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Rugby becomes an increasingly lucrative sport

While largely unknown in many countries, rugby union has been gaining momentum as one of the world’s most profitable sports. The upcoming Rugby World Cup 2015 in England will act as a showcase of the sport’s recently commercialised image

The popularity of rugby union is quickly growing worldwide, with analysts expecting it to make a substantial contribution to the British economy in the next few years
The popularity of rugby union is quickly growing worldwide, with analysts expecting it to make a substantial contribution to the British economy in the next few years 

Major sporting events have long attracted big money, be it through sponsorship, licensing deals or corporate hospitality. Where sports like football have successfully harnessed the commercial side of their game to generate hundreds of millions of dollars for events like the FIFA World Cup, others have only recently started to tap into the corporate market.

In September, the world of rugby union will congregate in England to celebrate its own World Cup. A sport that is only played in a comparatively small number of countries, it has a long way to go before it can match the global appeal of its rounder-balled cousin. However, after a record-breaking number of people watched the recent 6 Nations tournament between Europe’s elite national teams, the Rugby World Cup 2015 is set to capture the world’s attention – and with it, the attention of the corporate hospitality market and advertisers across the world.

It will not just be a single city that benefits from the World Cup, as with the London 2012 Olympic Games – but 11 cities across the whole of England

Going pro
For the majority of its existence, rugby union was an amateur sport. Since the mid-19th century the sport has been played in Britain, expanding throughout the British Empire to Australia, New Zealand and South Africa, while it was also enthusiastically adopted in places like France and Argentina. Scotland, Wales and Ireland also had their own teams.

Most of the players still had other careers, with many coming from the armed forces. The rival alternative version of the sport, rugby league, had also become widely popular, and soon became professional. Attractive offers to union athletes saw more and more players switching codes. By the mid-90s, the pressure on the union game to modernise and go professional was beginning to increase so rapidly and aggressively that in August 1995, the International Rugby Union Board met in Paris to officially allow professionalism in the sport, thus allowing players to benefit from the sudden influx of sponsorship money, advertising rights and television coverage. The southern hemisphere teams in South Africa, New Zealand and Australia quickly developed professional tournaments, and European competitions eventually followed them. That year there was also the launch of a European club tournament sponsored by beer manufacturer Heineken.

Today the sport is littered with sponsorship. Teams have sponsors adorning their shirts much like in football, with the England national team currently having the most lucrative deal in the game: telecom giant O2 has the sponsorship privileges for £4m a year. The forthcoming World Cup is being backed by some of the world’s biggest brands, including Coca-Cola, Toshiba, Canon, Heineken, DHL, Emirates, MasterCard and Land Rover.

Viewing figures for the sport have skyrocketed, with the recent 6 Nations match between England and France capturing 9.63 million viewers in the UK alone. While in the past spectators would likely all be crammed into relatively unsophisticated stadiums that had little in the way of luxury hospitality facilities, the World Cup will offer far more extravagant packages than ever seen before by using many English football stadiums, including Wembley, the Etihad in Manchester, Newcastle’s St James’ Park and Aston Villa’s Villa Park, as well as the Olympic Stadium in East London. The main England matches and the final game will be held at Twickenham.

Economic impact
According to estimates by analysts, the Rugby World Cup could make a substantial contribution to the British economy, while offering commercial opportunities to a number of businesses and industries. A report by the English tournament organisers – done in collaboration with analysts EY – showed that as many as 41,000 jobs will be created by the event, with 16,000 people directly hired by it. It estimated that the tournament could generate as much as £2.2bn output for the UK economy, with £982m being added to the national GDP. £85m would also be spent on boosting the country’s infrastructure, which will act as a long-term legacy for the event. It will not just be a single city that benefits from the World Cup, as with the London 2012 Olympic Games – but 11 cities across the whole of England.

Last November, England Rugby 2015 Chief Executive Debbie Jevins unveiled the report that set out the economic benefits of hosting the World Cup: “Rugby World Cup 2015 is set to create a wide range of economic opportunities across many different sectors. Whether through investment in infrastructure, supporting jobs or generating revenue in fanzones, the economic benefits will be shared around our 11 host cities and beyond. With Rugby World Cup 2015 expected to attract more visitors than any previous Rugby World Cup, the tournament is on track to deliver a strong economic legacy.”

EY director Peter Arnold added in the report, “Our forecasts are based on a whole range of direct, indirect and induced benefits of Rugby World Cup 2015, from the investment that will be made in infrastructure to the ticket and tax revenues that will be generated. The tournament creates economic activity and employment throughout the supply chain, which has the potential to bolster the growth of the host cities as well as the UK overall.”

Reaping the benefits
Even so, the benefits are set to be only a fraction of those reaped by other, more popular sports – 2014’s FIFA World Cup in Brazil is thought to have generated $4.8bn (£3.2bn) for organisers, while the Brazilian economy is thought to have benefitted by as much as $13.6bn as a result of infrastructure investment and tourism boosts. Nonetheless, the Rugby World Cup has made decent contributions to host countries in the past.

The last Rugby World Cup was held in New Zealand, six months after a devastating earthquake struck the country’s third most populous city, Christchurch. Because of the damage to the main stadium in Christchurch, matches were moved to other parts of the country. However, the success of the games gave the country a timely boost after such a large natural disaster. According to a study by the New Zealand government’s national statistics office, the country’s GDP for the quarter during the World Cup in 2011 rose by 0.7 percent. This was in large part due to retail spending and rises in accommodation and dining activity.

More research, by the independent Market Economics consultancy, showed that the country’s economy was boosted by NZD 537m ($400m) as a result of hosting the event. It also helped create almost 8,000 jobs, while around 133,000 tourists visited the country for the tournament.

When Australia hosted the World Cup 12 years ago, the sport had only recently turned professional. Even though there was not as much sponsorship money swilling around the games as is found now, the event still made a substantial contribution to the country’s economy: studies showed that AUD 494m ($381m) was generated in industry revenue, while 4,000 jobs were created during that year. The total contribution to Australia’s GDP was thought to be AUD 289m ($223m).

Proving itself
However, there are not just financial gains to be made from hosting a major sporting event like the Rugby World Cup. While the obvious benefits from increased tourism are clear, having the spotlight of the world’s media shining on a country gives it a great opportunity to promote itself, and perhaps change any lingering preconceptions.

The greatest example of this is undoubtedly South Africa in 1995 – just a year after the country emerged from apartheid. Having been boycotted by much of the world for the previous few decades, the World Cup represented an opportunity for the country to show the planet that it had changed, and was by then a far more inclusive society. The country had only recently been re-admitted back into the international rugby fold three years earlier, and the tournament represented the first major sporting event to take place in South Africa since the end of its brutal regime. It also marked the very last tournament before the sport turned professional. Deemed a huge success, the host nation went onto win the tournament, culminating in the iconic image of the white captain Francois Pienaar being awarded the trophy by black president Nelson Mandela.

The Rugby World Cup in England later this year may not offer the same transformative social change that was seen in South Africa, or the financial gains seen from the FIFA World Cup. However, it will represent one of the most profitable major tournaments that the comparatively young professional game has seen. With England being one of the wealthiest rugby teams in the world, and the European game recently celebrating the most money-spinning 6 Nations tournament in history, rugby union is finally set to present itself to the world as a major corporate sporting event.

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