They called it the slap that reverberated around the world. A wealthy and privileged, angry man arrogantly displaying his lack of respect for a long established institution and the faithful community that had blindly supported him. No, I’m not referring to the infamous Oscars night incident, I’m talking about Grant Dalton’s acceptance of an offer from the city of Barcelona to host and fund the 2024 Americas Cup yacht race.
In 2017 a glowingly optimistic report from the Ministry for Business Innovation and Employment (MBIE) estimated that delivery of the Americas Cup event would bring in $600 million to $1 billion in benefits to the New Zealand economy. A more recent post-event report estimated that less than half of the $348 million public investment was returned in economic benefits during the 2021 event. The New Zealand government share of the funding was $133 million.
In fairness nobody forecast that the event would fall amidst a global disease pandemic. It is a testament to local organisers (and the success of the government’s pandemic response) that the event ran at all in fact. It is claimed that 68 million global viewers watched the televised component of the event and almost 39,000 (mostly domestic) visitors provided a much needed boost to the Auckland regional economy. But the taxpayer investment in the event came with no guarantees that Team New Zealand would opt for the 2024 challenge to be held in New Zealand and despite a further $99 million offered by the New Zealand government, hard man Dalton predictably followed the big money elsewhere.
That’s a shame for Auckland. But in light of some commentators complaining about the elitist nature of the sport, perhaps it is not worth throwing more good money after bad. In the meantime, about the same time the report on outcomes of their $133 million stake was being released by MBIE, the Ministry was also taking a decision to actually reduce their $3 million annual investment in the local innovation ecosystem. Founder incubators will be disestablished from June this year and it is already known that some will receive no further government funding.
Founder incubators were once at the heart of the innovation ecosystem, providing a basis for entrepreneur capability building, a channel for investment flows and a pipeline of high tech startups that added long term, high value jobs to our economy. Not as glamorous as yacht races or movies, but creating sustainable value that persisted long after the initial public investment. Last month I explained how our neighbours and competitors across Asia-Pacific have begun to reap the rewards of long term ecosystem investment amounting to hundreds of millions of dollars.
Which brings me back to the $99 million already budgeted for the 2024 Americas Cup investment. Would it not be more valuable to now allocate those funds towards developing our local innovation ecosystem? New Zealand is finally beginning to gain some traction in attracting foreign startup investors and we have a wealth of homegrown entrepreneurial talent ready to take on meaty global problems in areas such as climate, food and health. We need to capitalise on this opportunity as quickly as possible. Surely it is now time to invest in creating sustainable economic opportunities, rather than one off vanity events?
Paul Spence is a commentator and serial entrepreneur, a recently exited co-founder of a New Zealand based technology venture, a co-founder and director of Creative Forest, principal at GeniusNet Research and an advisor at ThincLab. You can follow Paul on Twitter @GeniusNet or sign up for a free weekly digest of startup, tech and innovation related events curated by him through New Zealand Startup Digest.