KPMG contacts:

Simon Trussler

Director, Economics & Disputes

T +44 (0) 7799 658 000

E simon.trussler@kpmg.co.uk

Ruth Anderton

Manager, Economics & Disputes

T +44 (0) 7795 047 312

E ruth.anderton@kpmg.co.uk

www.kpmg.co.uk

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This document is confidential and should not be disclosed or referred to in whole or in part, without my prior written consent. It should not be shown to anyone other than Land Rover BAR and its professional advisors, or used for any other purpose.

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Heather Sharp

Associate Director, Economics & Disputes

T +44 (0) 7917 267 216

E heather.sharp@kpmg.co.uk

Economic impact study of Land Rover BAR, the British America’s Cup Challenger, and the Louis Vuitton America’s Cup World Series Portsmouth 2015

A report for Land Rover BAR and TEAMORIGIN EventsNovember 2015

Great Britain:

A time to fly

Important Notice

This report, “Economic impact study of Land Rover BAR, the British America’s

Cup Challenger, and the Louis Vuitton America’s Cup World Series Portsmouth 2015” (“Report”) has been prepared by KPMG LLP in accordance with specific terms of reference (“terms of reference”) agreed between Ben Ainslie Racing (Holdings) Limited “the Addressee”, and KPMG LLP.KPMG LLP has agreed that the Report may be disclosed to any party on the basis set out herein. KPMG LLP wishes all parties to be aware that KPMG LLP’s work for the Addressee was performed to meet specific terms of reference agreed between the Addressee and KPMG LLP and that there were particular features determined for the purposes of the engagement.

The Report should not therefore be regarded as suitable to be used or relied on by any other person or for any other purpose.

The Report is issued to all parties on the basis that it is for information only. Should any party choose to rely on the Report they do so at their own risk. KPMG LLP will accordingly accept no responsibility or liability in respect of the Report to any party other than the Addressee.

Contents

1

2

3

4

Executive summary 1

1.1 The economic contribution of Land Rover BAR 1

1.2 The economic impact of the Louis Vuitton America’s Cup World Series Portsmouth 2015 (ACWSP 2015) 3

About the study 5

2.1 History of the America’s Cup, Land Rover BAR and the Louis Vuitton America’s Cup World Series 5

2.2 The economic framework for assessing the impact of Land Rover BAR and the ACWSP 2015 6

2.3 Sources of information 7

The economic contribution of Land Rover BAR 9

3.1 Land Rover BAR’s contribution to the GVA of Portsmouth and the UK 9

3.2 Generating employment and supporting skills 14

3.3 Generating wider economic and social impacts 15

The Louis Vuitton America’s Cup World Series Portsmouth 2015 21

4.1 Activity in the lead up to the event 21

4.2 Estimating the economic impact 21

4.3 Economic impacts associated with the hosting of the ACWSP 2015 23

4.4 The economic impacts of spectator and event attendees spending at the event 25

4.5 The economic impact of other attendees spending at the ACWSP 2015 event 31

4.6 The economic impact of the ACWSP 2015 event on local business 33

4.7 Potential longer term impacts 37

Executive summary

Having built its new base in Portsmouth and committed to create a sustainable long term business in the UK, Land Rover BAR is having a positive economic impact in the local area, as well as more widely across the UK.

The Land Rover BAR team undertakes a wide range of economic activity, all of which generates positive impacts in Portsmouth, the surrounding area, and across the UK: the design, building, testing and modifications of its America’s Cup boat; the testing of the new fully foiling catamarans, including the AC45F, used for the first time for racing in the ACWSP 2015; the training of the sailing team; and the collaborations with other organisations to develop and apply advanced technologies. All of this activity has a positive economic impact on both the local and national economy.

The America’s Cup, the oldest international trophy in world sport, dating back to 1851 when the Royal Yacht Squadron organised the first race around the Isle of Wight, has never been won by a British team. Sir Ben Ainslie and his British team, Land Rover BAR, are endeavouring to change that.

In July 2015 Portsmouth hosted its first Louis Vuitton America’s Cup World Series event (ACWSP 2015). This was the first event in the run up to the 35th America’s Cup challenge to be held in Bermuda in 2017.

The establishment of the British challenge to the America’s Cup in Land Rover BAR, the hosting of the ACWSP event in July 2015, and a further event scheduled in Portsmouth for July 2016, combine to make a significant contribution to the local and UK economies. Land Rover BAR and TEAMORIGIN Events (the organisation that successfully bid to host the ACWSP events) commissioned KPMG to conduct an economic impact analysis to assess the scale and nature of this impact.

The economic framework we have applied to assess these impacts captures a number of different effects including:

• Gross Value Added (GVA), a measure of the economic value of goods and services produced by a firm, sector or activity;

• employment and skills;

• wider spillover effects, for example from innovation and R&D activity and the business benefits from increased tourism and inward investment.

was generated from Land Rover BAR’s ongoing operations, of which £7.0 million is direct GVA, £8.3 million is indirect GVA generated in its UK supply chain and £3.9 million is induced GVA generated through additional spending in the UK by employees.

£19.2million

£18.5million

was generated from the construction and fitting out of the base in Portsmouth (supported by a £6.5 million grant from Government), of this £15.7 million is indirect GVA through the UK supply chain and £2.8 million is induced GVA.

Of this:

1.1 The economic contribution of Land Rover BAR

1

in the UK economy including indirect and induced effects.

£38 millionof GVA

£96million

The local GVA impact, comprising direct GVA and indirect GVA with immediate suppliers is £3.8 million in Portsmouth, £8.2 million across Hampshire as a whole.

We estimate that from July 2014 to June 2015, Land Rover BAR generated a total of

This represents a single year of activity for Land Rover BAR. However based on an indicative spending profile for Land Rover BAR’s full campaign, running from January 2014 to September 2017, we estimate that the total GVA generated from the campaign could be in the region of

1

In addition a range of further positive economic spillover effects stem from Land Rover BAR’s activity including:

• Supporting skills development in the wider community: Through its collaboration with local educational institutes, Land Rover BAR is active in supporting the development of skills in the marine sector. For example over the last year the team has provided seven apprenticeships, two internships and nine work experience placements, as well as having collaborated with Southampton City College on a boat building project involving 80 apprentices.

• ■ Supporting knowledge sharing and innovation: Land Rover BAR has developed a series of industry collaborations to support innovation and knowledge sharing, which have positive economic impacts. Collaborations with Land Rover, the Red Bull Advanced Technologies team (a division of the Red Bull Formula One group), and with BAE Systems, for example, allow Land Rover BAR to benefit from high-tech engineering capabilities and innovations developed within other sectors and translate these into the marine sector, helping the sector innovate and grow. The team has the ultimate aim of creating a ‘marine valley’ in the Solent akin to the F1 valley in Oxfordshire.

• Supporting the sustainability agenda: In its early stages, Land Rover BAR partnered with 11th Hour Racing, an organisation which promotes better practices and sustainability initiatives in competitive sailing e.g. fostering stewardship of the marine environment through education programmes; pioneering fuel-efficient boats; avoiding single use products and targeting zero waste to landfill through use of recyclable materials1. The team have been awarded the Olympic-inspired international standard, ISO20121, which provides a framework for delivery of sustainable operations throughout its activities. Beyond its own activity, Land Rover BAR has a sustainable procurement policy to help ensure that it works with responsible suppliers, licensees and partners.

• Media coverage has the potential to have raised the profile of Portsmouth and the UK marine sector: Wider positive impacts stem from Land Rover BAR choosing Portsmouth as its base in that the media interest in the team attracts focus on Portsmouth, which can increase visitors to the area and hence generate more local economic activity. The media coverage of the team has an advertising value equivalency (AVE)2 of £43 million (around £6 million of this is associated with the team’s coverage at the ACWSP 2015 and is included in the AVE for the event). Indeed, the support from the Government for the building of the base in Portsmouth was in recognition of the benefits that supporting Land Rover BAR would deliver for Portsmouth and the UK.

• Impacts through the 1851 Trust: Land Rover BAR’s work with the 1851 Trust aims to inspire and engage a new generation through sailing and the marine industry. The trust provides opportunities for young people, particularly from diverse backgrounds to participate in and take up sailing, which can help them develop social and non-cognitive skills with wider applications. The charity aims to more directly contribute to the future growth of the economy, particularly through education and the development of STEM3 skills targeted at the marine sector. Part of this will be delivered through the 1851 Trust Visitor Centre at the Land Rover BAR base which is expected to attract up to 45,000 per annum which could bring additional wider benefits to the area. By their nature, it is harder to quantify the economic impact of these effects but they can form an important part of the contribution made to the economy and to society more generally.

1 http://www.mueva.eu/projects/acteams/benainslie-racing/media/files/m783_bar-sustainability-report-2014-2015.pdf2 AVE is the monetised value of what the campaign additional coverage would cost if it were advertising space’, .3 Science, technology, engineering and mathematics

And through its activities we estimate that Land Rover BAR generated

in full-time equivalent (FTE) terms, comprising:

555JOBS

direct FTE jobs at Land Rover BAR, of which 66 are employees and 21 contractors. Many of these are specialist and

skilled roles, including the technical designers and specialist boat builders involved in designing, developing and building the state of the art America’s Cup catamarans, the sailing coach, meteorologist, and team engineers.

87

indirect FTE jobs in Land Rover BAR’s supply chain, supported by its procurement of goods and services from a

range of local and national suppliers.

320induced FTE jobs as a result of Land Rover BAR’s and its suppliers’ employees spending a portion

of their income in the UK.

148Copyright Land Rover BAR. Copyright TEAMORIGIN Events

2

The successful bid to host the ACWSP 2015 brought world class sailing to British shores.

Hosting such a large scale event generates a wide range of economic activity: spending by TEAMORIGIN Events and the event sponsors on hosting the ACWSP 2015; and spending by spectators and participants while at the event, including that of the America’s Cup team crews and their support teams, exhibitors and media personnel. These positive economic impacts benefit both Portsmouth and the wider UK economy.

This total was created through a range of channels:

• Supplier expenditure of £4.5 million was required to host the ACWSP 2015, 89% of which was with UK suppliers across 50 different industries. A further £0.25 million of public activation costs were spent by sponsors.

• A total of 248,505 spectators and attendees attended the ACWSP 2015 over the four days from the 23rd to the 26th July. This includes all those who watched from within the ticketed area, including VIPs; and the crowds watching from the shore line, on the big screens around Portsmouth, and from boats on the water; as well as teams, contractors, exhibitors and volunteers working at the event.5 Based on evidence collected through a survey of spectators and data provided by TEAMORIGIN Events, we estimate that overall spectator spending linked to attendance at the ACWSP 2015 was £5.9 million.

Based on spectator survey responses we estimate that a total £1.5 million of spectator spending on the ACWSP 2015 may have been at the expense of spending on other events/activities in the UK. This equates to

Even when this is deducted from the total GVA of the event, the incremental GVA associated with the event was £9 million.

And through the hosting of the event, and spending by spectators and attendees, we estimate that the ACWSP 2015 generated

for a single year in full-time equivalent (FTE)terms, comprising:

The figures above are a partial picture of the true contribution of the ACWSP 2015. This is because we were unable to quantify the full economic impacts of spending linked to the ACWSP 2015 due to data constraints. For example data on team expenditure were limited to accommodation and transport spend, and other daily expenditure data were not available. Nor were data available on the spending of the hundreds of UK media personnel, exhibitors and volunteers at the ACWSP 20156. Therefore, our analysis will underestimate the full GVA contribution of the event.

Furthermore the ACWSP 2015 event took place over a weekend in which there was bad weather that resulted in lower spectator numbers on some days of the event and the cancellation of the Sunday racing. The full potential economic impact of the event is, consequently, certainly higher, and possibility substantively so, than we have estimated for the event that actually took place. We estimate that if all those who had pre-booked tickets had attended the ACWSP 2015, the net GVA generated through spectator spending at the ACWSP 2015 could have reached £7.5 million, resulting in total GVA of the event of £12.2 million.

4 Event, 1851 Trust Visitor Centre Study, April 2015 5 Estimates of spectators outside of the ticketed areas are based on information from crowd counters on the number of

people watching big screens or watching the boats from the shore in Gosport and Gunwharf Quays, and entrance to the Portsmouth Historic Dockyard which hosted the team base and technical area which visitors could view.

