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Why England can’t lose from hosting the Rugby World Cup

Reuters staff

Why England can’t lose from hosting the Rugby World Cup

Tills are ringing in pubs and hotels all over London, Cardiff, Exeter and Newcastle as rugby fans in town for the 2015 World Cup toast victory or drown their sorrows, racking up a tidy bar bill as they go. At least that’s the happy picture being painted by promoters of the tournament who are keen to highlight the economic benefits of hosting it.

Those touting the Rugby World Cup’s benefits are quick to reference a report by the accountancy firm Ernst & Young, which asserts that the tournament will generate up to £2.2 billion of output into the UK economy, add up to £982m of value to the UK’s GDP and attract more international visitors than any previous Rugby World Cup. UK residents are expected to fill pubs and bars, buy new giant TV sets and pay for more broadband capacity. And UK firms will make a bundle of money from selling memento products ranging from replica kits to kitchen textiles.

But the validity of these estimates and the calculations made for both the short and longer term are questionable. Some economists would argue, for example, that regular visitors such as business travellers and local tourists will be pushed out either by the influx of visitors or the astronomical prices charged for accommodation and other services.

In the long-term, various studies have found negligible benefits in employment, tourism, accommodation and retailing in countries that host big sporting events. And, of course, cynics will point to the fact that the Ernst & Young report was commissioned by the organisers of the Rugby World Cup themselves.

Low costs

Something we know for certain, however, is that hosting the Rugby World Cup has not cost England much. Unlike the billions spent by recent hosts of the Olympics and football World Cup, staging the Rugby World Cup in England and Wales has cost very little. The cost of staging the London Olympics, for example, was £8.9 billion. By comparison the costs of staging RWC 2015 are unlikely to exceed £1 billion, with infrastructure costs at a paltry £85m, £76m of which was earmarked for the remodelling the England team’s stadium, Twickenham – so straight back to rugby.

Similarly, unlike the huge infrastructure needs for the Olympics and FIFA World Cups staged elsewhere around the world, England and Wales already have the necessary transport links and stadiums in place. Looking to maximise revenue, the RWC has awarded the hosting of various fixtures to football and multi-use stadiums because of the greater capacity than at traditional rugby grounds. Only Exeter and Gloucester could be considered traditional club venues. And, even in Leicester, the home of top club team Leicester Tigers, the venue to be used is actually Leicester City’s football stadium, which has a larger capacity of 32,000. Similarly, Brighton and Milton Keynes, not traditional rugby towns, have won hosting rights because they have stadiums that can seat more than 30,000 fans.

Legacy: the London Olympics cost a lot but helped regenerate the area it was in. Matt Gibson / Shutterstock.com

There are clear benefits to this approach. The obvious one of maximising revenue, as well as taking rugby to non-traditional areas and benefiting smaller towns that would not normally be able to substantially drive tourist interest on the scale expected. The RWC is therefore spreading the revenue nationally much more than would be the case with events such as the Olympics or the Commonwealth Games where most of the action took place in one city.

But the downside of the fact that transport infrastructure and stadiums are already in place is that there is no need for regeneration activity and less opportunity, therefore, for potential large-scale legacy projects. Needing to regenerate an area such as Stratford in London’s east end, for example, can actually be central to the rationale for staging big events.

Rugby going global

There has to be a more rounded approach to identifying the benefits of hosting the tournament. For example, the benefits to the game of rugby itself are clear. Here is a sport that, while still a poor relation to football, has the capacity to grow exponentially if taken up globally. In the US, for example, rugby is the fastest-growing team sport; in Asia, Japan will host the 2019 tournament; in the Middle East, Emirates is already a major sponsor of the Rugby World Cup and the Emirates Airline Rugby Sevens in Dubai is growing in popularity.

Emirates’ involvement with rugby has been building gradually as they recognise that the RWC are making changes that permit greater marketing opportunities. For example, at previous RWCs, brands were not allowed to feature on the playing kits of players or match officials. Not so now. At this year’s RWC and again in 2019, the Fly Emirates logo will be on the shirts of match officials and the airline’s branding will be prominent at all host stadiums. Rugby is coming to terms with commerciality; even the sacred All-Blacks shirt now carries a sponsor’s logo.

Rugby is reaching new audiences through the men’s and the women’s game. Reuters/Benoit Tessier

Notwithstanding the Middle East, the major opportunity is in the US. There are 1.4m players there, a quarter of whom are women. And tapping into the potential for growing television revenues and sponsorship is key to the expansion of any sport globally as that revenue can be directed straight back into the sport.

Rugby is also now an Olympic sport and will be played in Rio next year. This will sustain the increased exposure of the game after 2015 – but for how long is open to question. As far as can be ascertained by the official figures, there has been minimal, if any, greater participant take-up of Olympic sports such as swimming and badminton since 2012. That is a challenge that the rugby world needs to recognise and meet.

Historic moment. Reuters/Mark Baker

Money well spent

If the economic benefits of any major sporting event are at best questionable (and at worst based on manipulated numbers), then it is to the intangible and indirect benefits to which the public must turn for reasons to be cheerful. And they are powerful. What’s wrong with just having a party every four years that changes how we feel for six weeks and which brings nations together in a unique way?

The South African World Cup of 1995 may well have lost money but what a moment it was in human history. When the newly elected president Nelson Mandela (at the time probably the most revered public figure in the world) led the support wearing the green and gold Springbok shirt, and presented the trophy to the home team, it was a hugely powerful symbolic moment. Despite the most recent difficulties with South Africa’s national team that moment remains transformational.

For all its potential to boost a host country’s economy, this should not be the ultimate driver for staging these events. The decision should be driven in spite of the economic issues not because of them.