Opinion: Our government should renegotiate its Rugby World Cup deal with the IRB to limit our likely losses because of the earthquake

By Bernard Hickey

Being 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's become clear this week New Zealand taxpayers face a loss of close to NZ$100 million if, as seems likely, hundreds of thousands of tickets are unsold.

This means we face the uneviable 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 NZ$20 billion or the equivalent of 10% 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 told the ODT in December last year the IRB expected to make a profit of around 95 million pounds (NZ$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 where the taxpayer underwrites the two thirds of the NZ$39 million of losses expected from the tournament. That assumes that 1.35 million tickets out of a total 1.6 million tickets are sold.

The Rugby Union and the Government have jointly taken responsibility for

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

The 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 NZ$20 million has been refunded to 150,000 ticket holders.

This potential burden for the New Zealand taxpayer is added to the money plouged into stadia and infrastructure, although to be fair the benefits will be felt for years to come rather than just over next 6 months. Almost NZ$500 million has been pumped into building the new Dunedin stadium and redeveloping Eden Park.

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

And then there's another NZ$2 million for the Tupperware waka, the NZHerald reports.

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

The least the rugby bureaucrats could do is waive the hosting fee, which is currently included in the NZ$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 currently paying the IRB IRD rather than the government and rugby union, may not enjoy see 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.

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

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33 Comments

Our governments ( local & central ) really have been silly feckers , since 1999 , havn't they  ! ......Splashing out an endless   stream of rate-payers' & tax-payers' munny into all manner of idiotic schemes , which the private sector wouldn't touch with a 30 foot barge pole .

...... A rich man's yacht race , which few in the entire world know about . A rugby cup , which many have no knowledge of . A covered stadium in Dunedin , which will never recoup it's costs of construction ......

.....bail-out this / hand-out that / have an interest-free loan .... have ten  thousand of them ........ / got kiddies ? Pay no tax ..... made a loss on your rental house , have a tax deduction ...... you're all entitled ....... it's free munny , we're the government , munny is free .......... YIPPPPEEEEEE !

We need a revolution , a people's protest against the bureaucratic insanity which so bedevils this fair land , girt-by-sea . ....... where the hell is the Count & Walter , when you need them !

There is a difference between bureaucratic actions and stupid politicians making decisions.  Aim your vile at the politicians on this one.

BH last para IRB rather than IRD??

The Government is certainily craking down in some areas while others there is plenty of money to spend..priorities...

So why are we subsidising a bunch of sports bureaucrats?

So a bunch of politicians get re-elected. Expect government to provide even more money to ensure the event looks like it has been a success - at least for the period preceding the election.

GBH is right, a revolution is needed.

Weather it is the IRB, the government or the bankers, we are being screwed totally, time and time again.

   The world over, not just in NZ, the financial  institutions have taken over and now our politicians are working for them. These banking institutions are meant to help society in our endevours to create a better world for everyone. Our politicians are meant  to be working on our behalf to achieve this, not the banks and themselves to line their own pockets.

Something has gone very wrong. Now the banks are saying we must sell our land and our assets to pay them back.

If we value society, our country and our future generations we will need to stand up and do someting. If we do nothing, they will just do as they please and we will be the losers.

So long as the 'banksters' are in control, there'll probably be more of these bread and circuses to come.

And what has the IRB done to popularise the game outside of the usual suspects? Not terribly much at all. Is it the physical requirements? Is it a social class thing? Who knows.

Urban legend has it that a high school in Melbourne, several years ago, had two-thirds of its students from non-Polynesian minorities (ie, Asian, Indian, Mid-Eastern, etc). When the time came to field a 1st XV team, there weren't enough players to form one. The minorities were playing sport alright, just not rugby. I recall reading the article, but it's lost in the mists of time, and Google has drawn a blank.

Personally I've never borrowed a dollar that I didn't want to. This cry of "banksters in control" suggests alot about the individuals making the complaint. Wise up guys, go into any retail store and there will be people there trying to sell you something you don't need. - why is it that you can say no to them, but feel the need to accept expensive money when the offer is made - lets face it, pathetic really

"I am a patriotic fan of rugby"

Does not compute.

The rugby world cup can not be measured in dollars, this event will go down in history as one the greatest moments for our nation.  We should do what ever it takes to make it as successful as we possibly can.

Rubbish.....only for rugby fans....the event should stand alone, no way should the Govn or council be back stopping a private entities business in case they make a loss....

regards

Good grief.

You have to be taking the piss, right?

Right?

Nobody would or could write such a thing because they actually believe it.

Gummy loves a good game of rugger , but doubts very much that RWC 2011 will be " one the greatest moments for our nation " ....

...  Anyone dealing with the NZRFU over the years will agree that they are a bucolic bunch of arrogant  old toss-pots , who think that they are God's gift to the planet . ...... and it is galling that these fools are being bailed out by the government , with tax-payers money .

Helen Clark / John Key : This is not the reason that we pay tax !