1.2 The economic impact of the Louis Vuitton America’s Cup World Series Portsmouth 2015

1

Executive summary

This equates to

A further £0.4 million of identified expenditure was spent by teams, international media and VIP’s, equating to

£5.8 millionof GVA

£0.4 millionof GVA

We estimate that the ACWSP 2015 generated a net total of

in the UK economy, including indirect and induced effects.

£9 millionof GVA

for the UK economy. £1.3 million of which was generated in Portsmouth and £1.6 million across Hampshire as a whole.

£4.3 millionof GVA

A total of 248,505 spectators and attendees attended the ACWSP 2015 over the four days from the 23rd to the 26th July.

indirect FTE jobs within event suppliers, other businesses supported by spending of visitors

to the event, and their supply chains; and

160induced FTE jobs as a result of indirect employees spending a portion of their income in the UK. 15

£1.5million

175 JOBSNET

These combined generated

3

6 It was not possible to quantify the impact of the spending by these groups due to a lack of available information on where they are from (whether they are local to the area or not), whether they stayed overnight, and their levels of spending.

7 The Louis Vuitton’s America’s Cup World Series Portsmouth 2015 Media Report which collects coverage details from November 2014 until August 2015. Print/online coverage numbers were sourced from www.precise.co.uk, Broadcast and TV coverage was sourced from ww.tveyes.com

9 This is based only on coverage over the month of the event.

The positive economic impacts are reflected in the experiences of many local businesses in Portsmouth:

• Of those businesses surveyed following the event, 43% experienced an increase in sales during the event and 17% following the event.

• While permanent employment was not impacted for most, 20% of business survey respondents indicated that they took on additional temporary staff during the events. Anecdotal evidence suggests that for some businesses, existing employees worked more hours than usual, rather than additional employees being taken, though this would have an equivalent impact on incomes when paid at an hourly rate.

There may be a series of longer term positive economic benefits stemming from the ACWSP 2015, particularly in relation to potential increases in future visitor numbers to Portsmouth:

• Media coverage of the event has the potential to have raised the profile of Portsmouth and the UK from both a business and tourism perspective: The event had a wide global reach and hosted 118 media outlets from 15 countries. Coverage began in November 2014, when Portsmouth was announced as the host, and continued until after the end of the event in August 2015. Cumulative total viewing/readership audience reach, for the entire 10 month period, was 1,006,819,3397 across all media outlets; with TV and radio accounting for 57% of this. The AVE for the exposure over the entire period was £18 million in the UK with an additional £4 million from abroad9. A further £4 million would have been expected had Sunday’s racing gone ahead as planned.

• Future tourism may increase, generating additional economic activity through visitors’ spending in the local economy: Almost two-thirds of non-resident ACWSP 2015 spectators surveyed said they were very likely to return to Portsmouth or the local area for a reason other than attending a future ACWS event. And an additional 20% said they were fairly likely to return. Over a quarter of those who said they would return expected that they would return for a weekend or longer. This would add to the economic impact of the ACWSP 2015 from these visitors spending, for example, on accommodation, food and drink, and tourist attractions in the local area.

• Business interest in the area, and hence inward investment, may increase: The ACWSP 2015 attracted a number of high profile VIPs, including senior executives of large multinationals for example from America’s Cup teams and sponsors, providing exposure of the city, and the wider UK, and what they can offer to the business community. Longer term positive economic impacts are expected in one in six business respondents, with reports of increases, or planned increases in business investment as a result of the event.

• Social impacts can be delivered through the positive impact on volunteering and skills: The ACWSP 2015 engaged the local community, providing opportunities to gain valuable experiences and skills through the 1851 Trust’s Portsmouth Sailing Project and the ACWSP 2015 Wavemakers volunteering programme. Through their contribution to the development of transferable skills these programmes and activities have the potential to deliver longer term social and economic benefits.

While the value of these impacts cannot be measured in the short term, they have the potential to bring longer term business, tourism and social gains in the future and so add to the economic contribution of the ACWSP 2015.

“This year Portsmouth has been given international exposure after welcoming Land Rover BAR to the city and as UK host for the summer’s Louis Vuitton America’s Cup World Series.

“We are now capitalising on the world-class maritime and marine expertise in the city and wider area, and anticipate further industries choosing to locate in Portsmouth.

“Sir Ben Ainslie and his team, combined with Sir Keith Mills and Team Origin, have seen Portsmouth’s potential, and together with a range of stakeholders we’re taking this

forward to maximise the city’s potential over the next few years.” – Councillor Donna Jones, Leader of Portsmouth City Council

4

10 Land Rover BAR “The team to bring the Cup home”. 11 Ibid.

About the study

2.1 History of the America’s Cup, Land Rover BAR and the Louis Vuitton America’s Cup World Series

The America’s Cup is the oldest international trophy in world sport, dating back to 1851 when the Royal Yacht Squadron organised the first race – a single race around the Isle of Wight – with yachts from all nations invited to participate. The American entry finished victorious, and the Trophy was named in its honour – the America’s Cup, initially known as the ‘Auld Mug’.

It subsequently became a challenge trophy, with the America’s Cup match race itself involving a challenge between two yachts, after Britain put forward its first challenge to win the Cup back in 1870.

Following this first event, American teams successfully defended their title for 132 years. Their winning streak, the

longest in sporting history, was finally broken by an Australian team in 1983. The Cup has since been won by New Zealand and Swiss challengers but Britain is, so far, yet to win the trophy.

The chain of events which led to the creation of Land Rover BAR and a new British entry into the America’s Cup started in September 2013 when Sir Ben Ainslie helped ORACLE TEAM USA win the 34th America’s Cup10.

In 2011, Sir Ben Ainslie set his sights on starting his own British team, with the ambition to bring the Cup to the UK. By December 2013, after success at the 34th America’s Cup, he had raised £25 million of private funding allowing him to proceed with entering a British Challenger for the Cup. In June 2014, the British challenge to the 35th America’s Cup, Ben Ainslie Racing (BAR, now Land Rover BAR), was officially launched in the presence of HRH The Duchess of Cambridge11.

A total of five international challenging teams (Sweden, New Zealand, France, Japan, and the UK) have entered the 35th America’s Cup, with ORACLE TEAM USA as the Defending team equating to six teams in total. The Louis Vuitton Challenger Series and the 35th America’s Cup will be held in Bermuda in 2017 hosted by ORACLE TEAM USA.

The America’s Cup starts with a two year series of preliminary races, known as the Louis Vuitton America’s Cup World Series (ACWS). Following the entry of Land Rover BAR, Sir Keith Mills – a Director of Land Rover BAR and Chairman of TEAMORIGIN Events – took on the mandate to bid for, manage and deliver the UK based events of the ACWS. Their bid to host the ACWS events in Portsmouth was successful. The first was held in July 2015, hereafter referred to as the ACWSP 2015. A second event is scheduled for 21 to 24 July 2016.

2

Copyright Land Rover BAR. Copyright TEAMORIGIN Events.

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2.2 The economic framework for assessing the impact of Land Rover BAR and the Louis Vuitton America’s Cup World Series Portsmouth 2015

Since its launch in 2014, Land Rover BAR has undertaken a wide range of activities in order to build a credible entry to the America’s Cup. This has included: building a new base in Portsmouth; designing, building, sailing and testing its AC45F and development boats; building two docking RIBs and launching its official charity. Further details are outlined in Section 3.

Likewise, hosting the ACWSP 2015, a major sporting event attracting 248,505 spectators and attendees, involved and generated a wide range of economic activity. This is described in full in Section 4.

All of this activity has contributed to, and continues to contribute to, the local economy and the wider UK economy.

Land Rover BAR and TEAMORIGIN Events commissioned KPMG to conduct an economic analysis to help them to better understand the contribution their activities made to the local and UK economy. Our review focused on the economic and social impact of developing the British entry to the 35th America’s Cup and of hosting the ACWSP 2015.

The economic framework we have applied to assess these impacts captures a number of different effects including:

• Gross Value Added;

• employment and skills; and

• wider spillover effects.

We now describe each of these in turn.

Gross Value Added

The first measure of Land Rover BAR’s and the ACWSP 2015’s economic contribution to the UK economy is Gross Value Added (GVA).

GVA measures the contribution to the economy of an individual producer, industry, sector or activity, net of intermediate consumption (for example goods and services that are used in the production process). It is a measure of the economic value of goods and services produced.

Through its own activities, Land Rover BAR adds GVA to the UK economy, the direct GVA contribution.

Land Rover BAR is currently not a profit making organisation, meaning that its direct GVA contribution comes through the wages it pays to employees and contractors.

However, as well as its direct GVA, Land Rover BAR also generates indirect GVA through its UK supply chain.

Land Rover BAR purchases goods and services from suppliers in order to support the development and building of its boats and the training of the team; as well as more standard business operations and marketing. The economic activity carried out by suppliers in delivering these goods and services generates additional GVA in the economy.

Furthermore, GVA is not only generated within the immediate suppliers to Land Rover BAR, but also in their wider supply chains. In this way, the economic activity disseminates through the economy.

The ACWSP 2015 generated indirect GVA through spending with a wide range of suppliers involved in putting on the event, which then generated further economic impacts within their own supply chains. In addition, the ACWSP 2015 generated GVA through the additional spending in the economy by visitors to the event, including spectators and event personnel. Spending by consumers directly generates additional revenues (and hence GVA) with local businesses,

which then generates additional economic activity (and indirect GVA) through these businesses’ supply chains.

Induced GVA is also generated in the economy as a result of the direct and indirect economic activity. These contributions arise from direct and indirect employees spending a proportion of their wages in the UK, which generates further economic activity in the UK economy. Again, the impact spreads through the economy, with some leakages at each stage due to savings and imports (spending which flows abroad).

The analysis within this report considers the gross economic impacts of Land Rover BAR. It does not take into account how UK resources used by Land Rover BAR, for example human and physical capital, would have been employed if they were not employed by Land Rover BAR. Similarly, when considering the impact of the activity involved in putting on the ACWSP 2015 event, our analysis considers only the gross impact of putting on the event.

We have, however, taken into account in our calculations the degree to which any consumer spending as a result of attending the ACWSP 2015 event could have led to lower spending elsewhere in the economy. For income constrained consumers, spending on one product or service may displace spending on an alternative good or service. If spending on product A fully crowds out spending on product B, then the net effect of expenditure on product A is neutral. But because most people have some level of discretionary spending, which can either be spent or saved, it is unlikely that spending on a new product or service, like the ACWSP 2015 event, will fully crowd out expenditure elsewhere in the economy.

6

Employment and skills

Employment is the second measure of economic contribution we have considered in our analysis.

Land Rover BAR employs a number of staff directly. Employment was also created through the hosting of the ACWSP 2015.

In addition, employment was created within the UK supply chains of these activities as a result of the additional activity generated. And induced employment is generated through the additional economic activity resulting from Land Rover BAR and ACWSP 2015 employees spending a proportion of their earnings. These make up the indirect and induced employment impacts.

It is not only the number of jobs supported that is important when considering the economic impact, but also the skill level of the job. Higher skilled jobs generate more Value Added in the economy, generally reflected in higher wages, and thus make a greater contribution towards economic growth. We consider the contribution towards skill generation in our analysis.

Wider spillover effects

The impact of Land Rover BAR and the ACWSP 2015 goes beyond their direct economic impact.

Examples of the wider impacts include the sustainability of operations; environmental impacts; social impacts; and spillovers from innovation and R&D activity.

The hosting of the ACWSP 2015 can also have wider, and longer term impacts. For example, by attracting new visitors to the area, and media interest, Portsmouth has gained exposure to wider international and domestic markets, which can lead to increased tourism and business for the local area going forward.

We consider these impacts in our analysis. However, by their nature, they are harder to put a monetary value to than the economic impacts set out above. Nonetheless, they can be an important part of the contribution that an organisation/event makes to the economy and to society more generally.

2.3 Sources of information

Our analysis of the impact of Land Rover BAR is based primarily on data from internal management accounts detailing its spending on suppliers and employment. We supplemented these data with interviews with Land Rover BAR staff to gain deeper insights into the business, as well as through wider research regarding their activity. Case study interviews with key partners and suppliers were also undertaken to obtain a wider view of the impact of its activity.

