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After the Cup has gone
Saturday November 18, 2006
By Geoff Cumming

Trevor Mallard is right about one thing: a downtown stadium has more potential than Eden Park to deliver economic benefits beyond the 2011 Rugby World Cup.

Mallard, the Minister for Economic Development, has linked the development of a world-class stadium to the Government's "economic transformation" strategy and its plans to make Auckland a global city. He talks of the catalyst potential of major events and "leveraging" off the World Cup to "create a positive legacy".

Auckland City Mayor Dick Hubbard imagines pictures being beamed to the rugby-watching world of a waterfront stadium, showcasing the harbour and CBD. These images will "instantly brand Auckland, if not New Zealand" and draw tourists to the country, he claims.

"It's hugely strong branding."

Beyond the World Cup, there will be more money-spinning events. Capacity crowds will bring vitality and wallets to the area which, unlike suburban Kingsland, has the bars and nightclubs, and accommodation.

This is the hype and the hope.

All around the world, flagship projects such as stadiums are accompanied by similar fanfare. According to the weight of overseas evidence, they don't always deliver.

The consistent lessons for the Government and city council: go slowly, consult, commission studies and evaluate thoroughly beforehand. And be realistic about costs and benefits.

In a report prepared for London's 2012 Olympics bid, British think tanks the Institute for Public Policy Research and Demos saw a pattern Aucklanders may recognise:

"Major events such as Olympic Games or World Cups tend to be promoted as once-in-a-lifetime opportunities for development, with the corollary that a failure to attract them represents a once-in-a-lifetime missed opportunity."

But vital to long-term success was the early involvement of local communities in weighing the options, establishing objectives and setting priorities.

"The trickle-down effects of flagship projects are notoriously erratic," the paper warns. " ... Even in economic terms, the track record of sporting projects is far from clear."

A key plank of the waterfront proposal is the potential to bring more events to Auckland because it is not in a residential suburb.

Proponents envisage a multi-use complex hosting concerts, with the ability to bid for "mobile sporting events" such as World Cups in cricket, soccer and rugby, and one-off events: for example, bringing an English football team here. Will it happen? We can only guess. Proper evaluation would cover the spectrum of costs and benefits, threats, and opportunities and opportunity costs. When the Weekend Herald sought out the economists and accountants who provide such analyses, we were asking questions that couldn't be answered.

One city consultancy had just been engaged by the city and regional councils to answer such questions by next Friday.

"I wouldn't have thought you'd be able to claim huge benefits from something like a stadium," says Infometrics chief economist Adolf Stroombergen. "But there are other benefits: a more viable city centre, seeing concerts which you might not otherwise see - the psychological effects shouldn't be underestimated."

Rob Harris, director of the Australian Centre for Event Management, says a 60,000-seat venue would give Auckland the ability to bid for major sporting events. "There's an increasing number of events of scale which are mobile. But at the same time there's a lot of people in this market. The extent to which you are able to do that is unknown without an analysis."

Harris says it's crucial that planners consider a stadium's potential for ongoing use - what's known as the legacy dimension.

"Given that it's a huge amount of public money, you need to spend a million or so doing some sort of feasibility study that looks at the claims and post-event opportunities for the venue. If you build it and can't make regular use of it then it becomes a drain."

Eden Park provides the only local evidence of the potential long-term usage of a 60,000-seat venue. At the moment, the 47,000-seat stadium contributes about $32 million a year to regional GDP from 16-20 big matches and is responsible for 600 jobs.

An economic impact assessment for an enlarged venue estimates that after the World Cup, it will contribute about $48 million in regional GDP and 900 jobs. The $16 million increase would arise from: an additional rugby test (two during a Lions' tour year); bigger average attendances, higher average ticket prices and one additional "other" event.

Much has been made of Eden Park's inability to stage noisy rock concerts but, as far as a downtown alternative is concerned, promoters this week lowered expectations. The era of stadium rock has passed. Only a handful of acts are capable of filling a 60,000-seat stadium and ageing fast, while audiences and performers prefer the intimacy of smaller, indoor venues, says promoter Ian Magan.

He predicts Auckland will host an average of one major outdoor concert a year if the downtown stadium is built. Promoters also struggle to see much demand for a 60,000-seat venue from other, non-sporting events. Multi-use venues are difficult to develop without compromise, says Magan. "Most stadiums are suitable only for one or two sporting codes."

But Tourism Auckland chief executive Graeme Osborne says the waterfront proposal would ensure "major events, infrastructure investment and global profiling".

He bases his enthusiasm on Auckland's experience with the 2003 America's Cup, which added $450 million to the regional economy. "It left a legacy of the Viaduct Harbour, which has continued to prosper despite predictions of doom." Osborne says Auckland would need to bid for events as Wellington does.

Melbourne, which this week topped an international survey of "sports cities", spends $30 million a year on attracting and marketing events.

A downtown stadium would potentially create a hierarchy of venues (including Eden Park, North Harbour Stadium and Mt Smart Stadium) for international tournaments. Most of the time they would be in competition.

In its bid to become a destination city, Auckland would be competing with Sydney, Melbourne and Brisbane. A stadium would be "just another factor," says Infometrics' Stroombergen.

