Auckland Council meets today to debate where to site the America’s Cup syndicates. Simon Wilson has five questions he’s hoping someone will answer.
There’s no perfect answer to the question of where to site the syndicates that will compete for the America’s Cup in 2021. There’s not even a good answer. Still, we want one that’s good enough. As the Auckland Council grapples with this dilemma today, here are five questions no one has yet been able to answer.
1. Why is Grant Dalton trying to hold the country to ransom?
There’s no copyright on using the words New Zealand in your name, but when you call yourself ‘Team New Zealand’ (TNZ), isn’t there some kind of moral duty to behave like, I don’t know, a team that’s committed to New Zealand?
So why are Grant Dalton and his team threatening to take the America’s Cup defence to Italy if they don’t get their way? Would any – any – other sports team claiming national representative status even dream of doing that? Especially given that they’ve benefitted very handsomely from public funding over the past couple of decades.
It’s just called being a bully, isn’t it?
2. Why is Grant Dalton trying to hold Auckland city to ransom?
Dalton and three of his TNZ mates went down to Tauranga the other day, supposedly to check it out as an alternative site for hosting the cup. Give me a break. Nobody thinks Tauranga could or should host the cup, and Dalts likely did little more while he was there than eat lunch with the local yacht club commodore.
Tauranga mayor Greg Brownless was pretty blunt when he talked to the Bay of Plenty Times. “It would be fantastic but I don’t want to get my hopes up,” he was reported as saying, “because there could be various reasons why they are doing this. One might be to cause Auckland to make a decision if they think it could possibly go elsewhere.”
Get it? Dalts went to Tauranga not to look at Tauranga but to pressure Auckland to accept the TNZ option for siting the syndicates – which is, controversially and expensively, on a big new extension of Halsey Wharf.
“Also from our point of view,” said the Tauranga mayor, “where would the money to fund all this come from? I don’t think we have surplus money floating around. If the government is prepared to do it, that would be wonderful and we would love to host it.”
Just to be clear, the government is not saying – and has never said – it will fund the entire cost of hosting the cup. It’s very clear the host city must contribute.
And just in case there was still any confusion, the Tauranga Yacht Club commodore himself, Nick Wrinch, also weighed in: “I think they are also quite keen for the news to come out that they had been in Tauranga. It might just wake the ideas up of a few people in Auckland and not to take for granted that it will be in Auckland come what may.”
So, to recap, TNZ wants the cup hosted on the most expensive available option, which would push further into the harbour than any of the other options, would involve the most disruption to the waterfront and would create a “facility” that doesn’t fit with any other existing long-term plans for the area. The different options are outlined here.
The Auckland mayor, Phil Goff, and the government, led by the minister responsible for the America’s Cup, David Parker, have both pushed back. They want to spend less, create less disruption, and build a facility that integrates well into the larger strategic framework for the area.
3. How good is Phil Goff?
Auckland Council meets today to consider the siting of the America’s Cup defence. But a decision is unlikely to be made. This is because, formalities aside, it’s not really up to the council where the syndicates will go. That decision has to be made, by consensus, by the three relevant parties: the government, the council and Team New Zealand. The council has already effectively delegated its authority to the mayor.
When he’s reached a consensus with the other two, he will be able to bring it back to the full council for approval. That’s expected, or at least hoped for, in mid December.
So how good are Goff’s negotiating skills? And how good are Parker’s? Together, they have to pull TNZ into line. There is no perfect outcome: no site that offers everything all three parties could wish for. So compromise is required.
Parker and the government are said to favour a site on the western edge of Wynyard Quarter. It would work splendidly and be relatively cheap. But currently it’s home to several of the boat-builders of the area – the companies that build and service the super yachts. This option is not included in the list of three included in a report to today’s council meeting.
Superyachts – the floating private hotels of the super rich – are important for economic reasons (see #4 below). If the boat-builders are displaced from that site, are there good alternatives for them?
The mayor favours an option that sees the syndicates spread over three wharves, all clustered within a couple of hundred metres of each other around the North Wharf basin. A Cup Village environment would be easy to establish.
It’s complicated, though. The Goff option used to involve limited extension of Halsey Wharf, but the officials’ report to council today reveals it would be a 50-metre extension and a total of two extra hectares on three different wharves. That’s rather more than was earlier proposed. Goff is proposing a compromise on the TNZ option, but one that will test everyone’s limits: does it push too far into the harbour; is it too different from what Dalton says they need?
The Goff option has the additional virtue of being flexible. TNZ expects eight syndicates to line up, but it might be wrong. The mayor’s plan will accommodate more, or fewer. TNZ’s own choice does not appear to allow for expansion.