In carrying out the assessment of the ACWSP 2015, our core analysis is based on four main sources of data:

• Data provided by TEAMORIGIN Events, covering: its spending with suppliers involved in putting on the event; information on hotel bookings through the official travel agency for the event (which captures room bookings for the competing teams, event sponsors and partners attending the event); and data on the spending on hospitality packages.

• A survey of spectators which was carried out following the ACWSP 2015 in order to capture information on spending patterns whilst attending the event.

• A survey of local businesses to assess the impact of the event on their employment, sales and investment.

• Case study interviews with local businesses and event suppliers and partners, selected by Land Rover BAR, to allow us to better understand the impact of the ACWSP 2015 at the firm level.

Our analysis treats the impact of Land Rover BAR’s activity in developing its challenge for the 35th America’s Cup separately to our analysis of the economic impact of the ACWSP 2015 event, however there is clearly a strong link between the two, and it is unlikely that Portsmouth would have hosted ACWS events if Land Rover BAR had not chosen to base themselves there.

The analysis of the ACWSP 2015 event covers activity associated with the event in 2015 only.

The analysis of Land Rover BAR GVA and employment impacts covers the financial year from July 2014 to June 2015.

The approach to estimating the specific impacts is detailed in the Technical Appendix to this report. While the various channels of economic and social contribution cannot be quantified in all of these areas, we draw on the available evidence to explain the potential scale and scope of impacts based on both a qualitative and, where feasible, quantitative assessment.

About the study

2

7

Copyright Land Rover BAR. Copyright TEAMORIGIN Events.8

Land Rover BAR’s activity at its Portsmouth base has a positive economic impact on both the local and national economies.

3.1 Land Rover BAR’s contribution to the GVA of Portsmouth and the UK

3.1.1 The GVA generated through Land Rover BAR’s ongoing operations

Land Rover BAR’s objective is not to generate profits, at least at this stage of its life.

Rather, in order to establish a strong challenge to the America’s Cup, all income generated by Land Rover BAR is being invested into the development of its entry to the America’s Cup and the ACWS events prior to that.

In the absence of company profits, the direct GVA generated by Land Rover BAR’s ongoing operations (excluding the building and kitting out of the base) comes through its payroll and contractor spending, totalling £7 million15 in the year to June 2015.

Land Rover BAR generates much wider economic activity in Portsmouth and across the UK through its supply chain.

Land Rover BAR recognises the potential it has to bring significant economic and sporting benefits to the UK, particularly for Portsmouth and the wider Solent area16.

In the year to June 2015, it spent £33.9 million on its suppliers. Of this:

• £19.6 million was spent on those suppliers specifically engaged with the building of the base17; and

• £14.3 million was spent on suppliers as part of the business’ ongoing operations and capital investments.

Where possible the company engages with local suppliers e.g. working with local architects, HGP Architects Ltd, based in Fareham; with the Direct Tools Company, in Southampton; employing the services of Camber Catering, based in close proximity to Land Rover BAR; as well as drawing on the wealth of marine sector expertise located in the Solent area, e.g. working with Green Marine, based in Hythe, near Southampton in the boat building process, and with local marine design and advanced engineering specialists in Portsmouth, Southampton and the Isle of Wight.

However, as a team competing at international events, some spending with international suppliers is unavoidable e.g. entry fees and other entry costs for the America’s Cup, which are paid to the Golden Gate Yacht Club in the USA; and the purchase of the AC45F boats (the one-design wingsail catamarans designed specifically for use by all teams in the ACWS and built in New Zealand). In other cases, specialist expertise and products are sourced from abroad in order for the team to remain competitive at the international level and have the best chance of winning the Cup, for example the sourcing of composite moulds used in boat building from a specialist European company, drawing on expertise and experience not available in the UK.

Based on our analysis of the top 100 suppliers for the year to June 2015 (accounting for 88% of total supplier spending by value), we estimate that approximately 84% of Land Rover BAR’s supplier spending by value was with UK suppliers, totalling £9.4 million of spending in the UK18. Of this:

• Land Rover BAR spent £1.5 million with suppliers based in Portsmouth, representing 16% of UK supplier spend;

• a further £3.0 million was spent with suppliers across the rest of Hampshire, accounting for a further 32% of supplier spending; and

• the remainder of Land Rover BAR’s UK spending went to suppliers across the rest of the UK.

The economic impacts arising from Land Rover BAR’s supplier spending are not just spread geographically across the UK but also across 30 different industries:

• Over 40% of its UK supplier spending in the year to June 2015 was with the manufacturing sector. Half of this is with the ‘other manufacturing’ sub group, within which ‘manufacture of sports goods’ sits. Another 16% is with the ‘manufacture of ships and boats’

15 Excluding investment expenditure associated with building of the base16 Raising the BAR, Ben Ainslie Racing Annual Sustainability Report17 A small amount of additional spending on the base was incurred prior to July 2014 and since June 2015 . 18 Other spending not included within this is spending on foreign currency credit card for spending abroad, and spending on a Performance Bond in the amount of £1 million to be forfeited to

the Golden Gate Yacht Club in part or whole depending on circumstances if Land Rover BAR does not participate in races or regattas when eligible.

The economic contribution of Land Rover BAR

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Copyright Land Rover BAR. Copyright TEAMORIGIN Events.

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19 https://www.portsmouth.gov.uk/ext/documents-external/cou-regeneration-strategy.pdf 20 http://solentlep.org.uk/strategic_priorities/strategic_sectors 21 This is an approximation based on the proportion of employees based in Portsmouth and Hampshire based on postcode.

Taking into account the direct GVA, the indirect impacts in the supply chain and the induced effect, we estimate that the total UK GVA arising from Land Rover BAR’s activities in the year to June 2015 was £19.2 million, comprising:

of direct GVA. Of this an estimated 44% was with employees living in Portsmouth, equivalent to £3.0 million of GVA. And £5.5 million (78% of the total) was with employees living in Hampshire21.

£7.0million

of induced GVA as a result of spending of additional wages in the UK by those employed both directly and indirectly as a result of Land Rover BAR’s activities.

£3.9 million

of indirect GVA from Land Rover BAR’s spending with immediate suppliers. Of this 15% is generated through suppliers based in Portsmouth. This is equivalent to £747,000. And £2.8 million (57% of the total) was generated with suppliers based in Hampshire as a whole.

£4.9million

£3.4millionof indirect GVA through the wider supply chain across the UK.

A FURTHER

£19.2 million

sub group falling within the broader marine sector, identified as a key sector for wealth generation in Portsmouth’s Strategy for Growth and Prosperity19

and as a strategic sector by Solent Local Enterprise Partnership (LEP)20.

• The ‘computer programming, consultancy and related activities’ sub group within the information and communication sector, accounted for a further 13% of UK supplier spend.

• The remaining expenditure falls across a range of other sectors, including: administrative and support service activities; wholesale and retail; professional; scientific and technical activities; and construction. È

This represents 3%22 of the total output by the ‘other manufacturing and repair’ sector within Hampshire.

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3.1.2 The GVA generated through building the Land Rover BAR base

Land Rover BAR has positively impacted the UK economy through its investment in the construction and kitting out of its new base; 2015 saw the completion of the team’s new headquarters at Camber Quay in Portsmouth, only a year after planning permission was received allowing the team to commence with the build.

The building was part financed by the UK Government, who provided a grant of £6.5 million to assist with the construction of the team’s base. The additional £13.1 million of private investment represents a significant investment in the local area.

This spending generated indirect and induced GVA, adding to the economic contribution generated by Land Rover BAR.

The economic contribution of Land Rover BAR

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£18.5 million

È of indirect GVA from Land Rover BAR’s spending with immediate suppliers involved in the building of the base;

£8.4 million of indirect GVA through the wider supply chain; and

£7.3 million

of induced GVA.£2.8 million

In total Land Rover BAR spent £19.6 million on suppliers involved in the building of the base in the year to June 2015, all of which was retained in the UK.

We estimate that the total UK GVA arising from the building of the base in the year to June 2015 was £18.5 million, comprising:

22 Based on 2012 ONS Workplace based GVA NUTS2 by industry at current basic prices23 Indirect and induced impacts will not be restricted to Portsmouth itself

Credit to Shaun Roster Photography

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Case Study: Green Marine

Green Marine’s core business is building high performance race boats and luxury lightweight yachts.

The company has built many famous race boats over its 30-year history from America’s Cup challengers, to Vendee Globe contenders and Volvo Ocean Race winners to Mini Maxis, TP52s, Wallys and IMOCA 60s.

The company operates at a 7,000m2 yard in Hythe, near Southampton. Land Rover BAR currently inhabits around 1,000m2 of these facilities, where Green Marine is supporting the build of two new test boats for Land Rover BAR.

In order to deliver this commission, Green Marine has made significant investments, buying two new composite curing ovens and making improvements to the occupied unit for Land Rover BAR’s needs.

Green Marine currently employs around 130 staff members, many highly skilled, including: composite boat builders, laminators, production teams,

engineering teams, project managers, finance and supply chain, marketing and a management team.

Of the 130 staff that work at Green Marine, a dedicated team of 15 staff work specifically on the Land Rover BAR project. This team was specially selected for their skill set. It constitutes a project manager, an engineer, a senior team leader for laminating, two senior team leaders for boat building, six composite boat builders, four laminators and an apprentice composite boat builder. These jobs, supported by Land Rover BAR, are skilled using specialist techniques, and will help to support the marine economy in the Solent going forward.

Green Marine is also helping to build a pipeline of skilled boat builders through its apprenticeship programme and reported that Land Rover BAR activity encouraged the use of apprentices on the team – which is not the case with all clients.

Land Rover BAR has a sustainable procurement policy, and we were told that Green Marine was inspired by this and so implemented its own sustainability plan, with subsequent positive environmental impacts. As of July 2015, 0% of Green Marine’s waste has gone to landfill. It is now recycled or is sent for incineration for the generation of electricity. Green Marine is also now looking at improving other areas of sustainability in its facility.

Green Marine reports that working with Land Rover BAR has had a positive impact on its wider sales, with the company receiving increased interest and publicity after the ACWSP 2015. However, they consider that the positive impacts of working with Land Rover BAR go wider than the financial gains - Green Marine reports that team morale has been boosted, which has been shown to have a positive impact on productivity: “… working with Land Rover BAR has had a great effect on morale internally, with all staff working on the project being extremely enthusiastic and proud to be doing so.”

Source: Information from Green Marine

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Case Study: Spinnaker Café/ Camber CateringThe Spinnaker Café is located in close proximity to the Land Rover BAR base in Camber Quay.

In addition to its café business, last year the two owners set up a new venture, Camber Catering, which was initially focused on catering for events at the local sailing club.

When the Land Rover BAR base was being built, Camber Catering set up a portacabin on the building site to provide catering for the construction workforce. The team at Land Rover BAR were impressed by the quality of the food provided. Therefore, as the building was being finished, discussions started regarding the potential for Camber Catering to provide catering services at the base. The initial contract was on a rolling monthly basis, but in October 2015 Camber Catering signed a 12 month contract with Land Rover BAR to provide these services on a more permanent basis. Camber Catering provide between 50-80 breakfast and lunches each working day for the Land Rover BAR staff, preparing all meals freshly onsite. The healthy menu changes daily and staff pay for their lunches using a pre-paid charge card.

The service that Camber Catering provides for Land Rover BAR makes up approximately half of its business. The rest of its work is with sailing clubs associated with Land Rover BAR, as well as with the 1851 Trust. Business has increased through the café’s work with Land Rover BAR, and it has taken on seven additional employee (three full time and four part time) in order to help meet demand, taking its total employees to nine.

Camber Catering have been able to develop their original café business into one that can now provide off site catering for a high performance team.

While it remains a small business, it is an example of how small, local businesses are supported through Land Rover BAR’s activities.

All of its employees are from the local area and the company consciously tries to source all its produce locally e.g. it purchases fruit and vegetables from Southsea in Portsmouth, meat from Portchester and other food supplies from Hilsea in Portsmouth.

