KEY POINTS:
It is easy to forget that, when David Kirk became the only New Zealander to lift the William Webb Ellis trophy in triumph, he did so against a backdrop of economic gloom.
The year was, in case you've somehow forgotten, 1987 and it was the last time
a financial wrecking ball shook the foundations of the world economy. The more immediate backdrop to a beaming Kirk was the South Stand of Eden Park, an edifice that recently faced its own, more tangible, wrecking ball.
The imagery is apt. Had the global credit bubble burst a year or two earlier, it seems improbable that Eden Park's $250 million makeover for the 2011 Rugby World Cup would have been given the green light. As the country inches towards austerity, how mad does the idea of a billion-dollar waterfront stadium now suddenly seem?
Fortunately, perhaps, the budget for New Zealand's sports spend has been determined for the 2008-09 financial year. The Government has allocated $75.4 million and that total will be increased to approximately $106 million with an expected $31 million from lotteries funding.
While it is speculative, sport could be squeezed in future budgets if the economic outlook remains bleak.
On a global scale, the credit crunch could have a huge impact. London 2012 Olympic chiefs said last week they face a $723 million shortfall in funding for the athletes' village, as developer Land Lease is struggling to secure bank loans.
"There are factors that we can't control and one example of that is what is happening in the city with the credit crunch. The village and broadcast centre were planned in one economic environment and are having to be delivered in another. The credit crunch is hitting the Olympics hard," Olympic Delivery Authority chairman John Armitt said.
Meanwhile, a rag-tag mob of Russian oligarchs, Thai politicians, American billionaires and Middle Eastern consortiums have made the English Premier League - the world's richest sporting competition - their personal playground over the past five years, often buying clubs and loading them with debt.
This is not a financial model that will be tolerated by banks any longer and already the vultures are circling at West Ham, where Icelandic owner Bjorgolfur Gudmundsson has found his wealth suddenly stripped after the Landsbanki bank, of which he was chairman and a major shareholder, was nationalised, leaving his stake in it notionally worthless.
New Zealand has none of those types of issues to deal with, though expect to find France's billionaire rugby club owners a little more reluctant to write big cheques to lure All Blacks.
There is an element of yin and yang in this. The New Zealand Rugby Union, for example, will be in a position to cash in on the receding value of the Kiwi dollar against the greenback but will find itself negotiating a new broadcast package in an atmosphere of corporate belt-tightening.
On this count, New Zealand Cricket chief executive Justin Vaughan must be secretly chuffed he tied his board into a $50 million deal with Sony Entertainment Television last year and recently inked a sponsorship deal with Dheeraj and East Coast LLC (DEC), a Dubai-based property company with no presence in New Zealand but strong links with India.
Where Vaughan might not be feeling so cheery is with the prospect of belt-tightening among India's nouveau riche which could lead to reduced opportunities for New Zealanders to cash in on the Indian Premier League.
The consumer might find less discretionary money in his pocket but will probably also find more attractive packages offered by savvy promoters who recognise the need to keep the turnstiles clicking.
Warriors chief executive Wayne Scurrah said his experience at Cadbury's taught him that, in times of recession, it was often the little luxuries that kept people sane and sales didn't necessarily suffer. He hopes a day out at Mt Smart will fall into that category.
"They're cancelling the big things - like the home renovation, the overseas trip or buying a new car - and the little treats are something people do a little bit more of. Some people actually do more business in this type of environment," Scurrah said.
The Warriors, who traditionally attract a working-class following, have payment structures on their season ticket packages that make it easier to purchase and Scurrah believes the fact they offer better value than walk-up tickets will keep sales robust.
"The savings are up to 50 per cent on gate prices so it's smarter economics to jump in and buy a membership," he said.
Of course the one thing that can bite through the recession is winning and the Warriors' merchandise sales over the past two months have reflected that. It is inevitable, Scurrah concedes, that people will face a choice between spending money on the Warriors and something else, whereas in the past, they might have afforded both.
"We don't expect to make big growth, certainly," Scurrah said, "but we hope to maintain where we are."
The scale and ferocity of the global credit crunch would have taken many who run sport here by surprise but in these times of fiscal uncertainty, one thing is certain. The recession will affect sport across all strata - from administrators and decision makers through the players to parents and, of course, the spectators.
