Public funding for a Rugby World Cup that few can afford to attend

rugby world cup money gold ballIn any other industry, the taxpayer/ratepayer subsidies being offered to the professional rugby industry for its World Cup event in 2011 would be being slagged off as government handouts.

Surely, no other business gets its premises built and budgeted losses covered quite so readily by government, not to mention the upgrades of related travel and accommodation facilities that will be servicing the event.

Too bad the prices for access are so steep that the peasantry will be unable to afford the commodity – the actual games – they are subsidising so very generously.

Unless that is, they own a hotel, bar, or airline, which will siphon off the vast bulk of the downstream economic benefits.

Understandably, the media attention this morning has been focussed on the cost of the tickets to the final.

Or rather, the cost of the tickets available – since 35,000 of the 60,000 tickets for the final have already been allocated to corporate hosting packages and travel deals for tourists. A little over 40% of the tickets to the final will be available to the public – and even then, the relatively few New Zealanders willing and able to stump up the $1250 required for good seats will have to go into a lottery on equal terms with visitors from overseas before they know whether they can gain entry to Eden Park – and to even get into that draw they will also have to buy an extra ticket to one of the other games. Clearly, that Rugby World slogan of “Give it 100% !” the spotlight is on the majority doing the giving, rather than on the relatively few doing the taking.

Besides covering the budgeted loss for the event, the taxpayer/ratepayer is paying $190 million of the $240.5 cost of refurbishing Eden Park. A further $200 million of ratepayer and central government funds are being spent on the new 35,000 person stadium in Dunedin, which is being rushed to completion in time for the event. Hey, no worries about that though. On paper, the contract conditions say that taxpayers are eligible for a refund of the $15 million dollars they are coughing up, should the deadline not be met Yet a fortnight ago, Prime Minister John Key made it clear he was feeling pretty relaxed about the money at risk, and wouldn’t be seeking to enforce the contract:

When questioned whether the Government might ask for the money back if it was not finished in time, Mr Key said: “I don’t think so. We’re not Indian-givers.” He was effusive in his praise of the construction.

“The stadium is great, isn’t it?” he said to waiting media.

The provision of such facilities and related largesse for what is an allegedly professional sport are just the tip of an iceberg. In place of the stimulus packages being offered overseas to help ravaged economies recover from the global recession, the Rugby World Cup has served as this country’s de facto stimulus package. All around the country, spending has been earmarked to capture hoped-for benefits from the Cup. Wellington for instance, may be getting only a few early matches and two quarter-finals. Yet its City Council publishes an online newsletter dedicated to RWC News, and it has appointed a council ‘project team’ to maximise the perceived benefits.

In the third edition of the council e-letter in November, Wellington’s listed projects planned for completion in time for RWC 2011 include the extension of the international terminal at Wellington airport, new apartment and hotel developments, an Indoor Community Sports Centre , new artificial playing surfaces for all the city’s sportsfields and a month long festival to be held in the city to mark the occasion.

Elsewhere, some $100,000 has been earmarked for Venture Hawkes Bay’s Rugby World Cup proposal. In Whangarei, $2.5 million of government funds has been spent on an upgrade of facilities at Okara Park, an infusion that proved crucial to the region being allocated two matches, according to Whangarei mayor Stan Semenoff. Christchurch has already received $15 million from the government for its AMI stadium upgrade in time for the Cup, and there are signs the Christchurch Business Association may be tapping more ratepayer funds for its marketing of the city during the run-up to the Cup.

Overall, the government has spent $300 million on the Rugby World Cup and is currently expecting a $39.3 million loss for the event.

The value of the tournament has been estimated by Deloittes in the hundreds of millions of dollars – which begs the question of why a tournament that is allegedly likely to be so successful should be needing to tap the funds of central and local government quite so heavily. According to Deloittes, this event makes more money relative to its cost of staging, than any similar major tournament on the global sporting calendar. Take a bow, everyone in New Zealand who has made that equation possible !

The use of the Rugby World Cup as a national stimulus package has been reflected in figures for building consents.

For much of the first half of this year, the value of non-residential building consents exceeded the value of residential building consents, the first time this has happened since mid 1998 – and this has largely been on the back of the consents for the Eden Park upgrade and for the Dunedin stadium. Since mid-year, the value of non-residential consents has declined, but is still up markedly, on a year end basis.

This only underlines the point as to whether it was the construction stimulus from the Rugby World Cup that ( briefly) served to delay the impact of the recession on our unemployment figures. Taken together with the added boost in construction from the retro-fitting related to the home insulation scheme, it is clear that the much maligned government spending has helped keep the economy afloat (and the unemployment rate down) for much of 2009.

Rugby though, has been the winner.


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