The economic contribution of Land Rover BAR

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Source: Information from Spinnaker Café/ Camber Catering and Land Rover BAR

Credit to Shaun Roster Photography

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25 This has been calculated using employees home postcodes

3.2 Generating employment and supporting skills

A large proportion of the positive economic impacts from employees’ earnings is likely to be local, linked to spending on housing, leisure and retail, for example. There will be some degree of leakage of this spending outside of the region (but benefiting the wider UK economy) and a smaller proportion outside of the UK.

It is not only the number of employees which is important when considering the economic impact of additional employment, but also the productivity, or value added, of the employment. Higher skilled jobs generate more value added in the economy, generally reflected in higher wages, and thus make a greater contribution towards economic growth. Land Rover BAR employs workers in a range of roles, including: 26 designers, 24 boat builders; and 9 sailors.

These roles comprise 61% of the total workforce. These skilled technical designers and specialist boat builders develop and build Land Rover BAR’s state of the art America’s Cup boats. A range of engineers, a meteorologist, a sailing coach, a strength and conditioning coach and a videographer, as well as marketing, communications, PR, sales and other roles, also support the Land Rover BAR initiative.

The sectors in which Land Rover BAR generates activity through is supply chain are also dominated by skilled sectors including advanced manufacturing and computer programming.

Higher skilled jobs generate more value added in the economy, generally reflected in higher wages, and thus make a greater contribution towards economic growth.

PEOPLE

As of July 2015, Land Rover BAR employed a total of

including 67 employees and 29 contractors.

96Approximately 44% of these employees live in the Portsmouth area25, with a further 34% of the workforce commuting from elsewhere in Hampshire. This is an example of the localised positive impact of Land Rover BAR.

This equates to a total

employed as a result of induced effects in the economy

87FTE employees in the year to June 2015, with an additional

employees on a full time equivalent (FTE) basis, of which 66 are FTE employees

and 21 are FTE contractors.

Due to its supplier spending we also estimate that Land Rover BAR indirectly supported a further

Of the 96 employees, 76 people work full time and 20 part time. This equated to a direct employment contribution of

320148

FTE jobs supported by Land Rover BAR.555

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3.3 Generating wider economic and social impacts

Land Rover BAR’s activities not only have positive economic effects; they also deliver a range of wider societal and environmental impacts for the local and UK economy.

Supporting skills development in the wider community

Land Rover BAR supports the development of skills in the workforce through the apprenticeship, internship, and work experience programmes it offers. In 2015 to date, it has had four apprentices (with one more starting shortly), two interns and nine work experience students. An additional three apprentices are involved in building the boats for Land Rover at Green Marine. Land Rover BAR plans to grow these numbers further.

Land Rover BAR links with local colleges (Isle of Wight College, Southampton City College and Highbury College in Portsmouth) to deliver its apprenticeship programme. Apprenticeships at Land Rover BAR can be up to four years, and the main aim for the schemes is for the apprentices to leave with a transferable qualification, for example an NVQ and a technical certificate. The scheme combines study at local colleges, with practical application of these skills through their work at Land Rover BAR.

The apprenticeships are offered in a range of departments within Land Rover BAR, depending on the business needs. The apprenticeship scheme aims to benefit both the departments in which the apprentices work, as well as the apprentices themselves. At present there are four apprentices working at Land Rover BAR: in the Marketing and Communications team, the IT team, the Shore team and the Finance team. The positions were advertised through the local colleges, as well as on the Land

Rover BAR website, to attract talent, from the local area where possible, to the roles.

In addition to its formal apprentice programme, Land Rover BAR contributes to the development of skills in the local economy through its established partnerships with local educational institutes. These partnerships aim to provide students with projects, research opportunities and work experience.

Land Rover BAR also provides a teaching resource for local students26. For example, from January to May 2015, Land Rover BAR engaged with 80 year two and three boat building apprentices from Southampton City College who were working on the construction of two docking RIBs developed from those used in the 34th America’s Cup27.

These types of activities provide on the job learning which generates skills and knowledge spillovers, to the benefit of future employers; and help students identify and embark on a career which best matches their skills and abilities. These both help to increase the productivity of the workforce in the long run and in this way make an important contribution to economic growth.

26 Raising the BAR, Ben Ainslie Racing Annual Sustainability Report27 http://www.itv.com/news/meridian/2015-02-11/southampton-apprentices-to-build-sustainable-boat-for-ben-ainslie/

The economic contribution of Land Rover BAR

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Ben Ainslie with the Green Marine apprentices, 2014.

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Apprenticeship Case Study: Ryan – Land Rover BAR IT apprentice

Apprenticeship Case Study: Danielle – Boat Building apprentice at Green Marine

Ryan is an apprentice in the IT department at Land Rover BAR. Having completed a year studying his A-levels at college, he decided against continuing on this path, and instead decided to take an apprenticeship. He felt that he wanted to put what he learnt to practice as he studied rather than just learning the practical side of things, and considered an apprenticeship a good route to take to achieve this. Ryan was informed of the opportunity with Land Rover BAR and saw this as a great opportunity to work apply his skills in the context of a competitive team.

Alongside his apprenticeship, Ryan is studying Networking at Highbury College. He hopes that the combined experience of studying and learning on the job will enable him to become a fully qualified network engineer, while at the same time gain experience working as part of a team and a better understanding of how businesses work. This will put him in a good position to either continue working in the IT department at

Land Rover BAR, or in other full time employment as a network engineer.

Ryan believes that his decision to undertake an apprenticeship at Land Rover BAR has put him on a fulfilling career path. If he hadn’t taken up the apprenticeship with Land Rover BAR, Ryan would most likely be studying in his second year at college, but does not believe that he would be getting out of it what he is through his apprenticeship. Nor does he think it would have led to a career in IT or Networking, as he would not have learned as much in these subjects as he has and will through the apprenticeship.

Moreover, Ryan reports that he does not believe he would have enjoyed full time study, and that the best part about doing the apprenticeship with Land Rover BAR is learning about the sailing and the team, whilst building on his understanding of all different aspects of IT, whether that be networking or more general problems and their solutions.

Having finished year 11 at school, Danielle decided that she wanted to translate her passion for the marine industry into a career. She believed the best, and most direct, route to achieve this was through an apprenticeship.

Danielle reports that the apprenticeship at Green Marine, working with Land Rover BAR, has given her the opportunity to earn money whilst learning on the job, giving her the skills she needs to kick-start a successful career. She believes it was a favourable alternative to university as it has taught her valuable hands-on skills that a degree would not offer.

Danielle became involved in the apprentice scheme through a

collaborative project between Southampton City College and Land Rover BAR. Students at the college were commissioned to build two specialised docking RIBs to be used in Land Rover BAR’s America’s Cup campaign, to help berth the huge, foiling multihulls.

While she is the only female on her course, Danielle believes that she faces a level playing field in her work and had the support she needs to develop her career in a field she feels passionate about.

“My ultimate goal is travel the world, building high-profile, high performance boats. That’s the dream. But first, I’ll finish my apprenticeship and get to see my fine work in action.”

Source: Information from Ryan Todd, Land Rover BAR

Source: Information from Danielle Thomas, Green Marine

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Contributing to the sustainability agenda

In its early stages, Land Rover BAR partnered with 11th Hour Racing, an organisation which promotes better practices and sustainability initiatives in competitive sailing e.g. fostering stewardship of the marine environment through education programmes; pioneering fuel-efficient boats; avoiding single use products; and targeting zero waste to landfill through use of recyclable materials28.

In an effort to contribute to a sustainable society, the new Land Rover BAR base has been built to BREEAM (Building Research Establishment Environmental Assessment Methodology) excellent standards. During the building phase, 97% of the demolition materials were recycled, and 100% of the demolition concrete was crushed and re-used in the foundations. The new base itself uses 100% renewable electricity.

The team have been awarded the Olympic-inspired international standard, ISO20121, which provides a framework for delivery of sustainable operations throughout its activities.

As well as ensuring its own operations are sustainable, Land Rover BAR has a sustainable procurement policy to help ensure that it works with responsible suppliers, licensees and partners. Each is assessed from a ‘sustainability risk’ perspective, including assessing their location, quality, environmental management and social management. This ‘sustainability risk’ is one of the factors considered in the procurement decision.

Land Rover BAR’s sustainable policy and requirements has had a positive impact on its suppliers. An example of this are the changes which have been made at Green Marine to meet Land Rover BAR’s sustainability requirements.

Land Rover BAR has also joined forces with BT to launch the 100% Sport initiative which promotes the use of 100% renewable energy among sports fans, team, clubs and partners and aims to create awareness about tangible action to tackle climate change.

Apprenticeship Case Study: Southampton City College At the beginning of 2015, Land Rover BAR announced a new project with Southampton City College to build two specialised docking ribs to enable the team to manoeuvre their race boats in and out of their team base at Camber Quay. The project has not only provided Land Rover BAR with a case study to analyse the carbon footprint of marine manufacture, but also reassess how City and Guilds qualifications are taught.

A team of 80 apprentices, mostly Level 2 and Level 3 apprentice boat builders and engineers studying for City and Guilds qualifications, worked on the project at the College’s Marine Skills Centre and Land Rover BAR used the construction as a case study to test their newly developed analysis of the carbon footprint of marine manufacture. The aim was to better understand material selection and its environmental impact in boat production; a first step to producing a model that will better inform the marine industry about the sustainability of the choices that they make.

The materials chosen created a 20% saving in carbon across the two boats, and included flax (a plant material that has been used in marine applications for thousands of years); epoxy bonding resins with high biomass content (50+%); and a recyclable PET core material that comes from plastic bottles. The equivalent of over 700

water bottles were recycled in the manufacture of the G-PET core used in the construction of the two boats.

As well as pushing the boundary in materials used in marine manufacture, the project has also changed the way City and Guilds qualifications are taught as lecturer Darren Patten explains: “In taking on this project, we have had to change the way we assess the qualification. We have taken a lead from the National Vocational Qualifications (NVQs) where students are assessed in the workplace. We spoke to the external verifier from City and Guilds very early about this change, and we discussed the ways that we were recording information. He was very positive.”

‘It’s something we will use in the future,’ concluded Patten. ‘The project based assessment is something that we can get everybody involved in. It’s much more engaging for students to be involved in this kind of activity. If we talk about things in isolation, we can lose their interest. This could benefit all colleges – it may well be a useful tool for other people. Employers are always looking at the relevance of what we teach the apprentices, how relevant the work they do here is to the real world. And of course, something like this is an industry standard construction project, so it could not fit the bill any better.’

The economic contribution of Land Rover BAR

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28 http://land-rover-bar.americascup.com/en/technical-innovation-group.html

Source: Information from Southampton City College and Land Rover BAR

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Contributing to technological innovation and knowledge spillovers

Land Rover BAR strives to lead the way in the technologies and innovations applied to the design and build of its boats.

The Technical Innovation Group (TIG) set up by Land Rover BAR is tasked with identifying and developing the latest science and technologies to put to use in the design and building of the racing yachts. The TIG is governed by a steering group chaired by PA Consulting’s Dr. Phil White.

Land Rover BAR has brought on board specific expertise to support its endeavours to build a Cup winning team.

Jaguar Land Rover (JLR), is a core member of the team’s TIG. JLR’s Advanced Engineering Team is working on a number of design challenges where they can contribute their unique knowledge and expertise in the application of advanced engineering and innovative technologies.

The Red Bull Advanced Technologies team, a division of the Red Bull Formula One (F1) group, has been working with Land Rover BAR since the end of 2014, providing expertise in advanced simulation and mathematical modelling.

In July 2015, BAE Systems signed up to the TIG to provide high-tech engineering expertise. The British multinational defence, security and aerospace company is working alongside Land Rover BAR to improve the performance of the racing team by adapting solutions normally reserved for the defence and aerospace sectors and applying them to boat design. This collaboration and knowledge sharing will allow Land Rover BAR to benefit from the high-tech engineering capabilities and innovations gained in the design and construction of highly innovative and technologically advanced defence products.

BT, the global communications company, has also collaborated with Land

Rover BAR as Exclusive Technology in Sustainability Partner. BT and Land Rover BAR will work together on several sustainable technology projects, initially focused on data analytics. This includes using cutting edge technology to deliver ‘pit lane’ style performance analysis, providing similar functionality to the pit lane race analysis seen in Formula 1.

Other companies involved in the TIG include BMT Nigel Gee and Renishaw.

