Rugby World Cup: Commercial viability may be hard to tackle for Japan

Future tournaments present big risks for taxpayers.

A rendering of Japan’s proposed National Stadium and main venue for the 2019 RWC, plans for which were subsequently scrapped. AP Photo

A row over venues at the next Rugby World Cup (RWC) in Japan in four years time throws into question the viability of taking the tournament to new hosts.

While one of the weaker finalists on the pitch, host Japan is an economic powerhouse but has been at odds with World Rugby after plans for one of the main venues for the 2019 RWC were scrapped.

Tokyo’s new National Stadium would have held more than 50,000 people and enabled the Japanese to meet the financial guarantees imposed by the governing body World Rugby, which has given Japan until the end of this month to provide a revised budget and host venue proposal.

The furore has implications for the 2023 tournament with four nations bidding, including two – Ireland and Italy – that like Japan have never staged the tournament before.

France and South Africa staged the RWC in 2007 and 1995 respectively. Ireland staged three group games, a quarter final and a semi-final as a co-host in 1991, while outsiders Italy have never hosted any part of the finals.

This is a major risk that could cost taxpayers, warns a leading academic in sports economics.

“Evidence abound suggests that there is no net gain from hosting major sporting events,” says Robbie Butler from the department of economics at University College Cork.

“Despite the fact that it is argued that the event can lead to an economic surplus for the state, there is little evidence to support this.”

France and South Africa have recent experience of organising sports mega-events, albeit in a different discipline.

France will host football’s Euro 2016, while South Africa successfully staged the 2010 Fifa World Cup. As a result, both countries have a plethora of suitable stadiums.

In the past three RWCs, 12 venues have been used. Mr Butler, who contributes to the Economics of Sport website, has identified a dozen grounds across the island of Ireland.

With the new Páirc Uí Chaoimh stadium in Cork expected to provide a 30,000-seat venue, Mr Butler’s research shows that these 12 stadiums would have a total capacity of 492,970 seats with a seated capacity of 327,300.

He believes Ireland has a sufficient number of facilities but adds the necessary upgrading would be expensive and cites the lack of floodlights at four of the 12 venues as an example.

“Substantial investment would be required upgrading hospitality and media facilities in many of the smaller stadiums. Investment in floodlights will also be required,” he says.

“Other investment will be required in transport infrastructure around the country. It’s difficult to know at this time how much that would cost but it is likely to be sizeable.

“Given the tournament fee – probably more than £100 million [Dh565m] – and the investment required on behalf of the state, it is likely that the best-case scenario is that the event is run at breakeven.

“A much more likely scenario based on previous tournaments is that this event will cost the taxpayer money. “

Mr Butler says any positive economic impact through the creation of jobs in construction would be short-lived, while an influx of tourists may deter other visitors to Ireland in 2023.

“There is unlikely to be any economic benefit,” he adds.

“However, should the country host the event will probably be the single biggest celebration of sport ever on the island, foster greater communication and links between people both north and south of the border, and lead to a surge in happiness across the island.

“Those three reasons are good enough to host the event, in my opinion. It is unlikely hosting the event will result in a financial return greater than the cost of hosting.”

The Irish Rugby Football Union will surely bear that in mind when World Rugby publishes tender documents for the 2023 RWC next May.

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