THE MONEY IN RUGBY TOURNAMENTS
THE MONEY IN RUGBY TOURNAMENTS
In recent years, international rugby tournaments have proven a tried-and-trusted method of bringing significant revenues to their hosting nations and cities. Major investment and marketing have reaped instant rewards, driving tourism, economic growth and a self-perpetuating, spiralling interest in the game.
But how much money did a major rugby tournament such as the 2015 World Cup actually inject in to the UK economy? How did the revenues compare against other tournaments? And do the figures confirm that we can look forward to the golden age of rugby financials extending into the future?
Rugby revenues: the best ever tournament
Shortly after All Blacks skipper Richie McCaw had lifted the Webb Ellis Trophy, Bernard Lapasset, chairman of tournament owners World Rugby, proudly declared that this World Cup “will be remembered as the biggest tournament to date, but I also believe that it will be remembered as the best. England 2015 has been the most competitive, best-attended, most-watched, most socially engaged, most commercially successful Rugby World Cup.”
According to a pre-World Cup study by Ernst & Young undertaken for the tournament organisers, England Rugby 2015, the rugby tournament itself earned an estimated £650m in revenues, which was predicted to generate up to £2.2 billion of output into the economy via various trickle-down and multiplier effects. This equated to the addition almost £1 billion of value to GDP – an incredible figure which equalled the combined total of the three previous World Cups in Australia, France and New Zealand.
Predicted rugby revenues: greater than the Olympics
Before the tournament came another confident prediction from World Rugby’s chief executive Brett Gosper. Citing the expected GDP contribution of around £1bn, he made the point that this contribution would be “probably greater than the Olympics if you take out the capital expenditure of an Olympics” – this based on the 2012 spectacular giving the economy a £9.9bn boost, as set against the £8.9bn it cost to stage.
At the time of the EY report, the 2015 event was already expected to attract more international visitors than any previous Rugby World Cup, with the estimated 466,000 inbound fans expected expenditure including travel, accommodation and tickets reaching up to £869 million.
The economic impact of the rugby money flowing in from abroad was estimated to lend the UK travel and tourism sector alone a £1 billion boost. Add in the spending power of the 2 million nationals in attendance, and it is easy to see how the trickle-down effect of this great rugby tournament lifted the country as a whole. The 11 host city hot-spots felt the benefit of staging matches via the support of some 41,000 jobs, £85 million infrastructure investment, stadium improvements, increased participation in sport, increased exposure as a tourist destination – and that elusive ‘feelgood’ factor.
Relative rugby returns: England vs. Rest of World
After the tournament, World Rugby was quick to declare England 2015 the biggest and best Rugby World Cup ever, but that memorable comparison against the previous three global rugby tournaments bear further analysis.
Australia’s Rugby World Cup 2003 delivered a considerable boost of close on £200 million to the country’s GDP. The 2007 tournament provided a direct contribution of £380 million to the French economy. And the New Zealand event in 2011 had an economic impact of approaching £300 million.
Meanwhile, we must not forget that the 2015 tournament’s £1 billion GDP figure was diminished enormously due to the host nation’s unprecedented exit in the pool stages. England’s defeat by Australia was viewed at the time as a financial disaster for the tournament organisers, the broadcasting and hospitality industries.
Notwithstanding the host nation’s on-field display and its considerable knock-on effect, England 2015 was a triumph of organisation, marketing and grass-roots enthusiasm, reflecting the sport’s growing stature. But where did all the money go?
Rugby money: who benefited?
England Rugby 2015 generated ticket revenues alone in excess of £250 million, which rugby cash windfall resulted in an £80 million surplus being passed on to World Rugby to fund the sport’s expansion in the US, Germany and Brazil. A £15 million surplus went to the RFU, rugby’s governing body in England, earmarked for reinvestment in the development of the game.
2015 proved a bonanza year for rugby financials, with the RFU’s revenues rising from £156.2 million to a record £207.9 million. A 2 per cent increase in spending in rugby investment appeared in the annual report, up to £76.8 million, while the 14-man board of directors enjoyed a collective pay rise of 13 per cent, up to £1.7 million.
However, any complaints about personal remuneration could realistically be filed away along with observations on high ticket prices and the lottery method of distribution. At the end of the tournament, the RFU board could point to their contribution to a hugely successful, perfectly organised World Cup which saw record numbers of spectators paying record prices for seats.
Aligned to World Rugby’s Impact programme, the RFU set out to capitalise on increased exposure by creating a lasting legacy through investment at grassroots level – better facilities, more coaches and schools programmes – and increasing participation.
The Six Nations and the future of rugby money
The message coming loud and clear from the domestic and international rugby organisations is that success breeds success. When major rugby tournaments are hailed as a marketing and logistical triumph, boosting GDP and the profile of the game, they can act as a catalyst for yet further growth.
In the wake of the 2015 World Cup, there was some concern that rugby would suffer from the economic and tournament hangover. But all the indications are that rugby is a sport on a continued upswing of popularity and financial success. For example, during the World Cup ITV advertising revenues were boosted 8% by the rugby tournament alone, setting the media company on the track to record annual profits. In keeping with such results, the Six Nations board has announced for the first time that it is open to offers from pay TV companies for its next UK broadcast rights deal from 2018. Rugby is on the rise, along with rugby’s financials.
While Premier League revenues and soccer broadcasting revenues remain in a different league to those of the oval ball game, rugby organisers still have plenty of scope for closing the gap on the world’s number one sport.