"You have to have good accessibility and things people can do before and after a game. How it factors into overall business and retail activity is important.

"The important measure is the benefit within the region: Is it bringing in money that would otherwise not be spent?

"If a few more Aucklanders go to a rugby game, that's nice for the stadium and the rugby union - but it's not doing a lot for trade if it's just a transfer of money that would be spent anyway. [The economic benefit] relies on getting extra spending from outside the region."

For a stadium to influence decisions to come to New Zealand, an iconic design is needed, says AUT Professor of Tourism Simon Milne.

"Most of the architectural wonders of the world don't just get dreamed up very quickly and passed on to the construction company in the next few months. I don't think we're giving ourselves the timeframe or the money to really make it stand out. There are big stadiums all around the world.

"There's a balancing act here. We might say putting a stadium on the waterfront opens up a new area for development close to transport hubs but in effect what it's doing is blocking off the city from the waterfront to some extent.

"I don't think it's necessarily a way of presenting the waterfront at its best to visitors."

That's a potential opportunity cost. "How does it fit within our broader concept of Auckland as a tourist city which has been looking over the years to the waterfront to give it a point of difference?"

Pragmatists point to the site's present eyesore status - fenced off to the public, a used car lot against a container terminal backdrop. But the port company has pledged to vacate the area within 10 years and many architects see the potential for people-focused redevelopment, with low-scale cultural facilities taking advantage of the harbour setting.

Stadiums can serve as catalysts for civic improvements. Cardiff's Millennium Stadium, built for the 1999 Rugby World Cup, is credited with breathing fresh life into the city's port precinct. Mallard points to an example closer to home: Wellington's Westpac Stadium.

Five years after it was opened, a Berl study found the development had added more than just a sports venue to the city, while its economic impact (a net gain of $35 million a year) was three times higher than expected.

The stadium had "helped shift city development towards the port, with a number of developments set to make the area a vibrant and exciting place to work and play."

Stroombergen says the Cake Tin's location is the key. "It really helps having the stadium close to bars and nightlife in the CBD. The most successful events are the rugby games on Friday nights. Everyone just wanders down from the office and wanders back into the bars and restaurants afterwards."

Proximity to the railway station helps to draw fans from the Hutt Valley and Kapiti Coast and as far north as Manawatu. But is Wellington's experience a reliable guide? It does not face competition for moderate-sized events from stadiums such as North Harbour, Mt Smart or Eden Park at current capacity. Westpac can look full, and provide atmosphere, with far smaller crowds than a 60,000-seat venue needs. Yet it still hosts fewer than 20 major events a year. And, as the Berl Report noted, visitors from outside the region have been slightly below expectations.

The same concerns about costs and benefits and subsequent use surround Eden Park's $385 million proposal but the stakes are nowhere near as high. The expected $240 million boost to the Auckland region's GDP from the 2011 tournament alone goes some way to justifying the capital cost. Eden Park says its figures are robust; the waterfront stadium's cost won't be reliably estimated until August.

Can Auckland support four stadiums when Sydney, an established international city, cannot? The ANZ Bank was this week forced to take control of the Telstra Stadium, which owes it $140 million. Built for the 2000 Olympics, the 85,000 seat arena in the western suburbs has struggled to compete with the Sydney Cricket Ground despite excellent public transport and the ability to contract four of Sydney's professional league clubs.

Last year, only seven of 20 events attracted crowds greater than 45,000, the Sydney Morning Herald reported. "A crowd of less than 40,000 just doesn't work at the cavernous Telstra Stadium with little connection between spectator and player ... "

United States cities are littered with failing and disused stadiums built amid hoopla about economic benefits and urban regeneration.

"We have a kind of rule of thumb," said Robert A. Baade, an Illinois-based professor of economics and business, quoted in the Milwaukee Journal Sentinel. "We move the decimal point one place to the left and we're closer to what actually occurs."

London lessons planning an Olympic-sized project

Excerpts from After the Gold Rush, a report for London's 2012 Olympic bid, by a British think-tank, the Institute for Public Policy Research and Demos:

"Flagship projects are often associated with grandiose claims of economic growth, urban regeneration and community riches. They promise radical agendas of socio-economic change through which projects will transform problem places into opportunity spaces.

"A key element in the success of any event is the extent to which it generates ownership in local communities over the direction and outcomes of project spending and how regeneration aims and objectives are established and prioritised.

"New facilities and employment opportunities are often [assumed] to be of benefit to local communities. However, the trickle-down effects of flagship projects are notoriously erratic. For example, jobs in the construction sector are often tied to multinational companies whose labour is only partially drawn from surrounding areas.

"Even in economic terms, the track record of sporting projects is far from clear ... assessment of such developments similarly concludes that a new sports facility has an extremely small (perhaps negative) effect on overall economic activity and employment.

"The first step in promoting a Games, therefore, has to be honest public acceptance of its limitations and the promotion of realistic expectations.

"Rather than seeking to create a limiting consensus about how beneficial a Games would be, the process should be actively politicised so that a range of perspectives, costs and benefits are aired and debated."