Treatment of the 2011 Rugby World Cup in New Zealand s balance of payments and national accounts

Transcription

1 Treatment of the 2011 Rugby World Cup in New Zealand s balance of payments and national accounts 1

2 Crown copyright This work is licensed under the Creative Commons Attribution 3.0 New Zealand licence. You are free to copy, distribute, and adapt the work, as long as you attribute the work to Statistics NZ and abide by the other licence terms. Please note you may not use any departmental or governmental emblem, logo, or coat of arms in any way that infringes any provision of the Flags, Emblems, and Names Protection Act Use the wording 'Statistics New Zealand' in your attribution, not the Statistics NZ logo. Liability While all care and diligence has been used in processing, analysing, and extracting data and information in this publication, Statistics New Zealand gives no warranty it is error free and will not be liable for any loss or damage suffered by the use directly, or indirectly, of the information in this publication. Citation Statistics New Zealand (2011). Treatment of the 2011 Rugby World Cup in New Zealand s balance of payments and national accounts. Wellington: Statistics New Zealand ISBN (online) Published in December 2011 by Statistics New Zealand Tatauranga Aotearoa Wellington, New Zealand Contact Statistics New Zealand Information Centre: info@stats.govt.nz Phone toll-free Phone international

3 Treatment of the 2011 Rugby World Cup in New Zealand s balance of payments and national accounts Purpose This article explains the treatment of economic activity associated with the 2011 Rugby World Cup in New Zealand s balance of payments (BoP) and national accounts statistics in the upcoming September 2011 and December 2011 quarter publications. Background to the 2011 Rugby World Cup The New Zealand Rugby Union (NZRU) was awarded the right to host the 2011 Rugby World Cup (RWC) by the International Rugby Board (IRB) and Rugby World Cup Limited (RWCL) in The event was held between 9 September and 23 October During this period 48 games were played across New Zealand. Visitors for the RWC According to international travel and migration statistics for September 2011 and October 2011, there were 74,400 RWC visitor arrivals in September 2011, and 53,200 in October In total, there were 133,200 RWC arrivals between July 2011 and October This included RWC players and officials. Figure 1 shows the effect of the RWC on visitor arrivals leading up to and during the tournament. Figure 1 Monthly visitor arrivals (000) Monthly visitor arrivals October Actual Seasonally adjusted Trend O 08 N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O Source: Statistics New Zealand Contractual arrangements There are contractual arrangements associated with the RWC which detail the roles and responsibilities of each party. It is important to understand these arrangements to correctly record and interpret the effects in New Zealand s accounts. 3

4 The IRB is based in Dublin, Ireland. It is the world governing and lawmaking body for the game of rugby union, 1 and has representatives from rugby union boards around the world (including the NZRU). The RWCL is a subsidiary of the IRB, and is also based in Ireland. The RWCL owns all rights to the RWC. It sub-contracts the RWC through bids from rugby unions from around the world. Every four years countries bid to host the world cup event New Zealand successfully bid to host the 2011 tournament. The NZRU won after submitting a bid with the New Zealand Government as underwriters of the tournament. The NZRU then entered into an agreement with the IRB and the RWCL. There were three key elements to the agreement. 1. The NZRU is contractually bound to pay the IRB/RWCL a set fee the tournament fee. 2. All revenue from ticket sales was to remain in New Zealand. Rugby New Zealand 2011 (RNZ 2011) was formed by the NZRU and the New Zealand Government. It was authorised to run the tournament, including all logistics, ticketing, and the matches. All revenue from ticket sales accrued to RNZ Its costs were all costs associated with organising and running the tournament. If RNZ 2011 did not meet these costs, the New Zealand Government would underwrite the loss. 3. All commercial activity associated with running the RWC was the responsibility of the IRB/RWCL. This included arranging sponsorship, licensing, and broadcasting contracts. The IRB/RWCL would receive all the revenue from these contracts. Impact on the balance of payments BoP measures and records non-resident transactions made between New Zealand residents and non-residents. Transactions are recorded at the time ownership changes, or, in the case of services, when the service is performed. The RWC spanned two quarters September 2011 and December All commercial rights are conceptually recorded over these two quarters, regardless of when fees were paid or when revenue was received. We have apportioned these transactions across the two quarters, based on the number of games played in each. The BoP current account will be affected during the September and December 2011 quarters as follows. Audio-visual broadcast rights imports and exports reflects all television and radio broadcasting contracts between New Zealand-resident companies and the RWCL. The New Zealand-host broadcaster receives revenue from the RWCL for providing the host broadcasting service, and pays the RWCL for broadcasting rights along with all other broadcasters. Advertising and market research imports reflects all sponsorship provided by New Zealand-resident companies to the RWCL. Other royalty payments imports reflects licensing and merchandising rights payments made by New Zealand-resident companies to the RWCL, and also the tournament fee payable by the NZRU to the RWCL. A large number of overseas visitors travelled to New Zealand for the RWC The following two points outline their impact on BoP. 1 International Rugby Board IRB Organisation 4

