RWC price falls

November 26 2008

The IRB has announced that the fee for hosting the 2015 and 2019 Rugby World Cups is to fall, in the wake of the recession since the credit crunch.

The host countries for the two tournaments would have had to pay £100m ($150m) and £120m ($180m) for 2015 and 2019 respectively, as deposits against the money raised for the country by hosting a World Cup.

These monies are paid to the IRB up front as a tournament hosting fee, but are expected to be recouped by the host country as a result of the commercial aspects of the tournament along with a healthy extra slice of cash.

The two fees have now been reduced by 20 per cent as the bidding process hots up ahead of the decision day next May, to reflect the downturn in the current economic climate and the likely long-term side-effect.

"A recent independent Deloitte report on the economic benefits of hosting Rugby World Cup highlighted the fact that it is one of, if not the most, cost effective major sports events in the world," said IRB Chairman Bernard Lapasset.

"RWC is estimated to have the potential to generate up to £2.1 bn ($3.6bn) in economic benefits while capital expenditure costs are among the lowest for an event of this magnitude."

"These economic benefits make the tournament a major attraction to host. Of course an event as large as Rugby World Cup does require a certain level of financial underwriting upfront.

"We have been in constant touch with the nine tender Unions and have taken on board their comments on the current economic environment they are operating in."

"We have also had meetings with government officials from several of the potential host countries which have been very encouraging.

"However, in light of the current economic environment the IRB has decided to take a pragmatic approach on the tournament financial modelling to assist Unions in their future discussions with their respective governments and their delivery of competitive tenders."

"The IRB Council has agreed that the minimum tournament fee for 2015 be reduced to £80m ($120mk) from £100m and that the minimum tournament fee for 2019 be reduced to £96m ($144m) from £120m.

However, the cut is not as generous as it sounds, with the IRB also stoking the fire of a potential bidding war for countries able to raise more than the new amounts, which are the guaranteed minimum fee.

"The IRB has also agreed to incentivise the Host Unions by building in a profit share formula for any tournament surplus it generates that exceeds the minimum guarantee," continued Lapasset.

"We are still looking to achieve a tournament fee of £100m from 2015 and £120m from 2019.

"The revised minimum requirements are just that, minimums. There is nothing to prevent one Union bidding the minimum guarantee of £80m for RWC 2015 and another bidding £100m."

"That would lead to a very interesting decision-making process next year when the host Unions for Rugby World Cup 2015 and 2019 will be decided in July," added Mr Lapasset.