The State would face a bill of more than €200 million to run the next America’s Cup yacht race in Cork if the Government wins a competition to host the event, officials have found.
The prospect of such large costs being incurred at a time of growing constraints on the public finances has raised the stakes considerably as Ministers await a formal cost-benefit analysis on the project.
“The host country is essentially liable to cover the cost of hosting the event. The case needs to be very strong and robust and has to stand up to independent scrutiny,” said a Government source familiar with the project.
Cork Harbour has been shortlisted, alongside Jeddah in Saudi Arabia and another location, to host the 2024 race for the oldest trophy in international sport.
But a Cabinet decision on whether to proceed with a final bid will depend on the overall cost of doing so. The Coalition is said to have an open mind.
Although Minister for Foreign Affairs Simon Coveney has championed the America's Cup project, the question of the State assuming a heavy financial burden to host the sailing contest is under close scrutiny in the Government given the pressures dealing with the Covid-19 pandemic are putting on the public finances.
The evaluation of bids will be carried out by Origin Sports, a London-based sports consultancy, whose chief executive Stewart Hosford is originally from Cork. He would not comment on potential costs but said hosting the race would provide "exceptional value for money".
Mr Hosford, who knows Mr Coveney on a personal basis, said: "If Ireland is successful they'll be successful on their own merit."
Ministers are scheduled to discuss making a final bid in mid-September after they receive a cost-benefit assessment due soon from EY, the business consultancy. EY declined to comment.
The Irish Government Economic and Evaluation Service, which conducts value for money analysis on policy, is also set to look at the proposal. That work is ongoing. But an informed Government source said "very preliminary assessments" suggest the State could be on the hook for more than €200 million to cover capital expenditure on infrastructure and race running costs.
A Government spokesman would neither confirm nor deny that such figures were under discussion.
“A detailed cost-benefit analysis is being prepared following a competitive tender process. This will be the basis for the final bid for the event, which will be first brought to Government for review and decision,” the spokesman said.
However, the likelihood of costs running into hundreds of millions of euro for an elite sporting contest has raised questions. One Government source said the money under discussion would “buy a lot of kit for grassroot sports”.
The Cabinet is also likely to look back at previous America's Cup contests. A recent review for New Zealand's government found that Auckland and New Zealand incurred "significant deficits" after hosting the last race.
These were attributed to lower-than-expected spending, partly due to Covid-19, and higher-than-projected public investment.
A negotiation with the New Zealand authorities to host the next race again in Auckland floundered over a disagreement on costs.
Origin will make a recommendation on final bids to Team New Zealand, the previous winners, who will select the host. Mr Hosford said the process was in the “final stages”, with the winning bid to be unveiled possibly as early as next month.