This time it does make commercial sense
In Part 3 of a nine-part series, we continue to unpack and analyse South Africa’s 2023 Rugby World Cup Bid.
THIS bid differs significantly from Durban’s 2022 Commonwealth Games in that World Rugby’s financial guarantees are fixed at R2.7 billion.
There will be no escalation on this figure from World Rugby over the next six years should South Africa, on November 15, win the vote to host the 2023 World Cup.
The R2.7 billion is consistent with what the government had initially agreed to commit to Durban’s 2022 Commonwealth bid, but projected soaring costs of Durban 2022, post Durban’s confirmation as host, meant that South Africa’s government was being asked to guarantee triple the initial amount guaranteed.
Durban 2022 is viewed by many as the elephant in the room in relation to South African Rugby’s 2023 World Cup bid. But it’s an ill-informed audience that doesn’t want to talk about Durban 2022 because the government’s refusal to endorse and guarantee such financial uncertainty and risk is one that merits reminding and respect.
Durban 2022 was rightly described as a debacle because of the lack of information that was always forthcoming. The media, the messengers to the people, were given very little information about the bid and about the country’s responsibility, financially and in all other aspects, to hosting the 2022 Games.
Emotion outweighed economics in the feel-good factor of Durban being the first African city to host the Commonwealth and it was believed (or promoted) that the successful hosting of the Commonwealth would be the forerunner to South Africa being the first African country to host the Summer OIympics.
There was very little public storytelling about the reality of Durban2022 and the practicality and reality of Durban2022 was never unpacked for discussion, debate and for any form of delight or derision.
Instead Durban 2022 was condemned for being a debacle, but the debacle was in a failure to communicate more than in the failure of a compelling Durban bid or South Africa’s ability to host the event.
It finally came down to economics and the government made an informed and justified decision in not committing financial guarantees closer to R8 billion when the initial Commonwealth sell was closer to R3billion.
The facts around Durban 2022 are that when the Games were awarded to South Africa the country had not signed the host city agreement, because of the government’s fear that the agreement would seriously compromise South Africa financially.
The ‘open-ended’ clause of the Commonwealth Host City agreement demanded that the government had to meet any shortfall in the budget relating to the preparations and hosting and that the government also had to guarantee subsidies and rental costs of the Commonwealth Village.
Rugby’s Bid doesn’t have such open-ended clauses in the host agreement. A 2023 RWC bid also meant that there would be minimal infra-structure stadia costs because of all the investment in stadia for Fifa 2010 in South Africa.
SA Rugby knew it could rely on emotive sporting narrative but that the most powerful element of the 2023 Bid had to be in its economics.
Did it make financial sense, could it enhance the stadia cost legacy of 2010 and could South Africa as a country financially benefit from having the biggest global sports event of 2023 hosted in South Africa?
The government has financially underwritten the bid because it would have a R27 billion direct, indirect and induced economic impact on South Africa; R5.7 billion would flow to low income households; 38 600 temporary or permanent jobs would be sustained and there’d be an estimated R1.4 billion tax benefit to government.
# SouthAfrica2023 makes commercial and business sense; Durban 2022 economically and financially did not. ●
Mark Keohane is an award-winning rugby writer and former Springbok communic ations manager. Follow him on www.keo.co.za and www.twitter. com/mark_keohane