World Cup warning: loss could hit $55m

Martin Snedden. Photo / Mark Mitchell

New Zealand's projected loss for the 2011 Rugby World Cup will be as high as $55 million, a leading sports entrepreneur has warned.

Officials have already said the event will lose $39.3 million. But rugby broadcasting rights expert Michael Watt said the figure could soar further by the time the tournaments starts on September 9, 2011.

"The New Zealanders admit already the loss will be about $40 million. But in my experience, everyone should expect that figure to rise substantially," he said.

"It always does for these big events. This is nothing to do with individual culpability. In Martin Snedden, the CEO of the Rugby World Cup, they have a very efficient business figure but he has to err on the side of caution.

"The loss has the potential to rise by another $15 million. No event of this magnitude has ever held to its figures, they always go up. In addition, the world of major events in entertainment and sport is going through tremendous metamorphosis."

Mr Snedden said the cup's financial team was constantly scrutinising financial performance and he remained "very confident" the $39.3 million figure was correct.

That figure was revised up from $30 million after a "very thorough" review of the original budget in 2008/09, he said.

Match ticket sales to date - the cup's only material source of revenue - had been "very strong" and "entirely in line with our forecast expectations".

Last week Fifa approved an extra $1.4 million for South Africa to cover increased costs of running the 2010 soccer World Cup, which begins next month.

Mr Watt has called for the International Rugby Board to give New Zealand similar hands-on financial assistance.

"If Fifa is prepared to help South Africa, I can't see any reason why the IRB and RWC Ltd should not assist New Zealand in a similar way.

"In my view, any shortfalls should be shored up. New Zealand should be requesting the IRB to help out because this is a serious financial shortfall with profound consequences for this small country if they are not assisted."

Mr Watt, a New Zealander, worked with Mr Snedden on international and domestic cricket rights when Mr Snedden was head of cricket in New Zealand. For many years his company CSI handled the TV rights for most rugby unions around the world.

He warned that the long-term cost to New Zealanders of staging next year's World Cup could be huge.

"They will struggle to meet these commitments, just as cities like Montreal spent around a quarter of a century trying to pay off the debts it incurred for hosting the Olympic Games," he said.

"It was only national ego that propelled New Zealand to go for this event. In my view, they should never have gone for it."