Land Rover BAR’s aim is to support growth and innovation in the marine sector to match the UK’s F1 innovation hub29. The competition between racing teams drives innovation in the same way as competition between rival companies, with a great deal of secrecy around the specific innovations and developments. However, the collaborations generated through the TIG’s provide a clear example of how wider benefits from these types of innovations can be shared across industries, and therefore support technological progress more widely.

Raising the profile of Portsmouth and the UK marine sector

The decision to locate the team HQ in Portsmouth will have wider and longer term impacts than those identified in our analysis above. This economic impact report focuses only on the contribution made by Land Rover BAR in the year to June 2015. However, the team has made a long term commitment to Portsmouth and the UK through its investment in the team base in Portsmouth and its ongoing activities. The economic impact captured is therefore not a one off, and the team aim to continue to operate from this base into the foreseeable future, delivering the associated benefits to the local and national economy year on year.

The support from the Government for the building of the base in Portsmouth was in recognition of the benefits that supporting Land Rover BAR would deliver for Portsmouth and the UK.

Not only does Land Rover BAR impact the local area through its direct activity and through its supply chain, but its bid to win the America’s Cup has attracted a lot of press coverage and interest in Portsmouth that arguably would not have occurred otherwise. The media coverage of the team has an advertising value equivalency (AVE)31 of £43 million (around £6 million of this is associated with the team’s coverage at the ACWSP 2015 and is included in the AVE for the event32). This helps to raise Portsmouth’s profile and generate longer term growth. Aside from the event itself the team has received coverage of its pursuit of the Cup, with Sir Ben Ainslie and Martin Whitmarsh, CEO of Land Rover BAR, featuring on the front pages of prominent newspapers and sporting magazines.

.

29 http://land-rover-bar.americascup.com/en/news/160_SETTING-SAIL-TO-ENGINEER-A-BRITISH-WIN.html30 http://land-rover-bar.americascup.com/en/ben-ainslie-racing-team-hq.html31 AVE is the monetised value of what the campaign additional coverage would cost if it were advertising space’, 32 Land Rover BAR media tracking data June 2014 – August 2015

“Sir Ben Ainslie’s project is truly fantastic news for Portsmouth and the Solent. It will not only build on Portsmouth’s global reputation as a centre of marine and maritime excellence but will also deliver a real sporting and economic boost to the UK. It is a great example of our long-term plan – creating jobs as well as opportunities for young people to develop their skills through apprenticeships.” Prime Minster David Cameron, 201430.

Copyright Land Rover BAR. Copyright TEAMORIGIN Events.

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33 Pfeifer, Christian, & Cornelißen, Thomas. 2010. The impact of participation in sports on educational attainment–New evidence from Germany. Economics of Education Review.

34 Ibid35 Science, technology, engineering and mathematics36 http://www.1851trust.org.uk/about/37 http://www.nationalstemcentre.org.uk/news/demand-for-stem-skills-is-strong-and-growing-

stronger38 Event, 1851 Trust Visitor Centre Study, April 2015

Impacts through the 1851 Trust

The 1851 Trust, founded alongside Land Rover BAR, is a charity set up to inspire and engage a new generation through sailing and the marine industry. Her Royal Highness The Duchess of Cambridge is the Royal Patron of the charity and Sir Ben Ainslie is the Patron. Land Rover BAR will also host a visitor centre for the Trust at its new headquarters in Portsmouth.

One of the main aims of the charity is to provide opportunities for young people, particularly from disadvantaged backgrounds to participate in and take up sailing. Participation in sport as a child can have long term labour market impacts, through, for example, helping children to develop self-esteem, a competitive spirit, tenacity, motivation, discipline and responsibility. These non-cognitive skills aid the learning process and have direct applications in the workplace. Participation in sport can also aid physical and mental health which in turn has impacts on labour market participation and productivity35.

As well as having socioeconomic impacts through participation, the charity aims to more directly contribute to the future growth of the economy, particularly through education and the development of STEM36 skills targeted at the marine sector. The charity seeks to engage young people in the subjects of science, technology, engineering and maths, and promote careers in the maritime industry37, supporting future innovation and growth in the sector. Linked to this, the charity will offer skills and qualifications for young people, and creates pathways into apprenticeships, skills based training, and jobs in the wider sports and maritime industry.

The benefits of STEM skills are widely recognised, which is reflected in the high levels of demand for these skills, not just in related sectors but across the economy38. Therefore, while the charity has a specific focus on promoting the right skills to deliver growth in the marine sector, the relevance and benefits of these skills extends much wider.

Part of this involves the planned new Visitor Centre at the Land Rover BAR base which will be run by the 1851 Trust. The aim for the Visitor Centre is for it to provide an engaging and contemporary exhibition, with a supporting educational offer, in order to showcase technology and innovation; educate and inspire visitors; demonstrate STEM in action and make sailing more accessible. Visitor numbers of up to 45,00039 per annum are expected, indicating that it could attract new visitors to Portsmouth, which in turn would deliver economic benefits for the area.

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The economic contribution of Land Rover BAR

Copyright Land Rover BAR. Copyright TEAMORIGIN Events.19

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4

The Louis Vuitton America’s Cup World Series Portsmouth 2015

The British entry to the America’s Cup brought with it the potential for Britain to host one or more ACWS events.

TEAMORIGIN Events was charged with bidding for two ACWS events and Britain was successful in winning its bid to host the events in July 2015 and July 2016 in Portsmouth, known as the ACWSP 2015 and 2016.

This provides the opportunity to bring world class sailing to British shores. And a wide range of economic and social impacts will arise for Portsmouth and the wider UK economy from the hosting of the event.

4.1 Activity in the lead up to the event

Official notification of the successful bid for the ACWS events in Portsmouth came in October 2014.

Following this, TEAMORIGIN Events took forward the planning and preparation for the 2015 event, allowing Land Rover BAR to focus its activities on launching a successful challenge for the America’s Cup.

TEAMORIGIN Events was responsible for all aspects of the event planning and delivery, including raising the required funding, running operations, marketing and stakeholder engagement. This involved working closely with stakeholders such as Portsmouth City Council and the Royal Navy, and liaising with the America’s Cup Event Authority (ACEA) – the global rights holder of the America’s Cup, in order to deliver a successful event.

Indeed, some of this activity commenced even before the bid for the event was won.

Engagement with Portsmouth County Council started during the event feasibility study stage, to ensure support for the event and agreement to host it in the local area. However, after official confirmation of Portsmouth’s winning bid, activity was scaled up and engagement extended to include the search for sponsors, in order to progress preparations.

The event received wide ranging support, both financially through official sponsors as well as through other stakeholders engaged with the organisation of the event.

39 TEAMORIGIN Events data 40 https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/220541/green_book_complete.pdf41 A collaboration between UK Sport, Visit Britain, EventScotland, the London Development Agency, the North West Development Agency, Yorkshire Forward and

Glasgow City marketing Bureau

Support also came from the public, exemplified by the quick take up of tickets for the event. The first tickets for the event were issued in March 2015 and all 10,000 tickets made available exclusively for Portsmouth residents were taken up within two days. The full allocation of publicly available tickets for the Waterfront Festival Arena were booked up within ten days of going live39.

Hosting such a large scale sporting event takes considerable preparation and activity, from the resourcing of staff, planning and building of, the event facilities, to the ticket sales, media, travel and security arrangements, and the co-ordination of the America’s Cup teams competing in the event.

This activity in the lead up to, and during, the ACWSP 2015 generated considerable economic and social impacts, both in the local area and more widely across the UK.

These impacts come through a number of different routes, including contributions arising from the spending by TEAMORIGIN Events and the event sponsors on hosting the event, spending by spectators at the event, and spending by participants involved in the event, including the crews and their support teams, sponsors and media personnel.

4.2 Estimating the economic impact

In order to assess the economic impacts relating to the hosting of the ACWSP 2015, our analysis draws on recognised economic impact analysis methodologies set out in HM Treasury’s Green Book40, as well as industry standard methodologies for measuring the impact of events, based on guidance provided by eventIMPACTS 41. Details of our methodology are outlined in the Technical Appendix to this report.

Hosting such a large scale sporting event takes considerable preparation and activity...

Copyright Land Rover BAR. Copyright TEAMORIGIN Events.

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We focus our analysis of the impact of the ACWSP 2015 on the economic contributions arising through:

• the supplier expenditure involved in putting on the event, including spending by TEAMORIGIN Events and sponsor activation costs;

• the additional spending by spectators whilst attending the event; and

• the spending by other event attendees, including spending by ACWSP 2015 visiting teams, VIPs, and the expenditure on VIP packages within the hospitality suites.

We have also surveyed businesses to understand both the positive and negative impacts events can have on the local business population.

Additional impacts would be expected to come from the UK media, exhibitors, on-water spectators and volunteers who worked at the event. We were not able to obtain detailed spending information from these groups, therefore these impacts have not been quantified as part of this analysis. Inclusion of these would be expected to increase the estimated impacts from the event.

In order to carry out the analysis of the impact of the event we drew on a variety of sources of data, including:

• an online survey of 1,485 event ticket holders;

• an online survey of 52 local businesses; and

• data relating to the event and event suppliers provided by TEAMORIGIN Events.

More detail on the methodology can be found in the Technical Appendix.

Figure 1: Event timeline

Ticket sales launched – 2nd March

10,000 Fanzone tickets for Portsmouth residents booked – 4th March

Remaining weekend free-to-view Waterfront Festival Arena tickets booked – 18th March

Online media accreditation went live – March

Hospitality pavilion & trackway built – 7th July

Infrastructure build commenced – 13th July

America’s Cup team base / technical area constructed – 10th July

America’s Cup teams arrive – 10th-11th July

Media centre build commenced – 18th July

Media centre opened – 20th July

Road closures – 23rd - 27th July

Louis Vuitton America’s Cup World Series Portsmouth – 23rd - 26th July

America’s Cup teams depart – 27th July

Event site returned to Portsmouth Council – 31st July

Ticket sales for Portsmouth Live! Concert launched – May

March May July 2015

22

4.3 Economic impacts associated with the hosting of the ACWSP 2015

4.3

The Louis Vuitton America’s Cup World Series Portsmouth 2015

In delivering the ACWSP 2015, the supplier expenditure involved in putting on the event totalled £4.5 million. £3.9 million of this was spent with UK suppliers across 50 different industries. This ranged from spending on marquees, big screens, and staging, to security, first aid and waste management.

Of this supplier spending, £2.1 million was spent on suppliers in Portsmouth, representing 54% of total supplier spending.

These costs to TEAMORIGIN Events represented revenues to the 165 suppliers involved, who in turn generated GVA in the economy, both directly and through their own supply chains.

Similarly, the event partners, stakeholders and suppliers had their own public activation costs, covering, for example, the setup of their stands and marquees at the event and the associated marketing and promotion activity. Based on its engagement with the relevant sponsors, TEAMORIGIN Events provided estimates of the public activation spending for the event by major sponsors42 with a site at the event. On basis of these figures, total spending on public activation for the event is estimated at £247,00043.

Converted to GVA44, we estimate that in hosting the event, including public activation by sponsors, a total of £4.3 million was generated in the UK economy, comprising:

• £2.3 million of GVA through spending with immediate suppliers to the event;

• £1.3 million of GVA in the wider supply chain; and

• £0.6 million of induced GVA.

42 Major Sponsors and Partners of the ACWSP.43 In some cases we have been given a range of spending. Where this has occurred the median value has been used.44 See the Technical Appendix for the detailed methodology.

In terms of the impact on the local economy, we estimated that of the £2.3 million of indirect GVA generated through supplier spending associated with the event, £1.3 million was generated through suppliers based in Portsmouth. This accounts for 61% of the total GVA directly created through all the event supplier spending, and highlights the positive impact on local businesses caused by the event. Broadening out the impacts, the indirect GVA generated by those businesses based in Hampshire as a whole was £1.6 million, accounting for 71% of the GVA generated with immediate suppliers.

The estimated total employment effect of hosting the event, including supplier spend and sponsor activation was

63 FTE’s.

This comprises

39

19 5

of induced GVA.