Grant Dalton is famous for hating to lose. The task for Goff is not to beat him, but to make him feel good about an outcome he didn’t want. It’s the task that makes a good negotiator great. Is Goff up to it?
4. What’s the benefit, really?
Sailing, they say, is like standing in a cold shower tearing up hundred dollar bills. But staging the America’s Cup – if you believe even half of what some commentators say – is a magical process which turns the water warm and makes all the money stick itself back together again.
Take just one component: the income to be made from superyachts. Back in June, the executive director of industry group Marine NZ, Peter Busfield, told Stuff’s Business Day there will be around 120 visiting superyachts and each will boost the NZ economy by $5 million. That’s $600 million. But just this week, speaking to Mike Hosking on Newstalk ZB, Busfield reined it back to around 100 superyachts spending $2.7 million each.
Clearly, the superyacht income is significant. But how significant? We don’t know. According to the council’s experts on the group that’s been working with the government and TNZ on the cup, superyachts are the third most important source of economic activity (after the syndicates themselves and the sponsors, but ahead of general visitors). That working group expects 140 superyachts to visit for the cup.
It also expects the cup to generate between $500 million and $1 billion economic activity throughout New Zealand, about 80% of it in Auckland (the variation is because they don’t know how many syndicates will enter).
Precise sums don’t matter. The amount of money the America’s Cup is going to generate is: a hell of a lot. Still, there is some weird accounting going on. I generalised when I quoted the working group’s figures of $500 million to a billion: in fact, they are predicting $555 million to $977 million. It’s weird they’ve been so precise: it’s the computer model speaking, not an actual human being.
Independent economist Shamubeel Eaqub has expressed deeper concerns. As he told the Herald, if the council spends $200 million (the likely cost of TNZ’s Halsey Wharf pet project) that’s $200 million not spent on something else. He also said economic impact reports often ignore the fact that much of the money will be spent anyway. And, he added, even when there is a bump in spending during a major event, there might also be a decline before and afterwards.
We save our pennies and splash out on the tickets, the restaurants, the hotel, and then we eat mince on toast for a few months.
While we’re on the economic benefits, let’s remember there are new rules for the America’s Cup now, promulgated by TNZ. One is that the hulls of the boats must be laminated (that is, effectively, built) in the country they represent. With that decision, the benefit of this cup to the NZ boat-building industry was reduced. By TNZ itself. They did a similar thing with new country-of-origin regulations for team members.
These new rules might help TNZ, but they’re a blow to New Zealand Inc and all the rest of us who sail in her.
There are two other important types of benefit that flow from a major sporting event like the America’s Cup.
One, mentioned by Eaqub, is the fun to be had. It’s inherently exciting to host an event like this – and hundreds of thousands of people will be able to enjoy the racing in all sorts of ways, often without spending a cent. It’s one of the great things about living in a big city, and because of this alone Goff and his officials are quite right to be working hard to secure the 2021 cup defence for Auckland.
The second major benefit is the way a big event can deliver lasting infrastructural improvements for the city. The timetable allows the government time to fast-track light rail from Wynyard at least to Mt Roskill, and they should press on and do it. We should be hearing soon about the tender process for the CRL tunnel and station building: can that also be fast-tracked? There will be more hotels, more street regeneration, more fizzing economic life on the waterfront and in many other parts of the city. The America’s Cup will makes things happen, just as it did for the defences of 2000 and 2003.
It doesn’t follow from either of these things, though, that TNZ or anyone else should be allowed to take the city for a ride. We want the America’s Cup to improve Auckland, not make it worse.
5. What’s the strategic plan?
The best way to make it better is to fit America’s Cup plans into the larger plans for the city. Unfortunately, the council is just starting to set the next 10-year budget for the city, which will involve a lot of decisions about the waterfront, transport spending and more. The process will include wide community consultation and can’t easily be hurried. It will take well into next year, by which time key America’s Cup decisions will be long in the past. They need to be made now.
So, what to do? The simple answer is: whatever happens for the America’s Cup can’t undermine the thrust of the various long-term proposals for the city. They have to allow scope for good planned growth.
That’s why extending Halsey Wharf 220 metres into the harbour is a bad idea. It undermines the long-term value of the Tank Farm headland, which will one day be dominated by a park. It undermines the planned growth and existing attractions of Wynyard Quarter. It compromises the desire not to keep filling in the harbour: if we can’t draw the line at a 220-metre wharf, where will we draw it?
And yet, there is no perfect answer – and it’s not obvious yet there is even an acceptable one. Good luck, Mayor Goff. Be smart, and just remember, that guy Dalts is all bark. He won’t bite.
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