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Minister Grant Gibbons Ministerial Statement: America’s Cup Update

Thursday, February 25, 2016

Mr. Speaker, I am pleased to provide this Honourable House with highlights from an economic impact report of the Louis Vuitton World Series held in October, as well as an update on preparations for the America’s Cup in May and June 2017.

When Bermuda was selected as the venue for the 35th America’s Cup, some questioned Bermuda’s ability to manage such a major event. The successful delivery of the Louis Vuitton World Series here last October has gone a long way to answering that skepticism. It is fair to say that Bermuda was transformed for the three days of the event as a result of the enormous commitment by the combined teams of the ACBDA, the ACEA, the Corporation of Hamilton, security and health services, Government departments and hundreds of volunteers both on and off the water. Bermuda delivered the event with style, and thousands of Bermudians and visitors thronged Front Street, took to their boats and enjoyed world-class entertainment and sport. This extraordinary weekend also gave residents and visitors a taste of the excitement and international attention that we can expect during the Finals in 2017.

Mr. Speaker, back in October of 2014, we projected that the potential economic impact for the Bermuda World Series event would be an additional spending contribution to our economy of $1.7 million, a small part of the overall $250 million in spending we estimated would accrue from hosting the America's Cup. Yesterday, I had the pleasure of revealing highlights resulting from an economic impact report of the Louis Vuitton World Series prepared by a consultant seconded to the ACBDA from a local accounting firm.

I am pleased to report that the estimated economic impact in Bermuda generated by the event was approximately $8.6 million. This is $6.9 million, or 400 percent more, than the original 2014 forecast, largely due to the increased scale of the event and significantly more visitors than anticipated. It was estimated that during the week of the event, 1,499 visitors came to Bermuda specifically for the event, which resulted in 3,730 room nights and $2.6 million revenue for hotels, an increase of 43 percent over a typical October week.

The full report, “Louis Vuitton America’s Cup World Series in Bermuda, Economic Impact Highlights” is posted on the ACBDA Ltd. Website: www.acbda.bm.

The figures used in the assessment reflect spending that occurred in Bermuda from a variety of sources including:

  • Visitors to Bermuda;

  • Competitor Teams visiting Bermuda;

  • AC sponsors visiting Bermuda;

  • Media visiting Bermuda

  • The ACEA in Organizing the event;

  • The ACBDA in hosting the event;

  • The Government of Bermuda and other taxpayer funded entities in hosting the event; and,

  • The Bermuda public.

    In total it was estimated that the event generated approximately $6.1 million of spending from overseas sources into Bermuda. This includes spending by visitors on accommodations and food and beverage, by the ACEA, and by competitor teams that have not yet established operation in Bermuda, all of which represent a direct investment into Bermuda’s economy.

    The event also generated spending of $1.2 million by the Bermuda public and private sectors. This includes spending in relation to:

  • The staging of the America’s Cup Concert;

  • Infrastructure investment by telecommunications companies; and,

  • Spending by Bermuda public bodies: the Government of Bermuda, the ACBDA, the Bermuda Tourism Authority, the Bermuda Police Service, the Bermuda Hospitals Board and the Corporation of Hamilton.

    It should be noted that this $1.2 million combined with the $6.1 million in spending from overseas sources, generated $7.3 million spending in Bermuda – additional spending which would otherwise have not occurred.

    Additional spending by the Bermuda public in various areas such as retail outlets throughout the island, the America’s Cup Village vendors, the America’s Cup concert, restaurants, transportation, gas; and other marine-related expenditures, was estimated to be $1.3 million.

Mr. Speaker, it was estimated that approximately $281,000 in direct income from airport taxes, hotel occupancy tax and the tourism guest fee was generated by the event, but costs of approximately $916,000 were incurred by Bermuda public bodies. This resulted in an estimated net cost to Bermuda public bodies of staging the events of approximately $635,000.

The World Series did not happen without intense planning and the delivery of a wide range of complex and demanding work streams. These included the set up and clearing of the technical bases on our container docks, the organisation of the race course and a huge spectator fleet, the coordination of award-winning television coverage, and the transformation of Front Street into an exciting and entertaining venue with a concert stage. The reaction both internationally and locally was virtually universal in its praise for the organisation and the participation of Bermudians and visitors alike.

