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Tuesday, December 10, 2013

America's Cup: Purported $364 Million in Revenue Still Comes With Big Question Marks

Posted By on Tue, Dec 10, 2013 at 11:15 AM

click to enlarge rsz_seamonsterscover.jpg

The number-crunchers who projected the America's Cup would reap San Francisco $1.4 billion, then heftily downgraded to $900 million have released a tentative actual haul: $364 million.

That's still a lot of money, especially if arranged in two piles. This is portrayed as spectacular news; an upbeat press release described the Cup as "an historic event.

Less historic is that, as long anticipated, private fund-raising to offset the city's costs came up woefully short; city taxpayers are on the hook to the tune of at least $5.5 million. Also, despite the very best efforts of the economists who have, repeatedly, whittled down their projections, difficult questions remain regarding exactly how much money this event really generated.

When asked just how the visitor spending numbers bandied about in today's Bay Area Council Economic Institute report differ in any way from the spending numbers generated by the hordes of out-of-towners habitually invading San Francisco during peak tourist season, the study's chief author forthrightly responded "it's difficult to know."

See Also: The big winner and many losers of the America's Cup

A PowerPoint of Bay Area Council-Generated Cup Data


Jon Haveman goes on to note that, yes, "there probably was some displacement of tourists" -- that is, America's Cup visitors merely replaced or even crowded out those who'd have come here anyway.

When further asked how one can discern that the estimated 700,000 America's Cup visitors are more than San Francisco would have received anyway during the summer months, he again admits "it's not clear." He states, however, that this year's hotel occupancy rates are higher than last year's.

That's true -- but following this path leads to a place America's Cup boosters might fear to tread.

Hotel occupancy rates were marginally higher in 2013 than '12 -- but only by between 0.3 percent and 1.5 percent during the summer months. But, in every month, San Francisco's occupancy levels grew at lower rates than those of the other Bay Area counties compared to the prior year. So it's very difficult to say that the America's Cup boosted San Francisco's hotel numbers. And while city hotels charged about 10 percent more this year than last year, that was a pattern that began long ago.

When asked why the current economic numbers are so much lower than projections from as recently as March -- when it was clear only a handful of teams would compete -- Haveman says that the current estimated attendance of 700,000 is far less than the hoped-for 2 million those figures were based on.

(The $900 million figure from March includes estimated returns from the city's cruise ship terminal; throw that into the mix now and the current predicted haul tops $550 million. But that, too, is a dicey proposition. The terminal's prohibitive cost kept it from being built for years until pressure to transform it into the epicenter of the America's Cup led to ground being broken in 2012. E-mails penned by Port director Monique Moyer obtained by SF Weekly lamented that the terminal might bankrupt the Port. Earlier this year, Port officials admitted the terminal still might bleed $611,000 a year).

Clearly some money -- in fact, lots of money -- was generated via the America's Cup. But it's also clear the event was fantastically oversold. As a city official instrumental in setting up the Cup deal told SF Weekly in September, "It's great the city hosted something like this. But the totality of what it took to get this? It's breathtaking. It's so uneven. It's so disproportionate. All of that -- delivered this."

A financial report from the Board of Supervisors Budget and Legislative Analyst is pending in a week's time, perhaps two. The mayor's office, meanwhile, is on line to submit an initial deal to Larry Ellison's people to host the next cup by Dec. 22.

You've got to spend money to make money. What's at stake is who's going to be spending and making that money. And how much.

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About The Author

Joe Eskenazi

Joe Eskenazi

Bio:
Joe Eskenazi was born in San Francisco, raised in the Bay Area, and attended U.C. Berkeley. He never left. "Your humble narrator" was a staff writer and columnist for SF Weekly from 2007 to 2015. He resides in the Excelsior with his wife, 4.3 miles from his birthplace and 5,474 from hers.

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