The NSOs
The most tangible effect of the economic fallout on our national sporting organisations (NSOs) will be the drop in the value of the Kiwi dollar.
"What we do know is our dollar is going to be worth less, so international costs will go up both in terms of travel and accommodation," said Sparc chief executive Peter Miskimmin.
"For competition and training overseas, it's going to be more expensive. A significant amount of the investment we make into NSOs is for international travel and accommodation to support athletes overseas."
The NSOs are in the process of presenting their plans looking ahead to the London Olympics. Miskimmin said if anything, the economic situation will bring into sharp relief the need for a dedicated training base in Europe that will offer New Zealand athletes a range of services at a one-stop shop.
The falling dollar spells better news, however, for New Zealand's richest sporting organisation. The NZRU earns around 70 per cent of its income in foreign currency.
Its two major contracts - the broadcast deal with News Corporation and sponsorship deal with adidas are paid in US dollars, while it holds significant reserves in British pounds and will also earn more sterling and euros for playing Wales and Munster respectively.
For the next financial year, the NZRU is budgeting to break even on the basis that the New Zealand dollar will be worth around 71 US cents. The Kiwi is currently trading in a range between 60-62 cents, which led to the NZRU buying forward cover - that is, they struck a deal where they now know the exact value of their overseas income through to 2011.
The hedging deal, says chief executive Steve Tew, does not necessarily mean more income "but it gives us certainty and we can now plan ahead knowing what our foreign currency is going to be worth".
The profit forecast for the current year is already much improved, as the NZRU has to nominally value all its foreign currency as per the exchange rate on December 31. Tew says the union is now hopeful of posting a small profit this year.
Perhaps the biggest headache for NSOs will be the inevitable shrinking of the sponsorship dollar. While the bigger codes such as rugby, league and cricket have an element of protection through the longevity of their contracts, any sport having to renegotiate sponsorship deals in the current climate will find themselves haggling hard in a recessionary market.
The athletes
Most think that European rugby and Indian Twenty20 cricket have been throwing silly money at athletes in recent years. Player advocates might argue that the spike is long overdue when you compare their pay to the likes of European footballers and any of the four major American professional sports leagues.
What is more difficult to get consensus on is whether the cash crisis will lead to club and franchise owners ending the era of Monopoly-money salaries.
Tew is doubtful that will prove the case in rugby: "The high net worth individuals who have invested in rugby tend to be very high net worth. They are in the kind of league that if they have lost $400 million dollars, they still have another $400 million."
The consumer
As pressure mounts to cut discretionary spending, those monthly Sky bills start to look grotesque. The trend has been for more events to be shifted to pay per view and specialist channels like the Rugby Channel but if viewers start voting with their remotes and by unsubscribing, that model starts to look unsustainable.
More worryingly, parents start to look at the subscriptions they're paying for kids' sport and how much it costs to ferry them to matches and practices. There is little research as to whether participation numbers drop in a recession but it would make sense if they did.
"Getting kids to sport is always an issue and we've heard that the higher petrol prices have been hurting," said Miskimmin.
"The ability to get children to the Saturday morning cricket game, or netball or whatever is an issue, particularly in rural areas. We have put money into a rural travel fund to make sure parents still have the ability to get their kids to sport."
The broadcaster
Sanzar bosses are planning to start renegotiating their existing Tri Nations and Super 14 broadcast deal some time next year. Most of the world's major economies are now predicting they will be in recession for the next 12 months and the depth of the bite might be significant. That could significantly affect the value of the next TV rights contract.
The broadcasters likely to buy packages might determine that, in a recession, sales of luxury products such as satellite TV subscriptions will drop. The cost of borrowing money to fund the rights acquisition will also have increased. Right now, the portents don't look good for Sanzar being able to match the US$323 million they received for their five-year contract in 2004.
But SkyTV's chief executive John Fellet says that because the deal will be for a minimum of five years, the immediate conditions will not necessarily be strongly factored into the price.
He said: "It is about another year before we sit down to renegotiate. If you tell me the current situation is going to last five years, then that's a problem. "In a five-year deal, we might have one fantastic year, two good ones and two bad ones. That's why you do longer deals. There is an ebb and flow."