Bermuda rose to the challenge with literally hundreds of residents volunteering to assist in a wide range of services. It was estimated that volunteers donated approximately 4,000 hours of time. The monetary value of this contribution from volunteers was estimated to be approximately $600,000.

Mr. Speaker, I would also like to highlight the degree of international brand exposure Bermuda received as a result of hosting the event. Bermuda was seen on television by millions of fans around the world. The island hosted high-end sponsors of the America’s Cup such as BMW, Louis Vuitton, Bremont and Moet & Chandon. As our Premier said at the time, “Bermuda shone on the world stage”.

An independent media report commissioned by the ACEA provided the following broadcast media statistics:

  • 1.4 million viewers either watched the event live or watched full recorded coverage, including 320,000 in the UK, 240,000 in France, and 220,000 in the US. A further 6.7 million viewers received coverage through either news programming or sports magazine programming, which results in a total of 8.1 million viewers reached by TV programming.

  • 138 accredited media personnel representing 97 media outlets from 14 countries were on island for the event.

  • In terms of global media exposure, there are Broadcast agreements in place in over 100 territories around the world including Japan, Sweden, Brazil, China and India. Footage was also broadcast in the US on NBC Sports and in the UK on BT Sport and BBC Red Button.

  • The Social media impact was impressive: For example - 11 videos posted on Facebook by ACEA for the event reached 1.2 million viewers and received more than 18,000 Likes. That represents production and distribution that Bermuda does not have to pay for. Nor does that include YouTube distribution or the multitude of videos produced by the teams themselves.

    The independent media report also assigned an “equivalent advertising value” of $14.1 million to the television coverage of the event. This is the amount Bermuda would have had to pay in order to get the same marketing exposure by purchasing TV time.

    Mr. Speaker, we also need to recognize the direct benefits to Bermudians small businesses. Some 59 vendors in the event village provided general retail, entertainment, and food and beverage services, plus a further 40 businesses provided services to help run the actual event. The ACBDA’s partnership with the Bermuda Economic Development Corporation (BEDC) and the Chamber of Commerce is ensuring access to America’s Cup benefits by small business interests. For the World Series event, many of these vendors were new to retail, encouraged by the opportunities provided to them.

Finally, 150 students participated in the learn-to-sail sessions in the event village and the ACEA chartered the Bermudian and gave 530 school children and 75 teachers direct access to the racing.

Mr. Speaker, back in 2014, when we said “Bermuda, we are the America’s Cup”, we meant it. The delivery of the World Series brought the best of Bermuda to the fore, and it showed just how good we can be when the community works together. We must capture that spirit, harness its energy, and focus it now on the delivery of not just a few days, but a month and a half of activities in May and June of 2017.

Since October, I can assure Honourable Members that there has been no pause in the workload of the ACBDA. Immediately following the World Series events, the ACBDA undertook an intensive post-mortem. All of its 16 committees participated and the ACBDA is now working to further improve their working groups and the communications between them with an aim to smooth out any identified challenges for 2017.

At the forefront of the work is the development of the plans for the America’s Cup Village at Dockyard. The ACBDA, working with Bermuda Environmental Consultants, is well along the road of seeking input and participation in the development of those plans, which includes an Environment Impact Assessment document. This document will involve a full workup of all the necessary elements of Bermuda’s delivery of the AC village and its operation. It will include, for instance, details on transportation, sewage, the provision of water, the collection of garbage, as well as an assessment of various environmental issues. This process is engaging a wide array of Government departments, environmental groups, NGO’s, businesses and the public at large. In January two public meetings were held regarding the process. The ACBDA continues to welcome input as we move this planning process forward. These development plans will be submitted in March of this year.

Mr. Speaker, while not in the ACBDA’s initial remit, last year the ACBDA agreed to take on the role of facilitator and project manager for the delivery of the infill in the South Basin of the Royal Naval Dockyard in active partnership with the Ministry of Public Works and the West End Development Corporation (WEDCO). I am pleased to confirm that this $39 million WEDCO project continues to be on time and on budget. In the last few months, some 310,000 cubic yards of material have been delivered to the site: 165,000 cubic yards in the form of imported granite from New Brunswick and the balance coming from the dredging spoils of the North Channel. The reclamation process required maneuvering a ship larger than any that had worked in the south basin before – a complicated exercise at best. This was accomplished with expert assistance from our own Bermudian pilots and leased tractor tugs from Nova Scotia. The delivery of the fill required seven trips in total – and we should convey our thanks for a job well done to all involved.

