As the battle for the America’s Cup continued in the Mediterranean off Valencia this week, three sailing professionals in the pay of a future challenger were touring unglamorous British ports, imagining them remade into billion-pound centres of international sailing.

Such is the transformative power of the cup, according to research conducted by Allianz, a sponsor of BMW Oracle Racing, the American team that crashed out of the contest last weekend. Even as Larry Ellison, the team’s billionaire backer, was watching his challenge come to naught, the economic report was setting out precisely what was lost and identifying the cup as the richest prize in world sport.

The winning syndicate makes an estimated $100 million (about £50 million) in profits, while the city where the cup is hosted becomes $1 billion to $10 billion richer.

Professor Tom Cannon, the Dean of Buckingham University Business School, which carried out the report, said: “The reason is the winning team gets to decide on the rules of the next competition and the place it is to be held.”

The Olympics and the football World Cup are far larger sporting events, but the best team or nation does not get to choose the location of the next contest, or set the rules.

“The America’s Cup is rather like Eurovision in that respect,” Cannon said. “The most conservative estimate for the economic effect of having the cup in your region is about $1 billion.”

This is based on the boom in New Zealand after two America’s Cups – a growth in tourism, massive investment in infrastructure and the development of a marine technology industry.

In 2003, the cup was won by Alinghi, a Swiss team, who took it back to Europe for the first time since its inception in 1851. They set up a management company to run the next contest, which in turn solicited tenders from European ports with appropriate weather conditions who were keen to host the cup. Valencia was chosen, although in the build-up stages the cup was taken on tour around Europe, a format that the next winning syndicate is likely to imitate. “In Valencia we estimate that the cup has been worth approximately $10 billion,” Cannon said.

The location was more profitable than New Zealand, being easier for tourists and sponsors to reach, easier for television audiences and with more potential for growth.

A drab regional airport now has a new terminal, connected to the port by new road and rail links. Jobs have been created (61,310, according to the organisers) and 36 new hotels rated between three and five stars have been erected in the city.

“There are knock-on effects, too,” Cannon said. “Formula One decided to run an event here for the next eight years because the infrastructure had improved so much. No other sport can earn a prize worth $1 billion but which could be worth as much as $10 billion.”

Sir Keith Mills, the millionaire entrepreneur who has announced that he is launching a challenge for the next America’s Cup, remembers Valencia before the cup arrived in town. “It was an old fishing port,” he said. “Some years ago, the city put a huge container port in front of it. The fishing harbour was run down, with drug dealers and prostitutes. It was not a safe place to go.”

Last week he was in Valencia again, showing prospective business partners for his team, TeamOrigin, around the three new marinas, one of which has been built specifically for super-yachts, and the gleaming hotels and apartments that now surround the harbour.

He has some experience of bringing a large sporting event to British shores because he was international president and chief executive of the London 2012 Olympic bid. This time, his bid will be won or lost on the high seas, with a dozen competing teams, rather than in sweaty corridors with Olympic officials.

“The two are analogous,” he said. “The Olympic team had 110 members, our America’s Cup team has 110 members.”

This week, three members of the team are looking at prospective bases for a British America’s Cup. Torquay, Folkestone, Weymouth, Felixstowe – any of these towns could become bywords for glamorous super-yacht sailing.

Cannon said: “Being a Scouser, I feel the natural place would be on Merseyside, but the area is not known for its super-yacht facilities.”

Mills was not ruling out Liverpool. “One of our concerns is how long it takes from the harbour out to the race area. I wouldn’t discount anywhere,” he said. “Although the south coast is more likely.” And, of course, he will have to win the America’s Cup first.