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Business

Rugby World Cup becomes money spinner

TOKYO -- The Rugby World Cup has become the third-largest global sports event after the FIFA World Cup and the Summer Olympics.     

     As the popularity of the event grows, it is becoming a huge business machine, with record audience sizes and revenues.

     The crowd at the match between Ireland and Romania at London's Wembley Stadium on Sunday was a record 89,267.

     England, the birthplace of the sport, is hosting the Rugby World Cup for the first time in 24 years. The event has set a number of records, such as highest gate receipts of 38.9 billion yen ($322 million) and highest broadcasting rights fees of 27.2 billion yen.

     According to Alan Gilpin, head of Rugby World Cup at World Rugby, the game's organizing body, tournament revenue was estimated in June to grow by 70% from the one held in France in 2007, to around 90 billion yen.

     The expected increase of revenue is also shown by higher interest in the game around the world. According to the survey conducted by global sports research company Repucom prior to the 2015 tournament, the interest levels of fans in the event in relatively new rugby nations were higher than before the 2011 tournament, held in New Zealand. Nations that are currently outside of World Rugby's top 10 rankings are described as new.

     Italian interest grew by 11 percentage points. Interest in Malaysia and Thailand has also risen to levels higher than Japan's.

     The Japanese team's recent upset of South Africa, however, significantly contributed to rallying interest in the sport and the event in Japan. According to the survey conducted by TV audience ratings research company Video Research, the viewing rate of the game between Japan and Scotland in the Kanto area surrounding Tokyo reached 15%, equal to the level of interest in the Japanese national soccer team.

     Hideyuki Hata, president of Repucom Japan, said that the Asian nation's victory against South Africa might contribute to the expansion of the entire rugby market. The victory shone a spotlight on relatively new rugby nations.

     The Rugby World Cup, which started in 1987, is relatively new compared with the FIFA World Cup and Olympic Games. Rugby, which was a strictly amateur game for most of its history, became a potentially massive commercial platform in 1995, when the International Rugby Board removed all restrictions on payments and benefits to players.

Issues to solve

Explosive growth has also brought problems.

     One is that distributing revenue from Rugby World Cup tournaments between the host country and World Rugby is complicated. Under the current scheme, host countries are entitled only to gate money. Unlike host countries of the Olympic Games, those holding the Rugby World Cup do not get a share of other revenue such as sponsorship.

     There is further bad news for host nations: They have to pay tournament fees to World Rugby. The institution largely relies on the revenue from the World Cups for income.     

    In the case of the current Rugby World Cup, England and Wales will pay an estimated 10.1 billion yen. Japan will pay 17.4 billion yen for hosting the event in 2019. This has made it almost impossible for countries where rugby is not popular to host the event.

     In a bid to expand its business opportunities, World Rugby is further seeking new frontier markets. "We are mulling a new income distribution model [under which other revenues such as sponsorship are shared by host countries, too] like that being run by the International Olympic Committee," said Gilpin.

     The other problem is exclusiveness. World Rugby has established so-called tier structure under which rugby-playing nations are classified into three tiers largely based on the length of history of rugby in each nation.

     This tier system makes it difficult for teams from different tiers to play against each other. For Japan, which is currently in tier 2, strong rugby nations in the top tier as New Zealand and England are practically off limits. World Rugby would advise against any game taking place. It is also tough for nations and regions in tier 2 or below to send board members to World Rugby.

      However, World Rugby is increasingly becoming aware that it needs to revise the system, which favors nations with long rugby traditions. "We may announce big news within a year or so," said Gilpin.

(Nikkei)

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