cup are going to be very cheap ($20 for an adult and $10 for a child) and he suggests that could reflect people not being willing to pay that much to attend them. 

"The boosters always try and put the rosiest glow on these things, they always overestimate the benefits," he says. 

"And who could blame them? People are happy enough not to look at things too closely." 

Chris Simpson is the head of major events for Tātaki Auckland Unlimited. It's his job to lure the big gigs to the city, and to get home-grown events established. 

"We see incredible benefits for the city to host major events," he says. "Part of that is to attract visitors in to Auckland to spend money. Part of it is to maximise the profile and exposure major events can offer in promoting the city.

"And then all of the social benefits - all of the intrinsic stuff that people actually feel proud about being part of the city when you do have a major event in town."

Simpson says the calculations are based on strong historic data such as visitor nights and GDP generation, and other measurements used to justify backing an event might include outcomes for Māori, sustainability and social outcomes. 

But some aspects of such events are hard to explain to the bean counters. 

"The number escalation of young girls wanting to play football off the back of the FIFA Under-17 World Cup was amazing: they needed to create new competitions; they needed to run summer competitions for girls because there was so much happening in winter. 

"Can you imagine what hosting the Women's World Cup on our shores is going to do to inspire young girls?"  

Hear more about weighing up the benefits of big events in the full podcast episode.

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