With the completion of the delivery of the fill, the focus is now on the second phase of this project. This involves the fabrication and delivery of the sheet pile walls, which, once installed, will contain the fill, bringing stability to the new land reclamation. Work is also currently progressing on the design of the utility infrastructure that will sit below the surface and support the intended uses in the AC village. We are expecting to complete the infill project and hand over the site to the ACEA some five months ahead of our commitment.

Mr. Speaker, this is no mean feat. In addition to the main contractor, Cashman Dredging and Marine Contracting Company, 20 local companies have been involved in the infill project and the bridge that connects the infill to the mainland. This includes 15 subcontractors and five professional firms with a total of 60 local workers. Also, four overseas companies were engaged for tugboat services and the design of the open-cell piling for the infill.

The ACBDA has also worked in partnership with WEDCO and the Ministry of Public Works on the delivery of a new road from Pender Road down to Moresby Plain in Dockyard. Moresby Plain will be a key facility during the lead up to and delivery of AC35, and access to the Plain needed to be dramatically improved.

In addition to the infill project, the ACBDA is well along in the plan to transform the dockside of the south basin. The Oracle Team USA base was operational by late spring of 2015, and Softbank Team Japan is now finishing their base next to and west of Oracle. The ACBDA project team is well ahead of its timeline in completing the surface preparations of the dockside. This has involved the removal of asbestos from the old buildings, their demolition and preparing the surface on which the bases can be erected.

Mr. Speaker, in addition to the land reclamation project, some 390 Bermudian workers have been gainfully employed in America’s Cup related projects in the Dockyard, valued at over $4.9 million. This included work specific to the team bases and other buildings that house Oracle Team’s administration and training facilities. Additionally, approximately 70 subcontracting companies were involved in these projects. This amount does not include local spending associated with sectors such as transport, shipping, shipping agents, hotels and airlines.

The ACBDA is currently in detailed conversations with Groupama Team France and Landrover BAR teams that will be situated on the dockside. We anticipate both these teams will have completed their bases and will be fully operational by mid-December of this year. As Honourable Members will be aware, Artemis is in the last stages of completing their base on Morgan’s Point. They employed over 70 local workers for the project. Artemis will also have a team base in Dockyard that will be erected later on the reclaimed land. The final team, Emirates Team New Zealand, will also have a base there.

Mr. Speaker, our current projections show at least five of the competing teams will launch the new 50ft boats, which will compete in the AC35, in Bermuda. It is worth noting that there are already four of AC45 sports boats located and training in Bermuda, with more to come. The sports boats are significantly faster than the boats used for the World Series – and everyone thought those were fast! The sports boats are effectively the platforms used to design the new 50s with a huge array of electronic data feeds that capture the information required to optimize the design of the new boats.

In addition to the very obvious changes occurring in the South Basin of Dockyard, I should point out that we are already seeing legacy impact. Building #9, the building that runs parallel to and behind the clock tower building in Dockyard, has been completely and attractively renovated and is now substantially occupied by Oracle Team USA. When Team Oracle departs, WEDCO will be left with a renovated building with enormous potential.

Mr. Speaker, when the initial projections for team relocations were made for the America’s Cup, we were conservative in projecting the amount of team and family members who would be in Bermuda in 2015 and 2016. Those projections have already been well exceeded, with some 160 team members along with over 170 family members currently living in Bermuda. In order to sustain their bases and meet their residential needs they contribute to all sectors of our economy including restaurants, transport services, construction and trades, wholesale and retail operators, security services, marine services, shipping and forwarding companies, telecommunications providers, service industries, small businesses and real estate. As an example, taking housing alone, ACEA, Oracle Team USA and SoftBank Team Japan have already rented over 80 houses and apartments in the central and western parishes with an annual rental value to landlords of $4.9 million.

Since April 2015, Oracle, Artemis and Softbank Team Japan cumulatively spent over $10.2 million on their team base operations, and as Softbank Team Japan and Artemis fill out their teams and other teams establish bases in Bermuda, these benefits will continue to grow.

