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Ministers were warned plans to host the America’s Cup yacht race in Cork were “overly optimistic and laden with risk” before the Cabinet finally scrapped Ireland’s bid last month, an unpublished Government report reveals.
The decision ended talks under way since January 2021 when the first approach about hosting the race was made to Minister for Foreign Affairs Simon Coveney. It took three months for the Department of Sport to be told of a potential bid – and papers prepared for Minister for Sport Catherine Martin show that an expression of interest had already been made by the time the Department of Foreign Affairs approached her department.
First contested in 1851, the America’s Cup is the oldest trophy in international sport. Attracting big corporate sponsorships and high-spending teams, the event is prestigious.
But the promise of major spin-off benefits for Cork in return for a large State investment in the race met resistance in official circles, and some Government figures said high expenditure in an elite sport would “buy a lot of kit for grassroot sports”.
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A report prepared for Ms Martin shows how a draft contract submitted by the race organisers – America’s Cup Events/Emirates Team New Zealand (ETNZ) – was “weighted very much in favour of the rights holder”. Although that was “not unusual” as an opening position, the report said an intense negotiation would be required to reach an acceptable compromise.
Officials in Ms Martin’s department also expressed anxiety about “very significant costs” and potential cost overrun, saying €66 million would be needed for capital projects such as marinas at Haulbowline Island and €115 million for day-to-day current spending.
Before advising that the Government should not proceed with a formal bid, the officials also warned of “severe deliverability challenges”. They cited concerns expressed by the planning and construction experts as well as the Departments of Housing and Defence and Cork County Council.
The Cabinet followed the officials’ recommendation in late March, resolving to withdraw from the contest to host the 37th America’s Cup race in 2024 or 2025. The event organisers said the next day that they had chosen Barcelona as the race venue.
The Ministers’ decision came 14 months after London-based consultants Origin Sports – which ran the venue-selection process for the rights holders – approached Mr Coveney. Origin’s chief executive, Stewart Hosford, is originally from Cork and is known on a personal basis to the Minister for Foreign Affairs, who is himself a keen sailor.
Mr Hosford told The Irish Times last year that the Government would be successful on its “own merit” if it prevailed in the contest to host the race, adding that the event would provide “exceptional value for money”.
Although Mr Coveney championed the bid, it faced scepticism within the Coalition and in official circles, not least because pandemic pressures were bearing down heavily on the public finances. Fiscal constraints have since tightened considerably because of fallout from Russia’s invasion of Ukraine.
In their assessment for Ms Martin, released after a Freedom of Information request, officials indicated that an expression of interest had already been made before her department was told about the possibility of a bid.
“In late April 2021, this Department [of Tourism and Sport] was made aware by the Department of Foreign Affairs of the potential bid after an expression of interest had been submitted and was asked for assistance in regard to conducting a cost benefit analysis,” said the report for Ms Martin. The same point was made in the Cabinet paper grounding the recommendation not to bid.
Asked by The Irish Times about the report’s findings, a spokesperson for the Department of Foreign Affairs said it had no comment to make.
‘Low benefit to cost ratio’
The report for Ms Martin pointed to a “low but positive benefit to cost ratio”, adding there were gaps in the analysis and concerns over deliverability. The need for capital investments and infrastructure upgrades was also cited, and it was resolved last autumn that months of further analysis would be needed.
The project was found to have a “positive economic benefit-to-cost ratio” but the report called for the opportunity cost of the financial investment to be considered. “There is a significant threat to Ireland’s international reputation as an event host should this event not be delivered or be delivered to a less than acceptable standard.”
The potential benefits from hosting the race included America’s Cup teams’ spending, tourism, international profile through advertising, the potential residual value of any capital infrastructure such as marinas, and potential sponsorship revenues for the exchequer.
The report also cited “non-monetised” potential benefits such as the impact on increased participation in sailing, foreign direct investment and “national pride, joy, etc”.
But it also warned in sharp terms of risks and negative aspects, saying the earliest point for infrastructure delivery was likely to be “well past the race window” even if the event was moved back to 2025.
“It is not possible to make any assurances about the delivery of the required infrastructure required for this event even if the rights-holders agreed to defer the event to 2025 and that it is much more likely than not that the infrastructure would not be in place in time,” it said.
Citing construction and planning requirements and “relatively short” timelines, it also warned of “multiple risks” to successful delivery and cost overrun.
Expert analysis point a delivery estimate for Haulbowline in the third quarter of 2025. “However, the department has consulted with the other stakeholders who have stated that even this projection is overly optimistic and laden with risk.”
The Department of Housing noted the plans were subject to “numerous” planning processes and approvals. “They have also highlighted the issue of judicial review and the negative effects this could have on projected timelines.”
The report added that Cork County Council was concerned that enabling projects in the Cork area were not fully taken into account.
In addition, the Department of Defence indicated that time estimates were “overly optimistic” even when accounting for significant additional time being allowed.
“They base this on their direct experience of other works on Haulbowline Island and within Cork Harbour. They have also made clear that the current remediation plans do not match the event requirements and that further costs could likely be expected in addition to the costs already highlighted by the contracted quantity surveyor.”