£0.6 million

was generated in the UK economy from hosting the event, including public activation by sponsors

of GVA in the wider supply chain

£1.3 million

£4.3 million

È

of GVA through spending with immediate suppliers to the event

£2.3 million

indirect FTEs within Tier 1 suppliers,

indirect FTEs in wider supplier and

FTEs through induced effects.

23

Figure 2: The event in numbers

Total attendees• 73,100 in the Waterfront Festival Arena

• 7,100 in the Fanzone

• 17,100 evening events

• 2,700 hospitality guests

• 25,700 on the water

• 111,300 across Portsmouth and Gosport (outside of official race village areas)

• 6 Royal Visit staff

Personnel (per day):• 122 America’s Cup personnel

• 197 from competing teams

• 198 ACWSP 2015 event team

• 295 volunteers

• 300 exhibitors

• 60 traders

• 260 journalists, including 24 international media

• 1610 contractors

• 190 security

• 60 artists, performers, show guests and supporting personnel

Total number of spectator boats 2,700

Total event area:• Waterfront Festival Arena 100,000 m2

• Fanzone 7,500 m2

• Hospitality Area 1,400 m2

1,702 hotel rooms booked for teams and other event personnel

Case Study: AggrekoAggreko plc is the world’s largest temporary power generation company and secured the contract to work with TEAMORIGIN Events to deliver its range of products and services in 2015 and then again in 2016 in support of the ACWSP.

Aggreko is a major supplier to the event and provided 28 generators with a total power delivery capacity of 3.76 mVA (mega-volt amperes), enough for around 150-200 homes. Total electrical distribution around the site including the main stage comprised approximately 23,000 metres of varying size of cable. Aggreko also provided 400 KW of air conditioning for the hospitality facilities. Aggreko’s temporary power installation supported all elements of the site including broadcast, hospitality, concessions, big screens and the main performance stage.

The value of the contract represented added revenues for Aggreko, through which it generated additional GVA in the UK economy.

Although Aggreko is a large multinational with sites all over the world, the local depot at Fareham was utilised as much as possible for the delivery of the equipment to the site. There were seven Aggreko personnel supporting the site under the management of a senior event Project Manager. Where possible staff at the depot are based locally and the Project Manager for this event was local to the Portsmouth area. The use of the Fareham depot meant that the employment impacts resulting from the contract would be retained locally and that logistics and manpower costs were kept to a minimum in Aggreko’s delivery of its services for the event.

Source: Information from Aggreko

24

4.4 The economic impacts of spectator and event attendees spending at the event

As well as the spending involved in hosting the event, the event generated additional economic activity, and hence GVA, as a result of the spending by visitors to the area, and local residents watching the event.

According to ticket data provided by TEAMORIGIN Events, a total of 248,505 spectators and attendees attended the ACWSP 2015 over the four days from 23 to 26 July. This includes all those within the ticketed area, including VIPs, and the crowds watching from the shore line, and on the big screens around Portsmouth, and from boats on the water, as well as teams, contractors, exhibitors and volunteers working at the event45.

4.4

The Louis Vuitton America’s Cup World Series Portsmouth 2015

Of those who had tickets for the event, the majority were Portsmouth residents, making up 77% of ticket holders, while the remaining 23% travelled from across the UK and abroad to attend the event.

The majority attended the day time racing events, with the most popular day, the Saturday race day, attracting a total of 120,828 people.

Excluding VIPs, over 168,000 tickets were sold or pre-booked for the event. However, actual attendance in the ticketed areas only reached 96,888 over the four days. The shortfall between actual attendance and pre-booked tickets was largely the result of poor weather on the Friday and the Sunday racing day being cancelled outright due to bad weather and the full site having to be evacuated – Sunday being the most popular day in terms of pre-booked tickets. However, more people than had pre-booked attended the Waterfront Arena area on the Saturday.

45 Estimates of spectators outside of the ticketed areas are based on information from crowd counters on the number of people watching big screens or watching the boats from the shore in Gosport and Gunwharf Quays, and entrance to the Portsmouth Historic Dockyard which hosted the team base and technical area which visitors could view.

46 Based on the address provided when tickets were pre-booked.47 See detail below48 These figures relate to the information about the person who booked the tickets

We have drawn on data from Ticketmaster and our own survey of spectators (see the Technical Appendix to this report for more detail) to carry out analysis of the profile of spectators attending the event.

In terms of the demographic, our survey of spectators suggests an even gender split – 50% of those surveyed and their parties were male and 50% female.

Our survey results suggest that the most common age group of spectators was the 45-64 age bracket, with around 40% of spectators in this group. This was followed by the 25-44 age group. This suggests a broad appeal of the event across age groups, but with more interest among the older age groups, particularly among non-residents who are likely to have travelled further to the event.

Figure 5 shows the geographical spread of ticket holders across the UK. The majority (77%) were Portsmouth residents46,while a further 17% were from the South East or the South West. Based our own survey data 47 just 2% of ticket holders were from overseas48.

Of those who came from outside Portsmouth, our survey evidence suggests that around 84% came specifically for the event, whilst 16% attended the event whilst in the area anyway.

Excluding VIPs, over 168,000 tickets were sold or pre-booked for the event.

Copyright Land Rover BAR. Copyright TEAMORIGIN Events.

25

Through the spending by spectators associated with attendance at the ACWSP 2015, the event generated additional economic activity and so positive impacts in the local and wider UK economy. The spending associated with attendance at the event included:

1. spending inside the ticketed areas, e.g. on food, drink and with sponsors;

2. spending outside of the ticketed areas, e.g. on transport, local attractions and at retail and leisure facilities in the area; and

3. spending on accommodation, where spectators stayed overnight in order to attend the event.

Figure 4: Age split of attendees

Age Percentage of ticket holders

0-15 16%

16-24 8%

25-44 29%

45-64 37%

65+ 10%

Source: KPMG analysis of survey data

Figure 5: Location of ticket holders across the UK

Source: Ticketmaster data

Pre-booked Attended

Thursday 23rd July 21,872 15,645

Friday 24th July 31,198 12,676

Saturday 25th July 60,989 64,242

Sunday 26th July 54,456 4,325

Source: TEAMORIGIN Events

Figure 3: Ticket sales and attendance to ticketed areas

26

4.4

The Louis Vuitton America’s Cup World Series Portsmouth 2015

Through our survey we gathered data on each of these areas of spending and found that, on average, spectators spent £17.22 per person per day in the ticketed areas49. Non-resident spectators tended to spend more on average than the residents, spending on average, £6.11 per day more than resident spectators.

Spending outside ticketed areas was, on average, higher than spending within ticketed areas. Figure 6 below shows the breakdown of spending outside of ticketed areas in five different areas. On average, spectators spent £26 per person outside of the ticketed areas.

Figure 6: Average spending per person outside of ticketed areas

Average spend per person (£)

Public transport £2.93

Car hire or fuel £2.33

Local attractions £1.17

Other retail spending £10.25

Other spending £9.64

Average total £26.32

Source: KPMG analysis of survey data

Figure 7: Type of accommodation average spend and percentage of spectators surveyed who stayed

4.4 The economic impacts of spectator and event attendees spending at the event

49 Weighted average based on number of ticket holders.

Average spend per person per night

% of respondents

With friends or family £3 28%

Hotel and similar accommodation (e.g. B&B) £78 47%

Holiday centre/village £65 1%

Youth hostel - 0%

Camping/ caravan accommodation £20 10%

Other holiday accommodation, e.g. self-catering accommodation

£53 2%

Boat £16 7%

Other £25 4%

Source: KPMG analysis of survey data

Copyright Land Rover BAR. Copyright TEAMORIGIN Events.

27

Source: KPMG analysis of survey responses

Figure 8: Breakdown of spectator spending

Only non-resident spectators who stayed overnight will have incurred accommodation costs. In total 28% of the non-resident spectators surveyed stayed at least one night.

Of those non-residents staying overnight to attend the event, on average they spent £66 per night per person on accommodation. There was a wide

variation in the value of spending on accommodation, however, with the maximum amount spent at £300 per person per night. The amount spent varied across the type of accommodation stayed in, as shown in Figure 7 below, with the average cost per person per night being the highest, on average, for hotel (or

equivalent) accommodation. This was where the largest proportion of survey respondents staying overnight stayed.

Aggregating the average spectator spending figures up to all attendees of the event provides an estimate of the overall spectator spending linked to attending the ACWSP 2015. This is shown in figure 8 below.

£5.9mTotal spectator spending:

96,888in ticketed areas

110,349outside ticketed areas

207,237total spectators

Average spend:£14.27 outside ticketed areas£2.1m

74,136day visitors

Average spend:£11.51 in ticketed areas £14.27 outside ticketed areas£1.9m Average spend:

£19.82 in ticketed areas £24.21 outside ticketed areas£0.6m

Average spend:£1.58 in ticketed areas £14.00 outside ticketed areas£0.1m

Average spend:£23.54 in ticketed areas £87.22 outside ticketed areas£0.7m

Average spend:£20.80 in ticketed areas £69.49 outside ticketed areas£0.1m

74,136residents

12,589day visitors

6,537overnight stayers

2,554day visitors

1,073overnight stayers

22,752non-residents

19,126in area for event

3,626in area anyway

4,419commercial

stayers

460commercial

stayers

2,118non-commercial

stayers

715stayed additional

nights

255non-commercial

stayers

28

4.4

The Louis Vuitton America’s Cup World Series Portsmouth 2015

4.4.1 The economic impacts from spectator spending

Within this section of the report we are focused only on the impact of the non-VIP spectators 50, and have excluded those who watched from boats in this analysis. The impacts include GVA generated from day time spending as well as accommodation spending for those who stayed overnight.

This spectator spending generated additional economic activity and hence additional GVA linked specifically to their attendance at the ACWSP 2015.

Based on survey responses, the estimated gross GVA generated through spectators spending due to their attendance at the ACWSP 2015 was £5.8 million, comprising:

• £3.2 million of indirect GVA from spending by spectators attending the event;

• a further £1.9 million in indirect GVA in the supply chain; and

• £0.8 million induced GVA.

The spectator spending arising from attendance at the event also generated employment though the additional economic activity generated. We estimate the employment impacts based on the GVA figures above, using ONS data on the average GVA per worker in each of the relevant industries.

The estimated gross employment impact from spectators’ spending at the ACWSP 2015 was 132 FTEs. This is comprised of an indirect employment effect of the total spectator spending of 120 FTE’s and induced effects of 12 FTEs.

4.4.2 Assessing the net economic contribution of spectator spending at the ACWSP 2015

As explained above, although the event generates economic activity itself, it may be at the expense of other events/activities. If spectators would have otherwise undertaken an alternative activity in the UK, and spent the same amount of money, then their spending, and the subsequent GVA generated in the UK economy cannot be considered additional. This foregone economic activity as a result of attending the ACWSP 2015 is known as displacement.

To estimate the extent of displacement associated with consumers’ spending at the event, we asked survey recipients whether their attendance at the ACWSP 2015 event meant that they would miss an alternative activity (either at the same time as the ACWSP 2015 event or at another time). We found that:

• 11% of non-resident respondents would miss an alternative activity due to attending the ACWSP 2015 event, with estimated average daily forgone spending on that alternative activity of £19 in Portsmouth and around £87 elsewhere in the UK;

• 10% of Portsmouth resident respondents indicated they would miss an alternative activity, with, on average, estimated forgone spending of £25 per day in Portsmouth and just under £46 per day in the rest of the UK; and

• some of these respondents who stated they had forgone another activity, identified that they would have forgone spending abroad, on average of around £33 and £38 per day by Portsmouth and non-Portsmouth residents respectively – this, however, would not displace UK economic activity.

50 VIP impacts are captured within the hospitality spend.

Figure 9: Average spending of event attendees

Average Spending of

non-residents

Average spending of

residents

In Portsmouth £18.55 £24.66

Elsewhere in the UK

£86.82 £45.47

Outside of UK £37.66 £32.95

Number of non-resident respondents= 101Number of resident respondents= 57Source: KPMG analysis of survey results

We used these figures to estimate a total of roughly £1.5 million of spectator spending which could have been displaced from elsewhere in the UK, representing 26% of the total spectator spending.

When translated into GVA, indirect and induced impacts, this suggests displaced GVA of £1.5 million, meaning the net GVA impact spectator spending was £4.3 million. This equates to a net employment impact of 98 FTEs, comprised of 89 indirect FTEs and 9 induced FTEs.

