Consultants who examined the Government’s bid to host the America’s Cup boat race in Cork said the event could cost “just over” €600 million before cutting the estimate back to €200 million-€300 million, The Irish Times has learned.
The sharp variation in figures provided in two draft reports by EY is understood to have damaged the Department of Sport’s confidence in the projections.
Minister for Sport Catherine Martin has told race organisers, who expected a formal bid last Friday, that the Government needs another six months to consider doing so because of the cost issues involved.
The race organisers on Friday said they were “extending the selection period” for bidders to work through “final details” and provide further information required.
The other shortlisted bids include one from Jeddah, Saudi Arabia. Although the Spanish city of Valencia has withdrawn, a Spanish government bid remains on the table. The organisers are also considering a new approach to host the event in Auckland, New Zealand.
Doubts over the financial projections for a formal bid from Ireland have intensified resistance within the Coalition to the project, which was championed by Minister for Foreign Affairs Simon Coveney.
Although the Government has kept its options open, some observers believe there is little prospect of a bid going ahead.
Net negative
A source familiar with the cost-benefit analysis documents said the first EY draft, in early August, set out three scenarios, with the cost of running the race set between €400 million and a sum slightly in excess of €600 million.
In two of the three scenarios, the cost-benefit assessment was net negative to the State, meaning there would no financial benefit from hosting the event and that the State could incur costs as a result.
The second EY draft, in early September, set out scenarios in which the cost of running the race was €200 million-€300 million, with a net-positive cost benefit assessment in each case.
The source said such changes raised serious questions in the Department of Sport. “When the figures changed so dramatically, how can we have confidence?”
Asked about such concerns, the department said “considerable further detailed technical examination is required” after the analysis highlighted the preliminary and “best estimate” nature of the capital and operational costs.
The department is understood to have said there were State-aid concerns around the investment required in Verolme dockyard. It had questions over the governance of assets funded by the State for the race and questions also about the constrained timeframe for the submission of the bid.
Extension request
Origin Sports, the London-based sports consultancy that is examining bids, wants a meeting with the Government to discuss its request for an extension.
“The bid committee have received a request for a further six months and we have responded saying ‘how about we have discussion about what’s required?’ and saying ‘we can provide whatever assistance is needed’,” chief executive Stewart Hosford said.
“If both parties are convinced that six months are required, then the bid committee can consider whether or not they can work in that timeline.”
The Department of Sport had concerns about the requirement for an upfront payment to €25 million if the bid was successful and a requirement not to hold any competing public or private event in Cork if the bid was successful.
One source questioned whether that would raise a question over an event such as the GAA Munster finals being held, but Mr Hosford dismissed that notion.
“The clause is a standard clause whose only intention is to ensure there’s no other large competing event at the same time, such as the Tall Ships race being the week before or the week after.”
