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Southern Hemisphere rugby nations have shocked the rugby world by saying they may not want to be involved in the Rugby World Cup in future years because it costs them money.
Simply put, nation teams do not tour New Zealand (the key union vocal about this issue), Australia or South Africa during June and July in World Cup years. Those tours bring crucial income to the host nations.
NZRFU CEO Steve Tew said the RWC cost his union NZ$13.2 million (about US$10.25 million), partly due to no incoming tour (and partly due to rising costs associated with the tournament. Thursday Australian RFU CEO John O’Neill chimed in with agreement, saying a lack of inbound tours cost his union A$16 million (about US$15.8 million).
What the unions are looking for, it appears, is some compensation for the lack of tours. They are threatening to pull out of the 2015 World Cup over the issue.
"Frankly the prospects of us going to England in 2015 under the current model are very slim. We cannot continue to sign on for an event that costs us so much money," Tew told The Guardian.
If the Rugby World Cup were to go on without New Zealand, there would likely still be no tours to New Zealand in a Rugby World Cup year. The RWC would still cost them.
The IRB has stated it will be reviewing the World Cup business model going forward. However, the IRB’s main source of income is the Rugby World Cup. The income from sponsorships come in throughout the four-year cycle, but the success and global interest of the event is crucial to the organization’s survival. In addition, grants to developing countries, including the USA, are dependent on that money. The host union of the RWC garners profits through ticket sales.
In 2007, the IRB took in 146 million points in broadcast and sponsorship rights, and recorded a net profit of 122.4 million. That income is supposed to last four years. The host nation, in 2007 France, brought in more money in gate receipts than the previous three tournaments combined, but profits (14 million pounds) were less than those in Australia or Wales because of much higher costs.
Should the NZRFU, ARFU and South African Rugby Union get a payoff to cover their lost hosting income, the IRB would take a hit of about $20 million pounds.
Clearly this is a new game of chicken between some of the more powerful (and often still financially-strapped) unions and the IRB.