You know GBH ...at least now I can get out there with my camel ....and get busy on the revolution...the front line stuff....now that your good.self  and others( I know not ) here rally to the call... for an uprising against those trough dwelling swine wallowing in the putrid stench of wasted taxpayer revenue...taken not given...and snorted down much as a two dollar whore would a bag of nose candy with an old biro.

Bastidos to a man..........Viva La Revolution.........it's on again baby...!!!

I might start with Minto ...just to show I'm an equal opportunist when it comes to giving pasty bureaucrats  a good bashing.....

Sorry Count  , but we've lost them  ; the troops have all snuck off to talk bloody-buggery-houses with Martin Hawes .....

...  Hawes property whores !

Brian Easton again... a couple of cracking one-liners - nice essay. 

I always like reading him but his predictions about the future of world trade is based on;

"As distance costs fall further..."....... 

Where does he get the evidence supporting that assumption from?

Seriously shoots the credibility of the entire agrument down, I'd have thought.

Point taken... Perhaps he's hinting that we have to be prepared for either eventuality. He wrote once on Cheese. At the time I wondered about the idea of using slow transportation to our advantage - maturation of cheese / wine / ham and anything else you can think of  (maybe not his thought).  Canning food maybe. There seems to little point  in sending refrigerated apples great distances - eventually the 'local is better' will win out.   Either way the argument seems to be about a diversity of approaches. . It's that 'value add' argument again. Milk powder instead of fresh milk etc. Where we can do it better, then capitalise on it. Fish processing etc.  

Maybe the one long trip is better than the multiplicity of processing steps he describes.

If a boat can get here, then it should go away with something in it... Or maybe they'll stop coming. Do we have any boats - do we need them given our distance?

Double post... pigeon on the wire probably.

No, there is no NZ-owned shipping line.  I looked at cargo lines into NZ recently - and I'd say were might be quite vulnerable in that regard going forward. 

Roger - get over there, you only have to mention capital gains tax, or land tax and the system throws a wobbler - "technical difficulties." No kidding, try it.

Cheers, Les.

I demand more than one 'like' vote for this comment...

alrighty then....... KW John...let it be so..! and here's one for you

 

Thanks Christov, apologies for the confused 'this and that' - euphoria. Three belly laughs today - too much.

C'mon all you doomsdayers!!! Martin Sneddon tells us the only worry is if the AB's don't end up winning the damn thing. Surely he knows what he is talking about........

I still wanna know if he took that catch many moons ago!

Unfortunately the AB's play tournment rugby like the poms play tournament footy.

 

 

 

 

Rugby is all a bit of a bore these days, too many games and I can't be bothered.

It is all too sanitised since it became professional.

Bring back the biff!  (Oh wait that is league)

Not sure why we haven't revolted against the IRB as they need us more than we need them.

We could revolt against the IRB , but the last time we did that , they took the joint-hosting rights off us , and gave the whole shebang to Australia .

Looks like the way things are going with this one, that it might have been a good thing.

I mean a total revolt though. Just tell them to get stuffed. Get rid of super 12, or whatever number it is up to, as it has degraded our rugby. Get back to a strong national competition, as that was always the strength of our rugby.

It would be a bit like SA in the apartheid era, other countries counldn't help themselves but want to play the All Blacks.

So much for a World Cup windfall!

How exactly is the country going to make the touted billions from having the event?  Surely the extra visitors are just going to at best even out a weak tourism sector?

The Govt seems obsessed with deluded "big" ideas and poorly thought out policies for our economic salvation.

yeah like the cycleway (whats happened to that?), some motorways of dubious benefit.....

and the RWC.................. 

The cycleway is part built out our way, since you asked. I wonder how much of our rates increase is to maintain it? Doh.

FYI from an emailer

Seldom have I read such facile, asinine nonsense.

Are you seriously suggesting IRB officials "line their own pockets" because NZ has to borrow?

Are you seriously suggesting that the IRB should not try to grow the game?

And are you SERIOUSLY suggesting that even if IRB people dined with Chateau Lafite every night the annual bill would be even a fraction of one percent of what the losses will be from an over-ambitious bid?

Spare us more drivel like this.

Graeme

Graeme,

Many thanks.

I'm not arguing the IRB officials have pocketed money.

I am arguing the government should not be borrowing money or cutting jobs or delaying hip operations to ensure the game of rugby is developed in Kazakhstan.

cheers

Bernard

FYI from a reader via email:

Hi Bernard, respect your opinion but the IRB has the responsibility for global development. Overall it does a good job and as a world wide traveller I am always impressed with the development of the game in strange places. I used to live in Kenya once and played Rugby for the Harlequins Club and East Africa (Idi Amin was one notable player in Uganda)  – today Rugby is a popular sport in Kenya witness their Sevens successes.  

 

Rugby actually rivals soccer in world wide spread & of course is a far more intelligent game with its extra dimension to actually use your hands to pick up the ball and run with it.

 

Let’s not keep knocking Rugby and the RWC – I support it big time and so should the whole population or else we become ignored, forgotten & further impoverished.

 

Empty stands would be a great big negative for the whole of NZ – you included.

 

Rgds John