MyPE

Community Business Directory, Event Listings, News and Views from Gqeberha, Nelson Mandela Bay

Let’s Box Clever and Maximise the Return from Watersport, Specifically Sailing

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For countless years Port Elizabeth and then Nelson Mandela Bay have touted our positioning as the ‘Watersport Capital’ of South Africa.

And yet, we spend more money on other sports and our Nelson Mandela Bay Stadium than in the promotion of what is essentially a free stadium area right on our beachfront.

According to figures gleaned from many sources the benefit to the city from domestic tourism generated as a result of rugby and soccer per annum pales into significance when compared with the benefit from one high profile foreign sailing event.

The natural occurrence here is to compare what is spent on the two sports that occupy the Nelson Mandela Bay Stadium – Rugby and Soccer – with a sport like sailing.

Countless experts will tell you that tourism is the wave of the future and that getting foreign tourists to stay more than one bed night in any city is the real aim. Why? Because they spend more and bring valuable foreign currency into the country.

Let us look seriously at the related spend bringing foreign and domestic tourists to Port Elizabeth for our traditional sports and anchor tenants of rugby and soccer and then do a pie in the sky estimate against a sport like sailing.

I have taken the numbers quoted from many (38) different sources and averaged them to get the figures below. I have used the conservative figures where possible.

Costs:

  • Nelson Mandela Bay Stadium build cost – R2 000 000 000
  • Nelson Mandela Bay Stadium annual cost – R60 000 000
  • Rugby Team Cost per annum – R23 000 000
  • Soccer Team Cost per annum – R16 000 000
  • Watersport ‘Stadium’ build cost – R0
  • Watersport ‘Stadium’ annual maintenance – R0
  • Cost to bring a high profile sailing event to Algoa Bay – R7 000 000 and up

Rationale:

  • Rugby – 40 employees (players and support staff) at an average of R800 000 each per annum
  • Soccer – 50 employees (players and support staff) at an average of R350 000 each per annum
  • Sailing event – anywhere from R7 000 000 to R21 000 000 and up per annum (In other words: we could hold 2 000 high profile events for the build cost of the stadium OR 3 high profile sailing events for the cost of the stadium’s annual maintenance)

Revenue Streams:

  • Stadium from Rugby, Soccer, sponsors, sales – R50 000 000 per annum
  • Sailing – Unknown as no ticket sales. Money Sponsors could cover the entire running cost.

Benefit to Nelson Mandela Bay:

Between January and June 2016 South Africans made 12.7 million domestic trips and spent R15.3 billion – an average of R1 205.00 per night

  • Tourism from Rugby and Soccer – based on bed nights for people travelling to Port Elizabeth to watch/play games and estimated at around 5 000 people per annum requiring 7 500 bed nights valued at R1 205.00 per night = R9 037 500
  • Tourism from sailing – high profile international regattas typically have the most sailors/spectators and support personnel in the city for at least two weeks. The 60th SAP 5O5 World Championships hosted by the Algoa Bay Yacht Club (ABYC) in 2015 saw 150 foreigners in the city for two weeks, which at figures from Stats SA, equate to a foreign spend of R11 634 000 for the two weeks. Add the 4 weeks before the event plus two weeks after the event for build and break down and the numbers ramp up significantly.

In 2013 foreign tourists spent R74 200 000 000 in South Africa over 13 392 566 bed nights for an average spend of R5 540.00 per day



High profile sailing events like the Volvo Ocean Race and Extreme Sailing come to the city at a hosting/naming cost which can be anywhere from R7 million and up per annum. Typically an international event will be hosted for three years in one venue. Most estimates of ROI in such a high profile events are in the 5:1 times ratio. Because of the nature of the events most tourists stay much longer than 1 night in the host city.

When an event like the Volvo Ocean Race visits a city like Cape Town it is quite common for all accommodation available to be fully booked along with a dearth of hire cars. Stopovers on a race like the Volvo Ocean Race range from from a 24-48 hour pit-stop, to shorter form stopovers of five days, through to traditional ‘two weekend’ stopovers with full activation – obviously each has an increasing cost.

The City of Cape Town has released estimated benefits from the Volvo Ocean Race which receives immense and excellent coverage on the Internet, TV and social media. The tourism destination marketing exposure for Cape Town was estimated at R78.8-million for the 2011-12 VOR. The economic impact for Cape Town is also impressive, generating close on R300 million. The boat-building industry alone generated R5.9-million during the last stopover, creating jobs and providing an outstanding platform to promote the boat-building industry. Obviously the City of Cape Town has the added benefit of an attraction like the V&A Waterfront which capitalises on the many additional feet passing through, whilst we are still talking about a PE Waterfront.

These international events always leave a legacy behind in terms of development of the sport and one such legacy for Port Elizabeth could be the establishment of a one-design sailing circuit with the newly launched Cape 31. Six yachts all in different corporate livery with two permanent employees could be used for local, national and international regattas each year. To run such a programme will involve a capital cost of R14 000 000 and annual running costs of R4 600 000 which could be offset by one regatta a year attracting foreign sailors paying charter costs of R240 000 (R40 000 per yacht) for the fleet, spending 180 bed nights (72 sailors, partners and support personnel at 5 nights each) in the town for a benefit of R1 994 400. The rest of the money could come from corporate sponsors and ad-hoc charter fees to local and national sailors for events such as Algoa Bay Week, Vasco Da Gama Race, Mykonos, Mossel Bay and Lipton Cup races (if the L26 is scrapped as the yacht of choice).

At the end of the day:

  1. The stadium very conservatively costs the ratepayer a Million Rand per month with a tourism benefit of R750 000 per month whereas

  2. An event like the 60th SAP 5O5 regatta cost the ratepayer NOTHING with a tourism benefit of R969 500 per month OR R11 000 000 for two weeks!

Studies on lower profile events than the VOR have shown that host cities will typically host nearly 100 000 attendees with anywhere from 30 to 75% of them having flown in from outside the city. Even if such an event only brings 5 000 foreign tourists spending three days in Port Elizabeth the estimated economic benefit from that alone is R83 100 000. The conservative in me estimates that we may have only 50 000 attendees (local, national and international) to a high profile international sailing event over two weeks in Port Elizabeth, though.

Just two high profile sailing events per annum will far outstrip the tourism spend by rugby and soccer fans.


Highlights of the 2015 SAP 5O5 World Championship – Day 6, Algoa Bay Yacht Club, Port Elizabeth

The ‘trick’ for Nelson Mandela Bay will be to get a direct return on the bringing of tourists to the City, on the ratepayer Rand, from the tourist entities that directly benefit.

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Alan Straton

Chief Cook, Bottle Washer and Broom Mechanic at MyPE
Passionate about Port Elizabeth and definitely NOT packing for Perth. Alan's ethos is epitomised in the words of Nelson Mandela; "I have fought against white domination and I have fought against black domination. I have cherished the idea of a democratic and free society. If need be, it is an ideal for which I am prepared to die." See more articles by Alan.