Mr. Speaker, in providing this update, it would be remiss of me not to bring to Honourable Members’ attention two America’s Cup related programs that have brought enormous added value to Bermuda. First, the Endeavour Community Sailing Program. The original vision of Sir Russell Coutts, CEO of the ACEA, the Endeavour Program is up and running, introducing sailing and the academic STEAM program – that stands for science, technology, engineering, arts and math – to young Bermudians throughout the education system. Last year, the Endeavour Program partnered with the St. George’s unit of the Bermuda Sea Cadets Corps to renovate the Sea Cadets facility at the TS Admiral Somers building. Now Endeavour and the Sea Cadets share a dramatically improved facility. All of the boats, tackle, and staffing costs have been donated by the ACEA and supporting companies.

Since last summer, over 1,000 Bermudian students have been exposed to Endeavour- related outreach programs, including in-class STEAM lessons, after-school sailing programs, Oracle Team USA and Spirit of Bermuda presentations, and America’s Cup team-base tours. In addition, 48 teachers participated in a two-day STEAM training session in September. Five out of six of the Endeavour Program recent hires are Bermudians, including two coordinators, two senior instructors, and two freelance instructors.

In the next few weeks, the West End Endeavour Fort will rise at Dockyard, close to the berthing facility for the Spirit of Bermuda. This fort is a modern facility comprised of an integrated container structure. Next year it will move to a permanent home on the landfill site and will double the reach and capacity of the Endeavour Program.

Mr. Speaker, the Endeavour Community Sailing Program has received significant support from private-sector sponsors, which ensures funding beyond the America’s Cup, and we will likely see many of these young Bermudian sailors competing in global sailing events in the future. We should be grateful to the ACEA, the Endeavour Community Sailing Program sponsors and the program volunteers who have brought this wonderful opportunity to Bermuda’s young people.

Mr. Speaker, the second value-added program I wish to bring to the attention of Honourable Members is the Bermuda RedBull Youth Team. Again, through the efforts of Sir Russell Coutts and Oracle Team USA, Bermuda has been given a unique opportunity to field a team in the RedBull Youth America’s Cup races, which will be held during the AC events in 2017. I am pleased to advise that the Red Bull Youth Bermuda Committee has seized this opportunity and is well along the road to identifying the Bermuda team.

There have been a series of tryouts, and Bermuda’s elite young sailors and athletes have responded to the challenge. The RedBull Bermuda committee has now retained the services of world-renowned coaches, they are ordering boats and equipment, and training will begin in earnest. The team will comprise of 18 athletes, six squad members and 12 support staff. Having a team in this competition is both an honour and a privilege, and brings a personal, home team, element to Bermuda for the America’s Cup. This team is also relying on public and corporate sponsorship, and while those efforts are going well, I encourage our community to engage and provide support to our young athletes.

Mr. Speaker, the worldwide sailing community has reacted positively to Bermuda’s selection as the host venue for the America’s Cup by selecting our island as the site of additional races. In December 2015 we saw some 60 sailors plus their family members arrive in Bermuda to compete in the Amlin Bermuda Moth International, the M32 winter series will bring more than 160 individuals to Bermuda, and in March the RC 44 will hold its Bermuda Cup here, bringing nine crews of fifteen plus their support staff. And these races are just the beginning. I believe there is real potential to grow our already positive reputation as the host of international sailing events, all of which will have a positive economic impact on Bermuda.

Mr. Speaker, we are less than 500 days away from the commencement of AC 35th America’s Cup. To some this may seem a long time. However considering the amount of work that still has to be done and the high standard expected of Bermuda, it is, in fact, a very short period. Having seen how Bermuda came together and delivered a spectacular World Series event in October, I am confident in our ability to produce another spectacular world-class event in 2017.

In January 2015, this Parliament approved the creation of the ACBDA, the team charged with delivering Bermuda’s commitments contained within the agreement between the Government of Bermuda and the Americas Cup Event Authority. It has always been our intention that the ACBDA should be a lean, efficient and tactical organisation. That team has remained small, but it has created 16 committees, which are manned by over 200 community volunteers. We may not see the work that they are doing, but their contributions cannot be overstated. Special thanks go to them, as well as the ACBDA and ACEA teams and Government representatives who go about their excellent work on a daily basis with dedication and enthusiasm.

I look forward to providing regular updates as we move forward to the highly anticipated America’s Cup events in May and June 2017.

Thank you, Mr. Speaker.

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