America's Cup: Economic Projections Are Beyond Optimistic

Sometimes it seems Ed Lee is not just the mayor but the official greeter of a city that relies, to an alarming extent, on tourist dollars. Last week, the city and America's Cup organizers announced a downsizing of the infrastructure and construction work tied to the pending race — a reduction in scale something like cutting Wagner's four-opera Ring cycle to an hour. But when asked what sort of economic impact this would have on San Francisco, Lee said there wouldn't be any — he still expects just as many visitors and just as much money to flow into the city as previously anticipated.

That might have been the "right" answer, politically, but it almost certainly isn't "correct." Every official estimate is based on a scenario that has become increasingly divergent from reality.

The often-cited figures of 8,840 jobs and $1.4 billion in economic influx trace to a report produced by Beacon Economics and the Bay Area Council Economic Institute in summer 2010. The Cup deal has, since that time, gone through more than half a dozen permutations. Also, the report's calculations are based on 15 sailing teams competing in the race itself — a total three to four times what race organizers now say they'd be pleased with. As a sporting competition and visual spectacle, the America's Cup should do just fine with four to six teams. But housing more than a dozen free-spending yachting syndicates in San Francisco for well over a year was a big part of how local businesses figured to rake in the bucks, accounting for more than a quarter of all Cup-related spending. Per the report, "Syndicates are expected to spend in the vicinity of $216 million. From this spending, the total increase in economic activity is on the order of $368 million, resulting in the creation of 2,287 jobs."

Along with talk of hundreds of millions in "infrastructure spending" which would ostensibly lead to thousands of jobs, the report bears scant resemblance to the conditions now facing the city. Plus, the term "job" isn't as straightforward as you'd think. What the report actually calculates is "labor years" — a measure of how much work is expected to be generated. Much of this work will be performed by extant job-holders, simply laboring that much harder, and, perhaps, earning a bit more scratch.

If these folks, however, put their extra tips and pay toward forming another America's Cup syndicate — well, that could change everything.

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