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.