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The surprising success of world cup rugby in Japan

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A last-gasp try against South Africa that propelled Japan to victory in one of the opening matches of the last Rugby World Cup provided one of the greatest shocks in the history of the tournament.

Four years on, the effects of that dramatic win are making themselves felt in the finances of the competition. As the 2019 World Cup kicks off next Friday, with the host nation Japan playing Russia, organisers have been surprised to find they are on track to make more money than the record-setting tournament held in England in 2015.

When World Rugby, the international governing body for the game, awarded the 2019 competition to Japan they took a risk by holding it in Asia for the first time, outside the sport’s strongholds.

But Brett Gosper, chief executive of World Rugby, said there has been unprecedented interest among Japanese fans, broadcasters and corporate sponsors after the unlikely victory of the “Brave Blossoms” over the two-time champions four years ago. 

“At the time Japan was appointed [host nation] we forecast commercial revenues to be down 20 to 25 per cent,” said Mr Gosper. “In fact, we now know that total commercial revenues will be higher in Japan than they were for England.” 

“Our job after this World Cup is to sustain that interest in Japan.” 

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According to World Rugby’s financial statements, it makes more than 80 per cent of revenues and nearly all its profits — which the organisation describes as a “surplus” — from the World Cup. 

Broadcasting rights, as well as most sponsorship and other commercial revenues from the tournament go to World Rugby, while the host country makes money mainly from ticket sales.

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Mr Gosper said his organisation expects to earn around £360m of its proceeds from the 2019 World Cup, compared with £330m four years earlier. However, its surplus — worth £163m in 2015 — is projected to fall because of additional organisational costs of holding the tournament in Japan. 

Still, World Rugby had previously believed revenues from broadcasting and sponsorship deals would drop in 2019 because the event is being held away from large markets where the sport is established, such as the UK, France and Australia. But this was deemed to be a price worth paying for trying to increase the sport’s popularity. 

“The weakness for rugby has been it is focused on 8-10 major [national] teams, many of which are based in a cluster around the UK, but struggled to break beyond that and get into any other of the big markets,” said Nigel Currie, founder of the sports sponsorship consultancy NC partnership. “This might help them break Japan and get into Asia.” 

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Four years ago, the majority of revenues from the World Cup came from two large broadcast deals, with French network TF1 and free-to-air channel ITV in the UK. These deals made up around 50 per cent of the tournament’s broadcasting revenues.

Mr Gosper said the value of those two deals will fall for the 2019 competition, because matches will be screened in the early morning in Europe, a time that is less suited to French and British audiences.

Yet, the overall value of international broadcasting rights has increased, thanks mainly to new deals in Japan, where games will by shown by three broadcasters: J Sports, NHK and Nippon TV.

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The tournament’s sponsorship deals have also maintained their value, thanks to the desire of established global corporate partners to target consumers in Asia, as well as new Japanese corporate sponsors.

“It’s an attractive opportunity for sponsors to target a new market, somewhere they may be established, and activate on a larger scale,” said Mr Currie. 

The tournament has become even more vital to World Rugby’s finances, following its recent failure to secure revenues from different sources. 

In June, it was forced to drop a £6bn plan to create a new annual tournament dubbed the Nations Championship. World Rugby had agreed a 12-year broadcasting deal for the new concept with Infront, a Swiss-based marketing agency, owned by Chinese conglomerate Dalian Wanda and run by Philippe Blatter, nephew of former Fifa president Sepp Blatter.

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The plans would have required the countries that compete in the Six Nations Championship — England, Scotland, Wales, Ireland, France and Italy — to abandon separate talks with private equity firm CVC, which has made a £500m bid to acquire a 30 per cent holding in the annual European tournament. 

After failing to persuade the Six Nations to support its plans, World Rugby decided to shelve its Nations Championship proposals, making the success of the World Cup even more crucial to the organisation. 

While ticket sales revenue is expected to fall, with 1.8m sold in Japan compared with 2.47m in England four years ago, organisers expect most stadiums to be full throughout the tournament. 

This has led to a further concern: whether there is enough alcohol for the thousands of travelling fans from Europe and Australasia, where copious drinking is a part of the rugby-watching experience. 

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“These stadia and these cities are not used to having the volume of people and the volume of beer drinkers that maybe rugby is associated with,” said Mr Gosper. “There have been a little bit of challenge around delivery to ensure the logistics of that, but we think we’re on top of that and we think it’s going to be fine.” 

Via Financial Times

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