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Bernard Hickey: IRB should waive hosting fees

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IRB CEO Mike Miller, here with Aaron Cruden, has a sweet job. Photo / Getty Images
IRB CEO Mike Miller, here with Aaron Cruden, has a sweet job. Photo / Getty Images

As it's based in Dublin, the International Rugby Board (IRB) should know a thing or two about bailouts.

It's time it considered a request for one from the Government of New Zealand.

It has become clear this week that Kiwi taxpayers face a loss of close to $100 million if, as seems likely, hundreds of thousands of tickets are unsold.

This means we face the enviable prospect of borrowing money from China's sovereign wealth fund to, essentially, pay for a bunch of rugby bureaucrats in Ireland to swan about the world having long lunches and doling out cash to develop the game in places such as Georgia and Kazakhstan.

Let's not beat about the bush here. Our Government is likely to borrow $20 billion or the equivalent of 10 per cent of GDP this year. It is cracking down on all sorts of spending.

People will be made redundant. Public services will be cut. We are in for a fiscally painful time.

So why are we subsidising a bunch of sports bureaucrats?

IRB chief executive Mike Miller said in December last year the IRB expected to make a profit of about £95 million ($200 million) from Rugby World Cup 2011, through the sale of media rights, sponsorships and corporate event packages.

Meanwhile, the-then Labour government agreed to a deal in which the taxpayer underwrote the two-thirds of the $39 million of losses expected from the tournament.

That assumed that 1.35 million tickets out of a total 1.6 million tickets were sold.

The rugby union and the Government have jointly taken responsibility for that.

So far only half the tickets have been sold and there are fewer than 100 days to go. There is now a significant risk that fewer than a million tickets will be sold. That leaves a potential shortfall of $70 million, adding to the $39 million of losses already budgeted for.

The Christchurch earthquake has obviously changed the landscape, as has a near four-year-long recession that is making rugby supporters much more cautious about spending their money on non-essential items.

Already, the games scheduled to be held in Christchurch have been moved and $20 million has been refunded to 150,000 ticket holders.

This potential burden for the New Zealand taxpayer is added to the money ploughed into stadia and infrastructure although, to be fair, the benefits will be felt for years to come rather than just over the next six months. Almost $500 million has been pumped into building the new Dunedin stadium and redeveloping Eden Park.

The New Zealand Herald has estimated a further $53 million will be spent on cup-related activities by police, Tourism New Zealand, the Transport Agency, New Zealand Trade and Enterprise and other government departments.

And then there's the $2 million for the Tupperware waka.

So we've already paid more than our fair share for this party, which will generate $200 million for the IRB.

The least the rugby bureaucrats could do is waive the hosting fee, which is currently included in the $310 million running costs of the tournament. It could stump up for some of the running costs for the tournament.

And if it doesn't do that, perhaps a little pressure could be applied by either the Government or spectators. After all, it will be free on television.

Perhaps we as taxpayers should save our hard-earned money and simply watch it on the telly. Sponsors and television rights holders, who are paying the IRB rather than the Government and rugby union, may not enjoy seeing their "product" prancing around in front of empty stands.

It makes no sense for us to borrow to line the pockets of rugby bureaucrats in Dublin.

- Herald on Sunday

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