RUGBY WORLD CUP:
THE FINANCIAL WINNERS
The 2015 Rugby World Cup ( RWC) kicked off on 18 September at Twickenham when host country England faced off against Fiji.
The Boks squared of f against Japan in their opening match on 2 0 September at the Brighton Community Stadium.
For those involved in the world of rugby, this is a huge money spinner. The tournament will likely bring in £ 2. 2bn ( R45.4bn) for t he UK economy, according to an economic impact assessment study by EY. Close to £ 1bn ( R21.3bn) will be added to the UK’s national GDP. A total of £ 85m ( R1.75bn) was invested in infrastructure in preparation for the tournament, supporting 41 000 jobs around the country.
The big money is in the sale of TV broadcast rights to the tournament. The RWC is one of the most watched i nternational competitions in t he world. In 2007, the RWC attracted a cumulative TV audience of 4.3bn people. In 2011, t he tournament attracted an estimated 3.9 b n cumulative global TV audience i n 207 territories. As a comparison, the 2014 Fifa World Cup in Brazil was estimated to have reached a cumulative audience of 26bn.
Rugby does not enjoy t he universal appeal of soccer, but t he RWC viewership figures are nevertheless impressive.
According to sports management expert Michael Goldman, who i s assistant professor at the University of San Francisco and Adjunct Faculty at Gibs, plans are in place to expand the appeal of the game to new territories. “Brett Gosper, World Rugby’s CEO, has spoken recently about their intent to grow the RWC to more country participants, partly in order to grow TV deals and other commercial dimensions. Germany and Russia were specifically mentioned. The tournament generates 90% of World Rugby’s revenues, and tournament broadcast deals contribute 60% of total revenues.”
Just as the 2012 Tri-Nations became the rugby championship to bring Argentina into the fold (alongside SA, Australia and New Zealand), Super Rugby will expand to 18 teams in 2016, with new entrants from Argentina and Japan, and a sixth franchise for SA. Expanding the number of competing territories increases TV viewership and revenues for the participating rugby unions; this no doubt helped the SA Rugby Union (Saru) secure new and enhanced commercial agreements with Samsung, Coke and Marriott. Super Rugby administrators are particularly excited about Japan’s entr y to t he tournament, as this could open the door to the giant Asian market.
Broadcasting rights for the RWC are regarded as a l icence to print money. Advertisers love it because viewership figures go through the roof. In the UK, terrestrial broadcaster ITV outbid SkySports and the BBC for the exclusive rights to the 2011 and 2015 tournaments. Goldman says the deal may have been worth £60m (R1.2bn) – double the fee paid for the previous two tournaments. This explains why overseas te a ms ar e a bl e to afford big paychecks for their players. ITV says advertising support for the RWC is particularly strong among young males. Saru’s 2014 annual report shows how much broadcasting rights bring to the domestic game. Last year it clocked revenue of more t han R800m, of which R317m was from broadcasting rights and R340m from sponsorships. Ticket and merchandise sales generate relatively little revenue for SA rugby.
SA hosted only three home tests this year because of the RWC, which represents a significant drop in income for local rugby.
Saru’s broadcasting i ncome will exceed sponsorships from 2016, when it is expected to account for about 60% of the union’s total income. Sponsorships are likely to catch up towards the end of the f ive-year broadcasting rights cycle. This is also an important source of income for the participating clubs, all of which get a share in the profits of the RWC. This includes broadcasting, sponsorship and other revenue.
Super Rugby teams sell their own sponsorships and share in broadcasting revenue, with a portion r eta i ned by Saruto cover costs. The current Bok squad is top-heavy with Stormers and Bulls players, and their respective clubs will have to pay their Springbok fees. This typically puts a strain on club finances, with the expectation that the return will come in the form of more bums on seats in future club fixtures.
HOW THE BOKS WILL EARN
When SA hosted the RWC in 1995, the sport was not yet professional, so the Boks theoretically earned nothing for their efforts. There were game and win bonuses for players, so they did not leave completely empty-handed. But the pay was nothing compared to what it is today. Shortly after the 1995 RWC victory, each Bok player was offered a four-year contract.
Veteran Bok campaigners playing abroad can expect to earn as much as R4m to R5m this year, and even as much as R6m to R7m once the effect of the weaker rand is taken into account.
The f igures offered by clubs i n Europe and Japan are already way ahead of those in SA, but the figures will look even sweeter once converted into rands. On this basis alone, we shouldn’t be surprised to see another wave of local players heading off to European and Japanese clubs. Of the 31-strong Bok squad announced recently by manager Heyneke Meyer, seven are playing for overseas clubs on multimillion rand-a-year packages. Those players earning rands will feel l i ke poor cousins alongside the likes of Morné Steyn, Bryan Habana, Fourie du Preez and Schalk Brits, all of whom play for
THE RWC IS ONE OF THE MOST WATCHED INTERNATIONAL COMPETITIONS IN
overseas clubs. By way of comparison, only two Australians in the RWC squad play for overseas teams. The rest play their trade in local Aussie teams. Not a single member of the All Black squad is listed as playing overseas.
