06 October 2011, 08:25
Unfortunately big events like the Rugby World Cup become avenues for countries and players to air their grievances with the governing body to the media as they know the event will draw the most media attention to their cause. These grievances for the most part are justified and many supporters are from across the board can sympathize with them. The threat of the All Blacks to withdraw from the next World Cup is an idle one.
Is NZRU’s claim justifiable?
I am not convinced and here is why. A quick internet search will reveal a number of things. Firstly the NZRU have been making losses since 2006. In 2006 it made a $4.8m loss and in 2007 the loss was $1.7m, far better than 2006 but in those two years there reserves were reduced by $6.5m. In 2007 the union had revenues of $101 million dollars but failed to curtail their expenses which amounted to $103.5m. 2007 was a World Cup year and they were able to reduce the loss of 2006 by 3.1m, therefore in a World Cup year they were able to improve their financial position rather than worsen it which completely rubbish Tew's claims.
However NZRU’s financial situation appears to be worsening. Just last year, in their 2010 financial reports, the losses were reported to be $15.9m with $9.5m being attributed to operating costs and $6.3m being attributed to the Rugby World Cup losses. The $6.3m loss however was attributed mostly to exchange rate losses due to the strengthening of the New Zealand Dollar rather than losses as a result of the World Cup directly.
The NZRU should be more concerned with the $9.5m it is over spending on its day to day operations rather than the once off $6.3m incurred as a once off for the Rugby World Cup. The 2010 operational losses were blamed on the recession but it seems that continual excuses are being made by NZRU and this year it just happens to be the World Cup.
Besides additional sponsorship deals New Zealand will receive its share of the 35% increase from Sanzar in 2011 which pushed the deal to $615m. Yet the organisation has been unable to see itself out of the red.
Tew’s claims not reasonable
So it appears that while Tew’s comments that NZRU makes a loss at every World Cup is true but questionable as it appears that the union makes consistent losses regardless if it is a World Cup year or not. What may be of concern to Tew is not the financial losses that the union is making but not winning the converted trophy. It almost sounds like a school yard tactic; if we cannot win then we will not play.
In 2007 the NZRU’s internal score card went from 84 percent in 2006 to 52 percent in 2007 because of their failure to bring home the cup. Tew mentioned what a disappoint this was when he said “The New Zealand Rugby Union failed to fulfil the hopes and expectations of so many of our stakeholders and supporters. For an organisation - and a country - that sets its standards and expectations very high, the loss was incredibly difficult to accept." Yes, very difficult to accept for their sponsors and financial contributors to their union. But perhaps it was more difficult for their damaged ego's to accept.
Large sporting events always seem to make losses
Most countries or cities complain that sporting events like these cost more that they generate. So if the NZRU is the profit driven organisation it claims to be why did it even bid for this year’s World Cup if they knew that there was a potential financial risk involved? Probably they hedged this on the potential that they stand a good chance of winning at home. However, if they fail this time around it may provide them with a strong case not appear at the next World Cup.
Every member country of the IRB are the responsible custodians of rugby in their respective countries, no one country is bigger than the game. As a result it is the responsibility of those countries to manage to the sport from a development and fiscal perspective. NZRU is a $100m a year organisation and with the increase in the SANZAR contract and new sponsorships will be increasing its revenue over the next four years significantly. It appears that the organisation however is unable to manage its costs effectively and they need to consider lean processes and better ways of managing the sport in their country, this is not the IRB's responsibility.
The IRB’s role is far greater as it is the custodian of the sport worldwide and their main income generating event is the World Cup every four years and is entitled as the governing body to make the rules that go with that event. They are entitled to claim a large share of the money from that, as the NZRU reminded everyone, this is a professional sport. At the end of the day if the IRB goes bankrupt rugby is in trouble. If the NZRU goes bankrupt only one union is in trouble.
So it appears to me that Tew is just trying to find a new income stream for his organisation, rather than effectively managing the one he has. This should hold true for all of the unions. It would not make financial sense for the IRB carry each union’s losses by giving up more of its own income stream if the game is going to survive into the future. If it did rugby this it would have its own debt crisis. As a result IRB are fully within their rights to deny NZRU’s request.
All Blacks Claim is an idle threat
It would be a poor decision all round for the NZRU to withdraw the All Blacks from the next world cup and both the IRB and NZRU are aware that this is an idle threat.
Firstly one of the NZRU complaints was loss of sponsorship because of the World Cup. Let’s take a look at this. Unless the majority of the unions go along with them who are they going to play during the World Cup? The only teams left to play would be those nations that fail to make the tournament. Watching the All Blacks trounce countries like Kenya, Zimbabwe or Solomon Islands would not make for entertaining rugby and would certainly not attract a decent sponsorship. So they would lose that sponsorship regardless. They would also have an issue with their sponsors as participation in the World Cup is a significant sponsor draw card, even if the sponsor is not allowed to advertise during the tournament. However winning it would draw even greater sponsorship.
Non-participation would be detrimental for rugby in New Zealand itself. It would lose support at home and abroad and would set rugby in the country backwards. They would lose their ranking as number one and it would be desponding to players and supporters if they were not there. The long term damage to their brand would be irreparable again something that would negatively affect sponsorship opportunities.
It appears that New Zealand is acting like a prima donna. Like any organisation making losses they need to cut the fat. They need to get their own house in order before they start placing demands on the IRB. Rugby can do without them and the game would exist even if there were not such team as All Blacks. However the All Blacks future in this professional era would become questionable without the IRB.
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