4.4.3 The potential for higher economic impacts of the ACWSP 2015

The potential impacts of the event could have been greater if the Sunday events, expected to have the highest attendance, had not being cancelled, and if bad weather had not impacted turnout on the Thursday and specifically on the Friday.

In order to provide an indication of the potential impact of the ACWSP 2015 over a fair weather weekend, we have scaled the estimated impacts up based on pre-booked ticket sales.

We estimate that if all those who had pre-booked tickets had attended the event, the gross GVA generated through spectator spending at the ACWSP 2015 could have totalled £10.2 million, resulting in net GVA, taking account of displacement of £7.5 million from spectator spending.

29

£1.5 million

of displaced spectator spending

the net GVA impact spectator spending

of induced GVA.

£0.8 million

the estimated gross GVA generated through spectators spending due to their attendance at the ACWSP 2015

of GVA in the supply chain

£1.9 million

£5.8 million

È

of indirect GVA from spending by spectators attending the event

£3.2 million

- =£4.3 million

Èif the weather had been better £4.3m could have reached £7.5m

£7.5 million

Copyright Land Rover BAR. Copyright TEAMORIGIN Events.

30

4.5 The economic impact of other attendees spending at the ACWSP 2015 event

4.5

The Louis Vuitton America’s Cup World Series Portsmouth 2015

As well as spending involved in organising the event and by spectators, the spending of other attendees at the ACWSP 2015 generates positive economic contributions. For example VIPs spending on hospitality packages, spending by the teams competing in the event and media attending the event.

There were six teams participating in the ACWSP 2015, all of which travelled to and stayed in Portsmouth in the run up to, and for the duration of, the event. Teams arrived two weeks before the event in order to establish their team bases, build and start practicing on their AC45Fs, which they may only sail for a restricted number of training days prior to events.

The boats are crewed by five-man teams, with additional crew in reserve. It is not only the crew who fly around the world competing in the ACWS races, their entourage includes coaches, trainers, meteorologists, design teams and family members. On average the teams that attended the ACWSP 2015 were made up of 25 members.

The boats are also shipped to each event in containers.

51 We have based spending assumptions on the accommodation spend of the teams, and the average non-accommodation spend outside of the ticketed areas of spectators staying overnight,

52 It was not possible to quantify the impact of the spending by these groups due to a lack of available information on where they are from (whether they are local to the area or not), whether they stayed overnight, and their levels of spending.

Additional spending comes from the spending by media and other workers at the event. For many of these we were unable to identify the level of spending or whether they stayed overnight locally. However for international media, we have assumed they stayed for the full period that the media centre was open51.

We also capture the spending by VIPs and sponsors on hospitality packages.

These avenues of spending add to the economic impact of the ACWSP 2015.

We estimate that the total GVA generated through team, VIP and sponsor spending on accommodation and travel with the event travel agency and on hospitality was £0.4 million.

The total employment generated through this spending was 14 FTEs.

However, this does not capture all the team, VIP and sponsor spending in the area and so underestimates the economic impacts. It also does not capture the economic impacts generated by the spending of the hundreds of UK media personnel, exhibitors and volunteers at the ACWSP 2015.52 Many of the events media outlets, for example from the BBC, ITV, BT Sport, national newspapers and photo agencies would not be local residents and so would may have travelled and stayed overnight for the event, generating additional revenues for the local economy which we have not been able to capture.

The total employment generated through this spending was

14 FTE’s.

estimated total GVA generated through team, VIP and sponsor spending on accommodation and travel with the event travel agency and on hospitality

£0.4 million

31

“It has helped to promote Portsmouth’s reputation as a great place to come to with events like Victorious Festival, America’s Cup as well as many others and has definitely increased trade to our business.” A local Portsmouth business

Copyright Land Rover BAR. Copyright TEAMORIGIN Events.

32

16%

49%

35%

4.6

The Louis Vuitton America’s Cup World Series Portsmouth 2015

4.6 The economic impact of the ACWSP 2015 event on local business

In addition to the positive economic impact on local business suppliers to the ACWSP 2015 event in Portsmouth, other local business may also be expected to benefit from the event. This is because the increased number of visitors to the area, many of whom spend in the local area (as our analysis above shows) generated additional business revenues.

However, for some businesses, these positive impacts from increased visitor numbers during the event in Portsmouth may be offset by any disruption to normal business, e.g. from road closures 53 and changes to the normal consumption behaviours of local residents.

In order to better understand the business impact of the ACWSP 2015 event we surveyed a sample of local businesses to obtain the local business perspective. Details of the survey methodology can be found in the Technical Appendix to this report.

Most of the businesses (90%) that we received responses from were supportive 54 of the ACWSP 2015 event, and many had experienced positive impacts in terms of increased sales during the event, and for some, after the event. Some local businesses reported that they had also taken on additional staff during the event and increased their investment levels in anticipation of increased activity. Approximately two-thirds of the businesses surveyed said that they undertook special marketing or promotional work during the event. Such marketing or promotional work included later opening hours, social media promotion and taking a stall at the event.

53 During the ACWSP 2015 the seafront was closed.54 Supportive or very supportive

4.6.1 Impact of the ACWSP 2015 event in Portsmouth on the sales of businesses surveyed

Just under half of the businesses surveyed said that the ACWSP 2015 event had, overall, increased the sales of their business. A much smaller proportion of businesses surveyed (16%) indicated that the event had caused a decrease in their sales, for example, due to disruption to the business and to local customers and regular tourists avoiding the area due to the event.

Figure 10: Overall impact of the ACWSP 2015 event on business sales (49 responses)

Just under half of the businesses surveyed said that the ACWSP 2015 event had, overall, increased the sales of their business.

Source: KPMG analysis of survey data

Increase in sales

No Effect

Decrease in sales

33

The impact on sales varied both over time and across individual businesses.

3 months prior to event

The majority of businesses surveyed indicated that in the three months prior to Portsmouth hosting the ACWSP 2015 event there was no effect on the sales of their business as a result of it. And of the 31% who reported an increase in their sales, most saw a relatively modest increase in sales of 25% or less. Only two of the businesses reported an increase in sales of over 25% in the 3 months prior to the event, one of which reported an increase in sales of between 100% and 150%. This business was a hotel based in Portsmouth which is likely to have benefited significantly from the additional visitors staying in the area.

During the event

The greatest impact on sales was experienced, as would be expected, during the event itself. Almost a third of all businesses surveyed reported an increase in sales of up to 25%. A further 9% of businesses surveyed experienced a 26 to 50% increase in sales. Again one business reported an increase in sales during the event of 100 to 150% compared to the expected revenues without the event.

A small proportion of businesses (14%) reported a decrease in sales whilst the event was being held. 10% found their sales decreased between 1 and 25%. One business, representing 2% of respondents, reported a fall in sales of between 76% and 100%.

1 week after the event

For some businesses, the positive impact of the ACWSP 2015 event lasted beyond the event itself in to the following week. 17% of all businesses surveyed reported experiencing an increase in sales in the week after the event. 9% of businesses surveyed experienced a 1% to 10% increase in sales, whilst 6% experienced an 11% to 25% increase. Just one business reported a 26% to 50% increase in sales.

Only 6% of businesses surveyed reported a decrease in sales in the week following the event. For these businesses the decrease in sales was between 1% and 10%.

4.6.2 Impact of the ACWSP 2015 in Portsmouth on the employment levels of businesses surveyed

We asked the businesses what effect the ACWSP 2015 event had had on their staffing levels. Any increase in employment levels at local businesses not directly involved in supplying the event, but benefiting from the increased number of visitors to the area, would be a positive spillover impact of the event in Portsmouth.

It is unlikely that local businesses would take on permanent staff as result of the ACWSP 2015 in Portsmouth, as to do so would indicate that they expect a permanent uplift in their levels of activity as a result of the event. While this may arise from the event raising the profile of Portsmouth and attracting more visitors, due to the costs of employing additional

staff it is more likely that businesses would wait to see whether this effect materialised. This is likely to be particularly the case as there is greater uncertainty of the longer term impacts of the event given that 2015 was the first year Portsmouth hosted the event.

Indeed, most businesses surveyed tended to have increased the number of their temporary staff (20%) rather than taking on new permanent staff (only 4%). The increases in staff numbers were very modest however.

Anecdotal evidence suggests that rather than employing additional workers, some businesses may have simply increased the hours worked by existing staff. Where pay is based on hourly rates, this would also have resulted in an increase in staff incomes over period, and would generate additional economic activity through spending of those wages in the economy.

Figure 11: Change in sales before, during and after the event for businesses reporting an increase in sales as a result of the ACWSP 2015 event 55

55 Before the event: 18 responses, during the event: 26 responses, after the event: 15 responses. “No effect” not included.

Per

cen

tag

e o

f res

po

nd

ents

1-10%

11-25%

51-75% 150-200%

76-100% 200%+

100-150% Don’t know26-50%

0

20

40

60

80

100

1 week after the eventDuring the event3 months prior to the event

34

Although these additional employment impacts in businesses surveyed are small, if there were similar impacts across the larger cohort of Portsmouth businesses this would suggest more substantial employment impacts, leading to higher incomes and employment over the event period, and in some cases, longer term.

Additionally, we understand from the businesses surveyed that a number would increase their employment levels for the ACWSP 2016 event in Portsmouth having experienced the event in 2015. 24% of businesses surveyed would increase their temporary staff and 10% increase their permanent staff.

4.6

The Louis Vuitton America’s Cup World Series Portsmouth 2015

On average, those businesses surveyed which reported that they would increase their staff levels for the 2016 event, indicated that they would take on an average of 3 additional permanent staff and 4 additional temporary staff for the ACWSP 2016 56.

In contrast, a small proportion of the businesses surveyed have reported that they would plan to employ fewer permanent and/or temporary staff when compared to the ACWSP 2015. Of the businesses surveyed, 6% and 2% reported that they would plan to hire fewer temporary and permanent staff, respectively.

56 Based on a total response rate of 6 for permanent staff and 8 for temporary staff. The minimum reported number of permanent staff reported was zero whilst the maximum was 10. The minimum reported number of temporary staff was 1 whilst the maximum was 8.

Figure 12: Increases in permanent and temporary staff for the 2015 ACWS

Min Max Average Number of responses

2015 Permanent staff 1 2 1.5 2

Temporary staff 1 4 2 6

Source: KPMG analysis of survey results

Figure 13: Effect of the ACWSP 2015 on the investment or planned investment in businesses surveyed (49 responses)

Source: KPMG analysis of survey data

Figure 14: Expected future business impacts (50 responses)

Increase in investment

No Effect

Don’t know

Decrease in investment

Portsmouth’s hosting of the ACWS event will increase visitor numbers to the area in the future

The ACWS event has improved consumer awareness of your business

Portsmouth’s hosting of the ACWS event in the area will have a positive short to medium term impact on my business

Portsmouth’s hosting of the ACWS event in the area will have a positive long term impact on my business

Strongly agree

Tend to agree

Tend to disagree

Strongly disagree

Don’t knowNeither agree nor disagree

4%

14%

16%65%

0% 20% 40% 60% 80% 100%

35

Case Study: HovertravelHovertravel is the world’s longest running commercial hovercraft services, and is the only scheduled passenger hovercraft service in Europe. The company offers a frequent service between Southsea, Portsmouth and Ryde, Isle of Wight.

In preparation for the ACWSP 2015, Hovertravel scheduled four extra evening services (two each way) on the Saturday night of the event. We were told that this was the first time that the firm had put on late services. All tickets for the crossings sold out in advance.

Additionally on Saturday 25 July an additional 16 services were put on during the day to deal with the high levels of demand, representing an 8.8% increase in crossings. These were not scheduled in advance due to the uncertainty over visitor numbers to the first ACWS event in Portsmouth, and due to the ability to add additional runs at very short notice.

Sales on Saturday 25 July were 9% higher than the average for a Saturday in the summer holidays in 2015 (excluding bank holidays and special events). When compared to the same summer holiday period in 2014, sales on Saturday 25 July were 28% higher than the average for a summer holiday Saturday (excluding bank holidays and special events).