Though the weak rand may have put more daylight between the earnings of local and overseas players, SA-based professionals can substantially improve their take-home pay with sponsorships and appearance fees. And, given the publicity around the RWC, this is a great opportunity for players to make some extra cash. But to get the really big sponsorship deals, you need to be a Victor Matfield or a Bryan Habana – faces that are instantly recognisable to the majority of South Africans – and that can take years of hard graft and outstanding performances on the field. Off-the-field behaviour also counts: no sponsor wants to throw money at a rugby player with a “questionable” reputation.
Eben Venter of Sterling Sports, which represents several high-profile rugby players, says a player’s income is dependent on their brand equity. “That’s why players l i ke [ New Zealand’s] Sonny Bill Williams earn more on endorsements and sponsorships (than matches) – because of their strong brand equity. Players at the top level can earn up to R50 000 for a single appearance of a few minutes and still earn a percentage for image rights over a period of a month, depending on the length of the campaign. In most player contracts, the unions or clubs specify that the sponsors of the union or club have first right to image of the players. When an agent or a player gets approached for an appearance or sponsorship, the club [approves if] it is not in conflict with the sponsors of the union.”
Players’ collective image rights are owned by their union, MyPlayers, which makes an annual distribution. On top of that, players also have personal endorsements. Figures are hard to come by, but some players are rumoured to be earning R4m to R6m a year from this.
Players’ incomes increase dramatically during the RWC, says Venter, not only for participating players but for those players that are approached to merely appear at social functions and partake in general rugby publicity. “[It’s] like silly season. A client of mine, an ex-player, made in the vicinity of R120 000 on broadcasting alone during the previous RWC,” says Venter.
Sponsors are looking for a return on investment, and that means splashing their brand in front of the cameras as prominently and as often as possible.
Goldman says in terms of personal endorsement sponsorships, rugby players have not been able to take advantage of this opportunity in the same way as football players have. With a few exceptions (such as Bryan Habana), most players have not been able to generate signif icant off-the-f ield sponsorship incomes. Typical personal endorsement deals would involve a set of appearances, advertising images and product usage rights, in return for campaign-based or
contract period fees. Importantly, these personal endorsement deals would need to carefully manage any conf licting category sponsorships for the teams, leagues, and tournaments that the player competes in.
For young up-and-coming players with the right amount of talent, there are a number of scholarships available to ease them into the world of professional rugby. Some of these cover full fees at private academies, while others will partly cover costs.
For the truly gifted, the route from high school to professional rugby – either as a member of a Currie Cup or Super Rugby team – can be as little as 12 to 18 months, at which point they can expect to earn upwards of R500 000 a year as a start.
ECONOMIC BENEFITS OF THE RUGBY WORLD CUP
The economic benefits of hosting an international sports tournament such as the RWC are not always clear-cut. For example, how do you measure the PR benefit of billions of TV viewers seeing the best your country has to offer?
SA is reckoned to have received a 0.54% bump in GDP from the 2010 Fifa World Cup. A total of nearly 310 000 foreign tourists arrived in SA for the tournament and spent about R3.64bn during t heir stay, which averaged 10 days. There is no doubt t hat t he global exposure SA received during t he tournament lifted tourism f igures in subsequent years – that is, until minister of home affairs Malusi Gigaba decided to tighten visa requirements earlier this year in his battle against human trafficking. Tourism numbers dropped 6% in the first quarter of this year compared with the same period in 2014, a loss of 150 000 visitors and R1.6bn in revenue. In one fell swoop much of the good generated by the 2010 Fifa World Cup was undone.
Doubts have been cast over t he economic benefits to SA from hosting the Fifa 2010 World Cup once it became clear that many of the stadiums, roads and much of the other infrastructure upgraded for the tournament were subject to bid-rigging. Fines in excess of R1.5bn have already been paid by the cartel members accused of ramping up the costs of this infrastructure. Of the R30bn spent by SA on the 2010 Fifa World Cup, we may never know how much of this was due to bidrigging. That has to be factored in to any assessment of the economic benefits derived from the tournament.
An economic impact study by EY suggests the UK stands to benef it handsomely as the host country for the 2015 RWC. For a start, attendance figures are higher for a European host country, given the shorter travel distances for supporters. The UK has shown itself to be an able host of large sporting tournaments, as demonstrated during the 2012 London Olympics, reckoned to be one of the best ever organised.
RWC 2015 HOST CITIES
20 Participating teams
44 Days of the tournament
BROADCAST RIGHTS FOR THE RUGBY WORLD CUP