Emirates Team Zew Zealand and Oracle Team USA during America's Regatta in September. (Jamie Squire/Getty Images)
Emirates Team Zew Zealand and Oracle Team USA during America’s Regatta in September. (Jamie Squire/Getty Images)

The America’s Cup — remember that?

Later this month, San Francisco Mayor Ed Lee is due to submit the city’s formal proposal to host the 35th America’s Cup in 2016 or 2017. Right on cue, we’re getting a glass half-full/half-empty debate about how much of an economic benefit the 2013 Cup delivered to the city.

The Bay Area Council Economic Institute is providing the benchmark for the discussion. The organization released an analysis of the economic activity generated by this year’s America’s Cup, a report that came with two scenarios:

  • In scenario 1, the Cup was responsible for $550 million in economic activity and created more than 3,800 jobs. The crucial footnote: those estimates count the impact of redeveloping Pier 27, part of the main spectator venue for the Cup that will now serve as the city’s cruise-ship terminal.
  • Scenario 2 excludes the cruise-ship terminal from consideration and finds overall economic impact was $364 million in economic activity 2,900 jobs were created.

Those findings, which included $280 million in spending by the four teams that eventually competed in the Cup and its preliminaries, prompted Sean Randolph, the president of the economic institute, to enthuse in a press release:

“The $550 million in economic activity generated by the America’s Cup is substantial. The activity benefited hundreds of small businesses and other employers in San Francisco and the Bay Area and produced tax revenue that supports a wide range of important city services.”

Mayor Lee issued a statement, too:

“Hosting the 34th America’s Cup in San Francisco showcased our beautiful city to the world and brought thousands of new jobs, long-overdue legacy waterfront improvements, international visitor spending, and a boost to our regional economy. Our investment brought in significant revenue to the city and the lessons we learned will help us deliver even better world-class events in the Bay Area in the future.”

That’s the glass-half-full part of the discussion about the event’s economic impact. What no one is rushing to mention is that the numbers are a fraction of the impact the economic institute estimated in 2010 and are well short of even a scaled-down forecast issued last March. In the first estimate, the organization said the America’s Cup could bring $1.4 billion in increased economic activity, dwarfing events like the Super Bowl.

But the caveat for the early report was that no one knew how many teams might compete or what the regatta format would be. Based on earlier Cup events, organizers predicted as many as 15 teams might compete for the prize in 2013. As it turned out, only four teams that eventually appeared to race — Oracle Team USA as Cup defenders and teams from New Zealand, Italy and Sweden as challengers. The small number of teams led the economic institute to trim its impact estimate by a half-billion dollars, to $902 million.

So, today’s numbers might be disappointing if you go by those earlier estimates.

But here’s where the economic-impact glass really turns half-empty: In hosting the event for Oracle billionaire Larry Ellison and his America’s Cup Event Authority, the city reportedly incurred $20.7 million in expenses to host the event for items like police overtime and traffic and crowd control. A fund-raising effort to defray those costs fell short, and the San Francisco Chronicle reports that, despite millions in tax revenue generated by the Cup, the city is still $5.5 million in the red.

Supervisor John Avalos, a leading critic of the city’s deal to host the Cup, told the Chronicle isn’t happy about the deficit:

“A $5.5 million deficit, all for a yacht race for billionaires. The whole event has been nothing more than a stupefying spectacle of how this city works for the top 1 percent on everyone else’s dime.”

But Board of Supervisors President David Chiu says the money was well spent. ‘While the economic boost fell short of initial expectations, it’s definitely worth a modest city investment to generate hundreds of millions of dollars for our local economy,” he told the Chron. “The race ended up being pretty exciting, too.”

  • Paul

    Avilos: Thumbs down – – Everybody I know who watched the races are not billionaires. (what an buffoon…..)
    Chiu: Thumbs up – – Much more appropriate comment. True and honest.

    To be frank, how many major city event make a “profit” for the city anyway. Yes the city is reimbursed to the maximum extent it can be, but is it always a break-even or profitable outcome? No way. Are the pride parades and marathons profitable enterprises for the city every time? I sincerely doubt it.

  • JimmyFoo



Dan Brekke

Dan Brekke is a blogger, reporter and editor for KQED News, responsible for online breaking news coverage of topics ranging from California water issues to the Bay Area's transportation challenges. In a newsroom career that began in Chicago in 1972, Dan has worked as a city and foreign/national editor for The San Francisco Examiner, editor at Wired News, deputy editor at Wired magazine, managing editor at TechTV as well as for several Web startups.

Since joining KQED in 2007, Dan has reported, edited and produced both radio and online features and breaking news pieces. He has shared in two Society of Professional Journalists Norcal Excellence in Journalism awards — for his 2012 reporting on a KQED Science series on water and power in California, and in 2014, for KQED's comprehensive reporting on the south Napa earthquake.

In addition to his 44 years of on-the-job education, Dan is a lifelong student of history and is still pursuing an undergraduate degree.

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