Rugby World Cup cash critics play advantage

By Geoff Cumming

The success of the Rugby World Cup makes it an ideal time to air long-simmering frustrations over finance.

The Webb Ellis Cup. Photo / Sarah Ivey
The Webb Ellis Cup. Photo / Sarah Ivey

Talk about the elephant in the room. With the 2011 Rugby World Cup shaping as a triumph, the host goes and spoils the party. The temerity of that Steve Tew, the NZRU chief executive, for mentioning the money.

Tew's threat that NZ may be too cash-strapped to attend the next soiree may be idle, but there is a genuine Cinderella aspect to the NZRU's financial position. It's a plight most rugby nations quietly (and in Australia's case, vocally) acknowledge and which goes to the heart of the sport's governance by the International Rugby Board.

That Tew should choose the middle of rugby's showcase event to reveal the sport's dodgy hamstrings need not detract from the tournament. As Tew is gambling, the event's very success makes it timely to air the tensions threatening rugby's local and global goals.

Tew was targeting two long-simmering issues for national unions. One is the lost income that the major northern and southern unions suffer in World Cup years when the Tri-Nations is curtailed and the June and November test "windows" are closed.

Tew estimates the net cost at $13.2 million. Australian Rugby Union CEO John O'Neill says the ARU has missed out on $20 million. All up, the tier one countries (the top 10 including the 6 Nations, Sanzar and Argentina) claim to be out of pocket by about $100 million.

The second sore point is the IRB's shut-out of national team sponsors so its RWC sponsors get undiluted exposure. This affects each national union's income stream and ability to offset those cup-year losses.

Reaction from the game's northern hemisphere powerbase was not only predictable, it underscored the enormity of the task of achieving change. Commentator and former England hooker Brian Moore accused the NZRU of bluster and bully and blackmail tactics. Writer Mark Reason argued that New Zealand and Australia created rugby's financial woes (in making rugby a professional sport) because "you were greedy for power and greedy for money".

Er, quite (cue forelock tugging). Where would rugby be - nationally and internationally - if, 16 years ago, the national unions had not dragged the sport, kicking and screaming, into professionalism? The All Blacks, certainly, would not be the sporting and marketing juggernaut they are today. And the IRB would not have 117 member countries, most of which tried to qualify for RWC2011.

As New Zealanders contemplate the prospect that rugby might finally expand into a truly international game, Tew's complaints are a reminder that its financing and governance are powderkegs that need to be addressed. As Paul Rees, the British journalist whose story started the fuss, told National Radio: "This is about the whole future of the international game. This is the right time to raise it."

Not that there's anything new in Tew's comments. Back in May, the Herald on Sunday's Gregor Paul wrote of the NZRU's expected lost income and a Sanzar proposal to change the timing of the 2015 cup to fit in a full TriNations.

The NZRU this year faces the double whammy of reduced income from tests and having to pay one-third of the expected $40 million shortfall on staging the RWC. The NZRU lost $9.4 million in 2010 ($6.4 million on RWC-related costs) after a $16 million loss in 2009 and has posted losses in five of the past six years. It has had to dig into reserves to keep top All Blacks in the country and bail out provincial unions such as Southland, Bay of Plenty and Taranaki. Along with other top tier nations, it has maxed out on the number of revenue-spinning tests played against traditional foe.

That the game can't pay its way in the most rugby mad nation in the world only underscores the challenges the professional sport faces.

For the minnow nations - such as Samoa, Fiji, Georgia and USA - who bring the X factor to World Cups, the experience is one of out-of-pocket players and state bailouts. The prospect of the NZRU and other tier one nations claiming more from the IRB is deeply disturbing to these emerging rugby powers.

Some, including Samoa and Fiji, are missing leading players contracted to overseas (mainly northern hemisphere) clubs for whom the World Cup is a big inconvenience. Others have amateurs who have taken leave without pay to be here. These unions have railed for years against the reluctance of tier one nations to give them income-boosting test matches or include them in tournaments. But they are reluctant to complain publicly at rugby's biggest tournament, such is their reliance on IRB funds.

Growing the game internationally, particularly in huge markets such as the USA, Asia and Russia, has long been seen as the way to ensure there is enough money to go round. That's what the Rugby World Cup is supposed to be for. As NZ taxpayers have learnt, the tournament is held not for the benefit of the host nation but for the International Rugby Board.

The tournament is virtually the IRB's sole income source - revenue it receives once every four years. It pays the cost of qualifying games for the tournament (around $214 million in 2007). Cup surpluses are used to fund the development of the game around the world - initiatives such as high-performance centres in Fiji and Samoa, an artificial pitch in Georgia and coaching development.

But the 10 "top tier" nations - particularly those in the northern hemisphere - have the most clout in the divvy-up, claiming around half the £150 million ($305.3 million) allocated to global development in the 2009-12 period. Some of that is coming from reserves, with the IRB swallowing a drop in revenue to allow New Zealand to hold this year's bash.

The top 10 also get a participation fee - currently £5.2 million over four years - as World Cup compensation.

International Rugby Players Association chief executive Rob Nichol says the problems can be sheeted home to the IRB's governance and the "deeply flawed" RWC commercial model.

"Rugby World Cup Ltd covers the cost of running the tournament but doesn't pay the players or the national unions and all the surplus goes to the IRB. Then, like bees around the honey pot, all the national unions go to the IRB and say 'how are we going to distribute that over the next four years?'

"The problem is that the [tier one] national unions are the IRB. .

"So what happens is the top 10 stick together and say 'we lost a whole lot on the World Cup and without us there's not going to be a World Cup so we should get the lions' share'.

"But at the same time they are wanting to grow the game globally so they wrestle with themselves about how this should be split up.

"It's absolute mayhem in there. From a players' point of view we just sit there and shake our heads."

Nichol says the RWC should be treated as a stand-alone tournament with a commercial model which fairly reflects the contribution of participating teams, players and the clubs that release them. The remaining surplus should go to the IRB to distribute to developing countries.

But without constitutional reform, developing countries will always suffer because "they don't control the vote around the IRB table.

After a summit last May over the game's economics, the IRB undertook to come up with a new commercial model by May next year.

But Nichol fears an unsatisfactory outcome because players and clubs are being excluded from the talks by national unions.

The IRB's record has been one of promising change but then rearranging the deckchairs. "The chances of this process producing an outcome without the players is pretty much zilch or it will be a compromise one and we'll be in the same place in three years' time."

He fears it could lead to a "fundamental breakdown in trust" between the players and the governing body and "something else emerging which the players will gravitate towards".

Are things really that serious? Nichol cites the little-known stand-off mid-year when players refused to assign their image rights to the IRB until the 11th hour. They wanted a say in renegotiating the commercial model but backed down when the IRB threatened to effectively lock them out of the tournament.

If any further evidence of the case for reform is needed it surely came on Thursday, when the IRB fined impoverished Samoa $10,000 - because a player sported the wrong brand of mouthguard.

- NZ Herald

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