KEY POINTS:
The Rugby World Cup failure raises many more questions than those about the performance of the All Blacks and their coaches and the conditioning and rotation policies.
It raises doubts about the business judgment of the New Zealand Rugby Union (NZRU) and its ability to host the 2011 World Cup.
The 2011 event represents a huge opportunity to showcase the country to the world, yet nearly two years after New Zealand was granted the staging rights little obvious progress has been made.
Unless the Rugby Union and the Government get their act together the 2011 Cup could be a disappointing event that damages our international image and tourism sector. There is also the possibility the tournament could end up in Australia or some other country if we fail to meet IRB requirements.
The loss or poor organisation of the 2011 World Cup will have far bigger consequences than the defeat in Paris two weeks ago.
The NZRU has three major revenue earning brands: the All Blacks, Rebel Sport Super 14 and Air New Zealand Cup. Most of the television revenue, sponsorship and gate receipts are derived from these three products.
The union outlines its priorities each year and its main objective for this year was to "Win Rugby World Cup 2007". The organisation of the 2011 tournament wasn't included as one of this year's priorities.
The best players were withdrawn from the first half of the Super 14 competition to assist the World Cup campaign. This was a highly questionable business decision because it gave a clear message that the Super 14 was less important than the All Blacks. The union has also given the unmistakable message that the National Provincial Championship, now the Air New Zealand Cup, is a secondary priority by withdrawing the top players from this event before previous World Cups.
No successful business devalues one brand at the expense of another unless there are clear reasons for it.
Would Jim Delegat tell his customers that Delegat's was focusing on pinot noir for the next 12 months and his chief winemakers would work only on this brand while the company bought lower-quality grapes for its other wines?
Clearly he wouldn't, because that would give a powerful message that Delegat's chardonnay and sauvignon blanc were inferior products. It wouldn't take long before this signal had a negative impact on these wines and, ultimately, the group's overall brand.
Not surprisingly, South Africa dominated Super 14 for the first time and attendances and interest in New Zealand waned.
Was there any clear commercial or rugby reason for devaluing the Super 14?
The only obvious commercial reason is that the union believed the All Blacks' brand and sponsorship income would be seriously dented if the team failed at another World Cup.
But the more obvious explanation is that the board of directors is dominated by rugby men and their major concern was to win in France even if it had a negative impact on the popularity of the Super 14 and Air New Zealand Cup.
But even if that is the case there is no obvious empirical evidence that performances improve when players are rested and rotated. Rugby is a contact sport, with a strong emphasis on team work and mental toughness, and most teams improve the more and more competitive games they play.
It would be fascinating to know how the union decided to withdraw its top players from the Super 14. Was the decision made by the board of directors or the All Black coaches? What was the hard factual evidence that influenced this radical decision?
The end result was that the verdict was wrong as it handed a great deal of momentum to South Africa, which has been carried through to this weekend's final in Paris. It has also seriously eroded the image of the Super 14 in New Zealand.
The next big challenge for the NZRU is the 2011 World Cup, which was granted to New Zealand on November 17, 2005. The final will be played at Eden Park on Labour Day weekend just four years from now.
The NZRU retains overall responsibility for the tournament but the planning, management and operation of the event has been transferred to Rugby New Zealand 2011, which is 50 per cent owned by the union and 50 per cent by the Crown under the auspices of Trevor Mallard, Minister for The Rugby World Cup.
Martin Sneddon, the former boss of NZ Cricket, is the chief executive of the operating company and its six directors are listed in the accompanying table. Jock Hobbs and Chris Moller represent the NZRU while Lois Appleby is the former chief executive of Tourism Victoria.
Sir Ron Carter, Alan Isaac and John Wells are successful New Zealand businessmen.
Rugby New Zealand 2011 faces a herculean challenge, mainly because of the high standards achieved by recent tournaments and the apathy of many local politicians in New Zealand.
The past three World Cups have attracted massive support as illustrated by the following total attendance figures:
* 1987 NZ and Australia 604,000
* 1991 Britain and France 1.01 million
* 1995 South Africa 1.10 million
* 1999 Britain and France 1.75 million
* 2003 Australia 1.84 million
* 2007 France 2.27 million.
Average ticket sales at the 48 games in France have been 47,300.
At this stage the Government has committed $20 million to Rugby NZ and the NZRU $10 million. How can Sneddon run and promote an event, which must aim to sell at least one million seats, on such a paltry sum?
The organisation of the tournament seems to be moving at a snail's pace with both the NZRU and Government trying to pass the ball to each other. A Google search fails to come up with an official website for the 2011 Rugby World Cup whereas the 2010 New Delhi Commonwealth Games and 2012 London Olympic Games have extensive websites. 2012 Euro, the European soccer tournament to be jointly hosted by Poland and Ukraine, already has its website. But New Zealand's stadiums are sending out confusing messages to their season ticket holders and the international media is beginning to question our ability to host the event.
The NZRU has almost no mention of the 2011 tournament on its website and Trevor Mallard has had little to say on the subject in recent months.
The other questionable NZRU decision is the appointment of Steve Tew to replace Chris Moller as chief executive from January 1 next year. Tew has a rugby background whereas the union needs a chief executive with a wide range of skills to ensure that the 2011 tournament is a major success.
Unfortunately a successful 2011 Cup will be more difficult to achieve because the union placed far too much emphasis on the 2007 Cup. Its failure there will make it much more difficult to attract domestic sponsors for 2011.
And the erosion of the Super 14 and Air New Zealand Cup brands has led to a fall in interest and attendances at provincial levels at a time when the NZRU should be desperately trying to drum up full stadiums for all the 2011 Rugby World Cup games.
* Disclosure of interest; Brian Gaynor is an investment strategist and analyst at Milford Asset Management.
2011 Rugby World Cup directors
New Zealand Rugby Union
* Andy Leslie (president)
* John Sturgeon (vice-president)
* Jock Hobbs (chairman)
* Mike Eagle
* Ivan Haines
* Graham Mourie
* Mark Peters
* Paul Quinn
* Warwick Syers
* Ken Douglas - Independent
* Bill Thurston - Independent
Rugby New Zealand 2011 Ltd
* Jock Hobbs (chairman)
* Lois Appleby
* Sir Ron Carter
* Alan Isaac
* Chris Moller
* John Wells
* All the non-independent NZRU directors are rugby appointees