5 When non-residents fly to New Zealand on New Zealand-resident airlines, their airfares are captured as an export of transportation services. When non-residents spend money in New Zealand, this is captured in the current account as an export of travel services. All international ticket sales revenue before the RWC 2011 (advance ticket sales) was classified as prepayment for services yet to be delivered, on an accrual accounting basis. The revenue was recorded in the BoP financial account as the tickets were sold, with a consequential rise in net liabilities in the international investment position (IIP). When the service is consumed (the game has been played), the following are recorded. Spending on tickets, along with all other spending, is recorded as an export of travel services in the BoP current account The financial account records transactions that decrease New Zealand s liabilities A fall in the IIP liabilities. Impact on quarterly gross domestic product The RWC games took place between 9 September and 23 October. The economic activity recorded in the national accounts, which occurred as a result of this event, is also seen across both the September and December 2011 quarters. Statistics New Zealand publishes two measures of economic growth (or gross domestic product (GDP)) on a quarterly basis the production measure (GDP) and the expenditure measure of GDP (GDE). Conceptually, the value added of goods and services produced in an economy in a given period is matched by the value of final expenditure on those goods and services (GDE). Value added is the difference between the gross output of an industry (sales) and the intermediate consumption (goods and services produced by other industries) of the industry. Gross domestic product The production measure of GDP measures the value added to the economy by each industry. On the production side, the likely effect of the RWC is predominantly in the service industries, particularly in the following categories. Accommodation, restaurants, and bars this category captures activity from spectators and participants using accommodation, restaurant, and bar services. Retail trade reflects the activity in supermarket and grocery stores; and in other personal and household goods retailing, which includes shops that sell merchandise and souvenirs. Transport and storage includes international travel for overseas visitors and domestic travel for New Zealanders and overseas visitors travelling around the country for the games. Culture and recreation includes television services used to broadcast the RWC games, as well as the use of sports grounds and services to sports. Construction captures repairs and maintenance, construction on temporary buildings, and other RWC-associated construction activity on non-residential buildings. 5

6 Expenditure on gross domestic product The expenditure measure of GDP (GDE) measures the final expenditure in the economy. The expenditure of New Zealanders is recorded in the relevant components of household consumption expenditure. Four areas were most likely to be affected. Durables includes spending on merchandise, souvenirs, and other RWC-related products. Non-durables captures expenditure on food and alcohol from supermarkets, grocery shops, and bottle stores. Services reflects spending on transport, recreation, accommodation, and café and restaurant services. Services includes spending on RWC tickets purchased in New Zealand. We assumed that any tickets purchased in New Zealand were bought by New Zealand residents. Net tourist expenditure measures the expenditure by New Zealanders overseas, less the expenditure by overseas tourists in New Zealand (as they are not part of the New Zealand economy). In addition to New Zealand households expenditure we also see expenditure in other areas measured by GDE. Export of services includes the expenditure of overseas residents (eg the amount spent on tickets by non-residents). Gross fixed capital formation (GFKF) captures work done on stadium upgrades (and/or the building of new stadiums) and other work on non-residential buildings around the country. As this work was done before the RWC kicked off, it was picked up in previous quarters when the investment in these projects occurred. Data issues Statistics NZ has collected additional data to measure activity related to the RWC. This data is used with existing data sources to produce the BoP statistics and the national accounts. However, it is difficult to separately identify the impact of the RWC. New Zealand-resident airlines are asked to provide the total value of airline tickets sold overseas each quarter. When using this to measure exports of transportation services we apply a convention that all airline tickets sold overseas are purchased by non-residents. Therefore, any New Zealand-resident airline tickets purchased overseas by RWC visitors are included in exports of transportation services. When measuring match tickets sold abroad, we applied a similar convention to the above in that all match tickets sold abroad were sold to non-residents, although it was possible for New Zealand residents to buy from overseas. With current data it is not possible to make that distinction. We use data from the International Visitor Survey (IVS) to estimate New Zealand's exports of travel services. IVS expenditure numbers are derived by rating up values obtained from the survey by overseas departure numbers. This means that, for the September 2011 quarter, we measured the expenditure of overseas visitors who left the country during that period. Many visitors may have arrived in New Zealand during September 2011 and departed in October Travel expenditure by these visitors will be included in the December 2011 quarter IVS results. Expenditure reported by the IVS includes money spent on match tickets, food, accommodation, and other goods and services while in New Zealand. Approximately 19.0 percent of departing visitors surveyed in the IVS in the September 2011 quarter stated they had been here for the RWC. This compares with around

7 percent of total departing visitors who, on their arrival cards, had indicated they were here for the RWC. Conceptually our main indicator for household consumption expenditure is the Retail Trade Survey, which does not distinguish between consumption by residents and nonresidents. We make adjustments using other data sources to remove the consumption by non-residents in New Zealand (travel credits) and to include New Zealand residents overseas (travel debits), to align with the scope of the New Zealand economy. Activity outside of the scope of BoP and national accounts Activities such as unpaid work (volunteers) are excluded from the scope of national accounts, so while this work made an important contribution to the tournament it will not be reflected in GDP. The value of volunteering in New Zealand was previously examined in the Non-Profit Institutions Satellite Account

8 Further information For enquiries please contact: James Wilson Wellington Glossary of abbreviations NZRU New Zealand Rugby Union RWC Rugby World Cup IRB International Rugby Board RWCL Rugby World Cup Limited BoP balance of payments IIP international investment position RNZ 2011 Rugby New Zealand 2011 Limited GDP gross domestic product GDE gross domestic expenditure GFKF gross fixed capital formation IVS International Visitor Survey 8