Gregor Paul is the Herald on Sunday's rugby writer

Rugby World Cup: Clash of the cash looming

New Zealand is increasingly unhappy with financial losses when competing in the World Cup. Photo / Getty Images
New Zealand is increasingly unhappy with financial losses when competing in the World Cup. Photo / Getty Images

It was no surprise that IRB chief executive Mike Miller dismissed New Zealand's threat of boycotting the next Rugby World Cup - he's heard it before.

Which means world rugby is going to fall into ugly territory after this tournament. The IRB has hinted that its heels are already firmly dug in; the governing body doesn't like threats or the idea that its current means of divvying up the World Cup loot is outdated and inequitable beyond reason.

The New Zealand Rugby Union is not alone in its belief the World Cup commercial model has to be radically overhauled before 2015.

The Australians and South Africans support the call for change as do the players - en masse. It's the support of this last group that is going to make life interesting because the IRB really can't be so stupid as to believe it can ignore this issue and it will go away.

The economics of the World Cup border on immoral. In 2007, the IRB made a clear profit of £122 million and yet nine of the top teams had to forfeit combined revenue of £48m just to be there.

That was the cost to the Tri Nations and Six Nations countries being unable to fulfil their November test window commitments.

As has been reiterated in recent weeks, New Zealand loses an estimated $13m every World Cup year and it has reached the point where the suits are seriously asking whether that sacrifice is worth it.

Inequity lies further down the pecking order as well. What is continually forgotten is that about one third of the 600 players involved at this World Cup are amateurs. They receive no payment at all and many are only here because they have generous employers or because they havemade a financial sacrifice to chase their dream of playing at a World Cup.

Never mind the fact the IRB don't feel the need to recompense the major nations for their massive losses - the governing body has even refused to offer a per diem payment to those here earning nothing.

A crew of volunteers chauffeur IRB executives wherever they need to be at this World Cup; executives who live well effectively on the revenue generated by the players.

The next World Cup is likely to be the most profitable in history. England plan to use massive football stadiums to host games and the value of broadcast and sponsorship rights will jump given the location and the proximity to major markets.

The IRB is expected to make in excess of £150m and unless the All Blacks are given a bigger share of the pie, they aren't going to be there. Idle threat? Possibly not.

The top brass of the major unions will meet next week to discuss the timing of the future of the tournament - which holds the key to the whole commercial model. If it stays in its existing September/October window, the southern hemisphere nations are not only going to miss out on hosting June tests in World Cup years, they will also have to truncate the Four Nations every fourth year.

At the moment, the plan is that, in 2015, the Four Nations will be reduced to just one round - denying South Africa, New Zealand, Australia and Argentina the opportunity to host two home tests. If the World Cup is pushed back a month, that at least allows for a full Four Nations programme and for some of the forecast losses to be recouped.

"We don't think you can have a discussion about the timing of the tournament in isolation of the commercial rules and the flow of money that comes out of it," says NZRU chief executive Steve Tew.

If agreement is reached to leave the World Cup in its current slot, then the NZRU needs to persuade the IRB that there has to be a massive change in the way wealth is distributed.

Tew says the NZRU want an agreement for future tournaments where they recuperate all of their lost revenue in World Cup year. That would require the IRB to make massive payouts to the established nations.

"It doesn't make any sense from our point of view to be coming into a World Cup year and being financially disadvantaged," says Tew. "The Australians want A$16m - that's the number they say they are losing in World Cup years."

If The IRB agreed, they would need to spend £48m keeping the established nations happy which would seriously restrict the sum left to invest in the developing nations. The World Cup is the IRB's one and only pay day and the only means they have of funding emerging nations. For the rich to stay rich, the poor are going to have become poorer - but Tew says that's not necessarily the case.

"We need to earn more money out of Rugby World Cup. We all need to generate more value out of the tournament. It might mean a completely different look at the way things are done."

No one has the answers on what any new model might look like but there is growing momentum for the Draconian rules around sponsorship to be loosened in line with other major tournaments.

The IRB stance around protecting official sponsors isolates and frustrates hundreds of regular sponsors of individual teams. A significant number of major brands plough millions into teams such as England, France and New Zealand and are then forced out of the picture every fourth year - denied the opportunity to leverage their association.

Those restrictions are believed to be holding back the tournament from reaching its full commercial potential. Supposedly the World Cup is the third biggest tournament behind the Olympics and FIFA World Cup, but it is according to Tew "a long way third" in terms of revenue generation.

"Rugby is still growing. For the first time this tournament is on NBC in America - a mainstream channel in the US. That is quite significant. We have had some quite influential people out here from Russia, for example; their deputy prime minister and a couple of their leading business people. We have all been saying that there are opportunities to grow rugby into new and emerging markets."

There's nothing new in rugby's administrators being at war - but there is a danger the threat made by the All Blacks to pull out of 2015 is more real than it seems. It might not be just the All Blacks either - Australia are struggling even more financially and neither country can genuinely carry the losses indefinitely. If it's not fixed, what choice will they have?

The IRB really are in cloud cuckoo land if they think the World Cup could maintain its credibility without New Zealand. The show would go on but it would be a farce.

- Herald on Sunday

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