Hovertravel indicated that its aims to increase passenger numbers by 15-20% compared to a normal weekend in July during the ACWSP 2016 event. It believes this can be achieved through scheduling more additional services in advance, including more evening services, and greater marketing of services.

Case Study: Portsmouth Watersports Centre Portsmouth Watersports Centre offers courses for both children and adults in various activities ranging from sailing, stand up paddle boarding, kayaking, canoeing, powerboating and land based activities. During the summer months of 2015 there was a team of 15-20 staff working at the centre.

The centre invested in a trade stand at the ACWSP 2015 event to promote the activities and courses they offer. They also ran a sailing and windsurf simulator for people to experience the basics on land. The centre stated that the main aim of this promotional activity was to publicise the courses on offer and generate interest which could be followed up on following the event. This paid off – the centre reported that they converted around half the leads they followed up, resulting in 20 bookings made over the event weekend compared to around six bookings which would be expected over a normal weekend.

In the week following the event they also saw around a 50% increase in sales compared to what they would normally expect in a typical week in the summer.

Most of the booking taken were for taster sessions across all the activities on offer, including a number of bookings for sailing taster courses. Many of the bookings were from local residents, however, a small proportion were from individuals living outside of the local area.

While the centre benefited from the ACWSP 2015 event, it suggested that there is an opportunity at the 2016 event for to promote sailing to a greater extent, for example, through sailing taster sessions on the water to give people the opportunity to experience the sport. This may have the longer term benefit of increasing interest and take up of the sport.

4.6.3 Impact of the ACWSP 2015 on the investment levels of businesses surveyed

In addition to the impact of the ACWSP 2015 on local businesses’ sales and, to a lesser extent, employment levels, some businesses also reported an impact on investment levels. Approximately 16% of businesses surveyed said that they had increased, or planned to increase their investment levels as a result of the event.

Furthermore, there are indications from the businesses surveyed that they consider that there are a range of wider benefits from the hosting of the ACWSP 2015 that will benefit their business and hence the local and national economy in the future. For example:

• over three-quarters of the businesses surveyed agreed or strongly agreed that Portsmouth’s hosting of the ACWSP 2015 will increase future visitor numbers to the area. Only 2% of businesses surveyed disagreed with this statement;

• over half of businesses surveyed thought that the ACWSP 2015 event had improved consumer awareness of their business; and

• 55% of the businesses surveyed agreed or strongly agreed that Portsmouth’s hosting of the ACWSP 2015 event will have a positive short to medium term impact on their business.

57 http://www.hovertravel.co.uk/about-hovertravel.php, Hovertravel data

Source: Information from Hovertravel

Source: Information from Portsmouth Watersports Centre

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4.7

4.7 Potential longer term impacts

The hosting of the ACWSP 2015 is likely to generate longer term benefits for the local economy and the UK more widely.

4.7.1 Impacts on Portsmouth’s tourism and business profile

One way in which the hosting of the ACWSP 2015 may have longer term positive impacts on the local Portsmouth economy is through the impact it has on future tourism in the area.

Survey evidence suggests that a large proportion of the non-resident spectators of the ACWSP 2015 would return to the city.

Almost two-thirds of non-resident spectators surveyed said they were very likely to return to Portsmouth or the local area for a reason other than attending a future ACWS event. And an additional 20% said they were fairly likely to return.

Tourism is an important part of the Portsmouth and wider Hampshire economies. Figures suggest that tourism in these areas is already starting to see a turnaround, going against the grain of the national average.57 It is estimated that total direct visitor expenditure in Portsmouth in 2014 was around £439 million, generating over £601 million of income for local businesses through additional indirect and induced effects.

57 Portsmouth Tourism Economic Impact Estimates 2014

The boost to tourism generated by the ACWSP 2015 will further help the city and the surrounding area build on this success, and hence generate additional economic activity in the area.

The majority of spectators who indicated that they would return to Portsmouth said they would return for a day trip. This will generate revenues for local businesses through retail spending, spending in local cafes and restaurants, as well as at local tourist and leisure attractions.

Over a fifth of respondents expected that they would return for a weekend or longer. This would bring with it additional daily expenditure as well as accommodation spending, with the impact on local businesses likely to increase with the length of the stay.

At least some of this expected increase in visitors to Portsmouth can be directly attributed to the ACWSP 2015 event. Around 25% of non-resident spectators surveyed indicated that their attendance at the ACWSP 2015 event had increased the likelihood of them returning to Portsmouth in the future.

Tourism is an important part of the Portsmouth and wider Hampshire economies. Figures suggest that tourism in these areas is already starting to see a turnaround... Figure 15: If you would return,

how long would you visit for?

Source: KPMG analysis of survey data

For a day trip

For a week

For longer

For a weekend

The Louis Vuitton America’s Cup World Series Portsmouth 2015

5%3%

70%

22%

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The event itself also attracted a number of high profile VIPs, including senior executives of large multinationals for example from America’s Cup and team sponsors58, providing additional exposure of the city and what it can offer to the business community.

As well as the impact on those who attended the event, there are a range of different channels through which the hosting of the ACWSP 2015 will boost tourism and hence economic activity in the local area. The ACWSP 2015 was followed by spectators from across the world – the event itself hosted 118 media outlets from 15 countries.

Coverage of the event began in November 2014, when Portsmouth was announced as the host, and continued until after the end of the event in August 2015. Cumulative total audience reach, for the entire 10 month period, was 1,006,819,339 59 across all media outlets; with TV and radio accounting for 57% of this. On UK television alone there was over 17 hours of coverage, 10 of these being on national news stations. The AVE60 for the exposure over the entire period was £18 million in the UK with an additional £4 million from abroad.61 A further £4 million was estimated to have been lost due to Sunday’s racing not going ahead as planned. The total figure of £22 million represents the equivalent value of the coverage, had the same airtime and column inches had been used as advertising. While it is not a direct comparison it is an indicator of the breadth of coverage and reach that the event had, and the value this could bring to the Portsmouth economy.

More generally the association of the city with a high profile international event can have benefits in terms of inward investment, as it can provide a selling point for investment in the city, and the UK. An example of this is the Spinnaker Tower naming rights deal. In early June 2015 Emirates was announced as the naming rights sponsor of the Spinnaker Tower in Portsmouth, in a deal worth £3.5 million to the city over five years. Portsmouth City Council report that the timing of the deal, just weeks before the ACWSP 2015, formed a key part of their pitch for sponsorship of the iconic tower,

58 America’s Cup Partners and Suppliers: Louis Vuitton, BMW, Bremont, Bermuda Tourism Authority, XL Caitlin, Goslings, Sail Racing, Moet et Chandon, Red Bull, Land Rover BAR: Land Rover, CMC, 11th Hour Racing, BT, Henri Lloyd, KPMG, Siemens, JCB, Linklaters, Low Carbon, Siemens, PA Consulting, BAE Systems, Scorpion, CD ADAPCO Team Soft Bank Japan: Softbank, Yamaha, Airbus Team Emirates New Zealand: Emirates Airlines, Omega, Toyota, New Zealand Groupama Team France: Groupama Oracle Team USA: Oracle, BMW, Bremont, Airbus, Parker, Yanmar, Sail Racing Artemis (Sweden): Ulysse Nardin, Pelle P

59 The Louis Vuitton’s America’s Cup World Series Portsmouth 2015 Media Report which collects coverage details from November 2014 until August 2015. Print/online coverage numbers were sourced from www.precise.co.uk, Broadcast and TV coverage was sourced from ww.tveyes.com

60 AVE is the monetised value of what the campaign additional coverage would cost if it were advertising space’

61 This is based only on coverage over the month of the event

and that without the high profile platform that the event provided, they would not have secured a deal of such value or with such a prestigious international brand.

The total value of these impacts cannot be measured in the short term, but combined have the potential to bring longer term business gains in the future to both Portsmouth and the rest of the UK.

Copyright Land Rover BAR. Copyright TEAMORIGIN Events.

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4.7.2 Social impacts of the ACWSP 2015

Large scale events have the potential to deliver positive effects beyond the immediate economic impacts. Guidance set out within the eventIMPACTS 62

4.7.2

toolkit highlights the wider positive benefits which can be delivered by events, including social impacts on the communities involved. Although there is little concrete evidence to quantify these impacts, the guidance supports the idea that events can deliver directly, or act as catalysts for, wider social impacts such as the development of community and the advancement of skills.

Most relevant in the case of the ACWSP 2015, is the potential impact the event may have had on skills and volunteering. Events can offer diverse opportunities for people to gain valuable experiences

62 A collaboration between UK Sport, Visit Britain, EventScotland, the London Development Agency, the North West Development Agency, Yorkshire Forward and Glasgow City marketing Bureau

63 eventIMPACTS guidance http://www.eventimpacts.com/social/skills-volunteering/

Through its volunteer programme and work with sponsors, the ACWS 2015 aimed to engage, inspire and upskill local people to deliver longer term social benefits.

The Louis Vuitton America’s Cup World Series Portsmouth 2015

and skills that they may not be able to develop within their own working environments and provide transferable skills which can be applied in current or future employment63. The development of people’s skills and volunteering through events can also help engage individuals in volunteering and social activities more widely and in this way can have long term social and economic impacts.

Through its volunteer programme and work with sponsors, the ACWS 2015 aimed to engage, inspire and upskill local people to deliver longer term social benefits.

Copyright Land Rover BAR. Copyright TEAMORIGIN Events.

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Case Study: Wavemakers volunteers The 250 Volunteers that formed the ‘Wavemakers’ team were integral to the success of the ACWSP 2015, on land and on water.

The ‘Wavemakers’ applied for their position and were selected via a selection and interview process. To prepare for the event, Wavemakers attended training sessions, designed and delivered by Isle of Wight and Portsmouth based HTP Training, a leading work-based training providers.

The majority of Volunteers came from the Portsmouth area, which ensured that they were proud and passionate about their home town, knowledgeable about the area, and able to give visitors a warm welcome and assistance when required.

Wearing their distinctive ‘Wavemaker’ uniform, which consisted of red jackets and shirts, their main roles involved welcoming visitors to the Louis Vuitton America’s Cup World Series Portsmouth by acting as ‘Meet and Greeters’ at the event Park & Ride sites, on the water as course marshals, and at transport terminals in the city and as guides along the walking route from The Hard to the event sites. Wavemakers were also positioned at the event site on Southsea Common, the Guildhall, Gunwharf Quays, Gosport and the Historic Dockyard, ensuring that every single visitor to the event site had an amazing and unforgettable experience.

Geoff Terry, local resident and ‘Wavemaker’ Volunteer Manager, commented:

“Portsmouth is my home, it’s a fantastic place to live and I’m proud that a world class event like the America’s Cup World Series is going to take place on our waters. It’s was important that we show the spectators everything our great City has to offer. Therefore it was essential we had local volunteers on-board sharing their knowledge and passion – I was incredible proud to be part of the incredible team of ‘Wavemakers’.”

Case Study: Travis Perkins Travis Perkins is an official Partner for the ACWSP 2015 and 2016.

One of the key areas of focus for its sponsorship was to make the event as accessible as possible for wheelchair users and those with reduced mobility, allowing them to enjoy the event. Part of the Travis Perkins sponsorship was used to fund ramps and viewing platforms for the grandstand, stages and race course.

As well as sponsoring the event accessibility platforms, Travis Perkins provided 10 staff for each day of the ACWSP 2015 event to act as hosts for these platforms. The role of the volunteers was to be a point of information for those using the platforms, and to provide assistance where possible.

As part of its sponsorship of the event Travis Perkins helped to fund the Portsmouth Sailing Project. This was an initiative arranged by the 1851 Trust, with the aim to inspire a new generation into sailing, whilst reducing the barriers to participation of young people from diverse backgrounds. Between 27th July and 30th August 2015 the project provided sailing taster sessions for young people aged 9-14 years. As part of the scheme, those who took part in the taster sessions were then able to access ongoing sailing tuition at a reduced cost. The aim being to facilitate ongoing engagement and to lower the barriers to participation over the longer term.

In addition to the support provided, Travis Perkins will also be an Inclusivity Partner to the 1851 Trust helping to support the 1851 Trust Visitor Centre which will be opened early in 2016 at the Land Rover BAR base in Portsmouth.

Source: Information from TEAMORIGIN Events.

Source: Information from Travis Perkins

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