Business

Rugby World Cup gives New Zealand economy all to play for

South Africa's Percy Montgomery walks next to the William Webb Ellis cup after winning the 2007 final against England
Image caption There will be 48 games over six weeks of games before the 2011 winners pick up the trophy

The William Webb Ellis trophy has been dusted off and the 20 teams that will contest the 2011 Rugby World Cup have made their final preparations for the event.

The tournament, which runs from 9 September to 23 October, is the biggest ever event to be held in New Zealand, with close to 100,000 overseas fans expected.

The seventh premier event in international rugby union kicks off when the host nation takes on Tonga in Auckland.

The event will provide New Zealand with a major opportunity to showcase itself to the world, with the tourist industry looking to be the most immediate off-field beneficiary.

But other sectors are also looking to benefit.

In Hamilton, the Aviation Industry Cluster is planning a three-day event called "Flair" to showcase New Zealand's capability in aviation design, manufacturing and pilot training.

More than 1,000 expressions of interest in the event have been expressed from overseas.

'Innovation story'

Meanwhile, in Auckland, The Cloud on Queen's Wharf - a multi-purpose event venue built at a cost of NZ$9m (£4.7m; $7.5m) - will be showcasing New Zealand's business innovation and creativity.

"Our goal [is] to ensure New Zealand's innovation story plays a strong role in showcasing New Zealand during the tournament," says Rugby World Cup Minister Murray McCully.

Image caption While New Zealand are favourites, tourist numbers could be boosted if neighbours Australia do well

"It is an investment which is a legacy that New Zealand trade and enterprise will continue to build on long after the tournament ends."

The Cloud will also be a venue for 40 New Zealand bands and musicians to perform for visiting fans during the tournament.

A report by the Reserve Bank of New Zealand estimates that the total visitor spending will surpass NZ$700m, based on 95,000 overseas visitors coming to the tournament.

And if neighbours Australia reach the semi-finals and final the visitor numbers could be higher, as short-term visitors jet in.

The country should also have benefited from an accelerated upgrade of infrastructure like stadiums, roads and public transport, tourism facilities and investment in hotels and restaurants.

Impact unclear

On the playing field there are high hopes the All Blacks can emulate their predecessors of 24 years ago and lift the trophy, with the team top of many bookmakers' lists of favourites.

However, aside from the business showcase events and tourist figures, broader predictions about how much money - if any - the event many bring to the New Zealand economy are thin on the ground.

In fact, local media in New Zealand have been reporting that the government and event organisers will be picking up a loss at the end of the tournament.

But the Reserve Bank says it may not be possible to know immediately whether there will be long-term benefit or deficit from the tournament.

"The net impact of the tournament on short-term economic aggregates, and longer-term activity, remains to be seen," admits the bank in its analysis.

"Factors including the operational cost of hosting the tournament... and the crowding out of other tourism and investment, household budget constraints and any rise in imports associated with higher domestic and international spending must be taken into account when assessing the overall macroeconomic impact of the Rugby World Cup," it adds.

In addition, it will be a worry for organisers that tickets are still available for the majority of matches, although total ticket sales have passed the one million mark.

The organisers - who have budgeted for $258m in ticket sales - say they expect to reach their target of 1.3m in total ticket sales numbers.

'Empire game'

Unlike the football World Cup, Olympic Games, or the major tennis and golf tournaments, the rugby union event is a fairly recent creation, being first contested in 1987.

Image caption International rugby has been restricted in terms of countries playing but that may be about to change

And it may be for that reason that it has still to break into the hierarchy of lucrative global sporting events.

"If you look at the top 10 sporting events in the world in terms of commercial value, historically rugby union has not been in there," says Simon Chadwick, professor of sport business strategy and marketing at Coventry University.

"Historically you can say it hasn't had the commercial appeal of other sporting events, in that rugby union is a socio-culturally specific sport that has been largely restricted to the UK nations and the countries of the British Empire."

'New age'

There has also been a long-standing interest in the sport in France, and to a lesser extent Italy.

But Mr Chadwick says the game is currently undergoing a growth spurt - which could be boosted by the Rugby World Cup - in China, the US, India, and former countries of the former Soviet Union such as Russia and Kazakhstan.

"I think we are in a new age for rugby, in a sense spurred by the professional status of players," Prof Chadwick says.

"We have also seen a new type of off-field managers coming into the game, and their managerial competence, who have overseen the commercial development of the sport.

"And as a result rugby union is becoming an increasingly big business."

'Passionate'

As a result the sport is attracting big name sponsors to the World Cup, including big names such as Emirates, DHL, ANZ, Mastercard, Societe Generale, and Heineken.

Image caption Heineken has been a sponsor of three previous Rugby World Cups

For Heineken it is their fourth partnership with the event, having been a backer in 1995, 2003 and 2007.

"We have a long history of backing rugby, we have the Heineken Cup [European club competition], and have been supporting the World Cup since South Africa in 1995," says Heineken's global brand activation manager, Hans Erik Tuijt

"People are passionate about sport and beer, and they value us for being there at the World Cup - in fact our customers expect us to be there."

Those customers are among the 5,000 guests Heineken is taking to New Zealand as part of its sponsorship activation.

'Well-run event'

Mr Tuijt said that Heineken would benefit from its backing of an event that people would be discussing and watching for the six-week duration of the tournament.

"The event is being broadcast to 180 countries, which will give our brand exposure in all those places," says Mr Tuijt.

"This is a massive tournament, and a well-run one, and if the business reasons are still there then we would like to be involved with the event in the future."

Meanwhile Professor Chadwick says "over the next 10 years the Rugby World Cup will be a much more serious commercial competitor".

"Over the next decade it will creep up the chart of major sporting events."

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